/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190228.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, February 28, 2019, Vol. 20, No. 43 Headlines A R G E N T I N A COMPANIA GENERAL: S&P Affirms B- Ratings, Alters Outlook to Stable B R A Z I L FORD MOTORS: Brazil Workers Go on Strike to Protest Plant Closure ITAIPU BINACIONAL: Moody's Withdraws Ba2 Issuer Ratings TRIZ VENTURES: April 3 Plan Confirmation Hearing C A Y M A N I S L A N D S ASCOT FUND: Chapter 15 Case Summary C O L O M B I A EMPRESA DE TELECOMUNICACIONES: Fitch Affirms BB+ Long-Term IDRs D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Paid US$12MM to Contractor Before Debt Spat M E X I C O GRUPO KUO: Fitch Affirms LT IDRs at BB, Outlook Stable SERVICIOS CORPORATIVOS: Fitch Affirms B+ LT IDR, Outlook Stable P U E R T O R I C O 4J CUSTOM DESIGN: April 3 Plan Confirmation Hearing CAGUAS COPY: Seeks to Hire Carrasquillo CPA as Accountant CHARLOTTE RUSSE: Hires Cooley as General Bankruptcy Counsel CHARLOTTE RUSSE: Seeks to Hire Guggenheim as Investment Banker V E N E Z U E L A CITGO PETROLEUM: Confirms Board and Names Officers CITGO PETROLEUM: Formally Cuts Ties With Petroleos de Venezuela VENEZUELA: Trade Invective With US at UN Security Council - - - - - ================= A R G E N T I N A ================= COMPANIA GENERAL: S&P Affirms B- Ratings, Alters Outlook to Stable ------------------------------------------------------------------ Operating performance of Argentina-based oil and gas exploration and production (E&P) company, Compania General de Combustibles S.A. (CGC), has benefited from a rising gas production, favorable prices, and cost efficiencies stemming from the Argentine peso's sharp depreciation. On Feb. 26, 2019, S&P Global Ratings revised its outlook to CGC to stable from negative and affirmed its 'B-' ratings. The outlook revision to stable reflects CGC's improved operating performance and S&P's view of lower refinancing risk in the short term. CGC's cash flow generation has benefited from a successful development and exploratory campaign that allowed for a 50% growth in gas production in 2018 (gas represents now about 80% of the company's total production) and because realized gas prices increased 55% in 2018. Realized gas prices result from the combination of rates that the government established and subsidies for additional non-conventional gas production. Furthermore, given that around 85% of the company's operating costs are denominated in pesos, the sharp slide of the latter bolstered CGC's profitability. As a result, the reported EBITDA for 2018 should be around $250 million, almost three times higher than the one in 2017. However, even though S&P acknowledges that improvement in the company's margins and leverage alleviates short-term liquidity pressures, CGC's credit quality is still constrained by the company's smaller scale than of global peers, volatility in credit metrics, and medium-term refinancing risks, especially given that the senior unsecured note maturing in 2021. =========== B R A Z I L =========== FORD MOTORS: Brazil Workers Go on Strike to Protest Plant Closure ----------------------------------------------------------------- EFE News reports that hundreds of workers from the Ford factory in the Sao Paulo suburb of Sao Bernardo do Campo gathered and voted to go on strike to protest the US automaker's decision to shut down the plant, which employs 4,500 people in all. Ford Motor Co. disclosed that it would be closing its plant in Sao Bernardo do Campo in November following a strategic decision to halt production and sales of pick-up trucks in South America, according to EFE News. The report notes that the 2,800 permanent Ford employees in Sao Bernardo are represented by the regional Metalworkers Union, which hosted the assembly of roughly 400 people. During the assembly, the union decided to formalize the work stoppage that began immediately following Ford's Feb. 26 announcement, the report relays. Led by union president Wagner Santana, the Ford workers marched to the Sao Bernardo city hall, the report says. The report notes that the union expects to meet with Ford CEO James Hackett at the company's global headquarters in Dearborn, Michigan, hoping to persuade him to keep the factory open. Former President Luiz Inacio Lula da Silva , who became a national figure as the leader of the Sao Paulo Metalworkers Union in the 1970s, again expressed support for the Ford workers on social media, the report relays. Pres. Lula wrote on Twitter that workers should pressure the current government, led by rightist President Jair Bolsonaro, to bar imports of Ford products made elsewhere if the company decides to move forward with the closure in Sao Bernardo, the report notes. Mr. Fabinho, one of the Ford workers who attended the assembly, told EFE that the announcement was "a shock for everyone" and expressed concern about his ability to continue to provide medical care for his daughter, who suffers from a rare illness. "We are not giving up and we will pursue this to the end," the report quoted Mr. Fabinho as saying. Besides the 2,800 Ford employees, the Sao Bernardo plant is staffed by 1,700 contractors doing cleaning and maintenance, and the union estimates that the shutdown will affect 27,000 people in all, taking into account the numerous local businesses that depend on the factory and the spending by employees, the report says. Opened in 1967, the plant currently produces F-Series pick-ups, heavy cargo trucks and the Ford Fiesta, a subcompact car, the report adds. ITAIPU BINACIONAL: Moody's Withdraws Ba2 Issuer Ratings ------------------------------------------------------- Moody's Investors Service has withdrawn Itaipu Binacional Ba2 issuer rating. Prior to the withdrawal, the outlook on the rating was stable. The following ratings were withdrawn: Outlook Actions: Issuer: ITAIPU Binacional - Outlook, Changed To Rating Withdrawn From Stable Withdrawals: Issuer: ITAIPU Binacional - Issuer Rating (Foreign Currency), Withdrawn , previously rated Ba2 - Issuer Rating (Local Currency), Withdrawn , previously rated Ba2 RATINGS RATIONALE Moody's has decided to withdraw the ratings for its own business reasons. The last rating action on Itaipu Binacional was taken on March 17, 2017 when Moody's affirmed the company's rating at Ba2, outlook stable. On April 26, 1973, Brazil and Paraguay signed the Itaipu Treaty, the legal instrument for the hydroelectric exploitation of the Parana River by the two countries. On May 17, 1974, the Itaipu Binacional entity was created to administer the plant's construction. Itaipu is controlled by Centrais Eletricas Brasileiras S.A. - Eletrobras and Admnistracion Nacional de Electricidad - Ande, representing the government of Brazil and Paraguay, respectively, wherein each individually holds 50% of Itaipu's total capital. Itaipu has an installed capacity of 14GW based on 20 generation units of 700MW each. The last two generation units were installed in December 2006 and April 2007. That increase in capacity allowed for 18 generation units to remain running all of the time while two stay down for periodic maintenance. In 2017, Itaipu generated 83.3TWh, down from 91.1TWh in 2016. Such output was primarily sold to Brazil, representing approximately 16% of the country's total energy consumption in 2017. TRIZ VENTURES: April 3 Plan Confirmation Hearing ------------------------------------------------ The Bankruptcy Court has conditionally approved the disclosure statement explaining TRIZ Ventures, LLC's plan of reorganization and fixed April 3, 2019, at 2:00 p.m., as the confirmation hearing. March 29, 2019 is fixed as the last day for filing and serving written objections to the disclosure statement and confirmation of the plan. Class 5 are impaired and consists of the Claims of General Unsecured Creditors greater than $20,000.00 or more. Each Holder of an Allowed Class 5 Claim shall receive payments from the Unsecured Creditors' Fund in five annual payments with payments to commence on first day of the first full month following the one year anniversary of the Effective Date. Class 6 are impaired and consists of Claims of General Unsecured Creditors in the amount of less than $20,000.00. Each Holder of an Allowed Class 6 Claim shall receive payment of 50% of its claim from the Unsecured Creditors' Fund in two (2) annual payments on the first day of the first month following the first and second anniversaries of the Effective Date from the Unsecured Creditors' Fund Class 1 are impaired and consists of the Secured Claim of the VW Credit, Inc. d/b/a Audi Financial in the amount of $71,874.51, less any post-petition payments made by the Debtor. The Claim is secured by a 2017 Audi A8. The Debtor shall surrender the Audi A8 as described herein in full satisfaction of Audi's Secured Claim. Class 2 are impaired and consists of the Secured Claim of the VW Credit, Inc. d/b/a Audi Financial in the amount of $56,438.25, less any post-petition payments made by the Debtor. The Claim is Secured by a 2017 Audi Q7. The Debtor shall surrender the Audi Q7 as described herein in full satisfaction of Audi's Secured Claim. Class 3 are impaired and consists of the Secured Claim of Almond Street Cold Storage. The Claim is secured by the warehouse lien on inventory currently held at the Almond Street facility. The Debtor shall sell the Inventory and apply the proceeds to the pre-petition and post-petition amounts due under the Debtor's storage agreement, up to the amount of its claim and, to the extent that the proceeds are insufficient to satisfy its claim, Almond Street shall have a Class 5 Unsecured claim for the remaining balance. Class 4 are impaired and consists of the Secured Claim of JW Renfroe Pecan Co. in the amount of $816,860.07. Renfroe's Claim is secured upon the Debtor's potential recoveries under the APAR Global Litigation. Renfroe shall be paid all net recovered proceeds, less expenses and fees associated therewith, from the APAR Global Litigation up to the amount of its claim and, to the extent that the proceeds are insufficient to satisfy its claim, Renfroe shall have a Class 5 Unsecured Claim for the remaining balance. Upon the Effective Date the Debtor shall utilize any Cash on hand to satisfy any Allowed Administrative Expense Claims, Allowed Professional Compensation Claims, Allowed Priority Tax Claims, the amount of any Cure due to Holders of Allowed Secured Claims, and US Trustee Fees due on the Effective Date. The Debtor shall fund the Unsecured Creditors' Fund from (i) post-Confirmation business operations, (ii) collections of pre-petition receivables, Avoidance Actions and Rights of Action, and (iii) post-confirmation contributions from the Debtor's principal. A full-text copy of the Disclosure Statement dated February 17, 2019, is available at https://tinyurl.com/yyfqzjg2 from PacerMonitor.com at no charge. About Triz Ventures LLC TRIZ Ventures, LLC, is a multinational company -- https://trizventures.com/ -- engaged in producing, procuring, processing and international trading of peanuts, tree nuts, edible oils and other foodstuffs, satisfying the most demanding global markets. Triz Ventures has diversified its business to major countries like USA, Brazil, Mexico, The Netherlands, India, Singapore, South Africa, Benin, Vietnam and China. TRIZ Ventures, LLC, based in Albany, GA, filed a Chapter 11 petition (Bankr. M.D. Ga. Case No. 18-10489) on April 24, 2018. The Hon. Austin E. Carter presides over the case. Kenneth W. Revell, Esq., at Zalkin Revell, PLLC, serves as bankruptcy counsel. In the petition signed by Dhawal Raste, manager, the Debtor estimated $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. =========================== C A Y M A N I S L A N D S =========================== ASCOT FUND: Chapter 15 Case Summary ----------------------------------- Chapter 15 Debtor: Ascot Fund Limited Deloitte & Touche PO Box 1787 One Capital Place, Shedden Road Grand Cayman KY1-1109 Cayman Islands Business Description: Ascot Fund Limited is an exempted investment company incorporated in the Cayman Islands. Chapter 15 Petition Date: February 25, 2019 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Chapter 15 Case No.: 19-10594 Judge: Hon. Stuart M. Bernstein Foreign Representative: Michael Penner Citrus Grove (CG), 106 Goring Avenue George Town, Grand Cayman, KY1-1109 Cayman Islands Foreign Proceeding in Which Appointment of the Foreign Representative Occurred: In the Matter of Ascot Fund Ltd. (In Voluntary Liquidation), Cause No: FSD 3 of 2019 (IKJ) in the Grand Court of the Cayman Islands, Financial Services Division Foreign Representative's Counsel: Amelia Temple Redwood Starr, Esq. DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, NY 10017 Tel: 212-450-4516 Fax: 212-701-5516 Email: astarr@davispolk.com amelia.starr@davispolk.com Estimated Assets: Unknown Estimated Debts: Unknown A full-text copy of the Chapter 15 petition is available for free at: http://bankrupt.com/misc/nysb19-10594.pdf =============== C O L O M B I A =============== EMPRESA DE TELECOMUNICACIONES: Fitch Affirms BB+ Long-Term IDRs --------------------------------------------------------------- Fitch Ratings has affirmed Empresa de Telecomunicaciones de Bogota S.A.'s (ETB) Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) at 'BB+'. The Rating Outlook is Stable. The rating affirmation reflects ETB's positive EBITDA performance as a result of a continued successful cost control strategy in the context of a 3.4% contraction of operational revenue growth during 2018. The EBITDA performance and lower than anticipated capex expenditures during the period reduced financing needs. This allowed ETB to maintain an adjusted leverage metric of 1.9x as of December 2018, below the leverage negative rating trigger of 2.5x for its 'BB+' rating category. Fitch will continue to monitor ETB's ability to improve its EBITDA performance through the reduction of its operational costs. ETB's credit profile reflects a strong asset based fixed operation concentrated in the city of Bogota, with a revenue structure concentrated mainly in its home business (49.2%) and B2B (42.3%), with the remaining 8% coming from its relatively weak mobile operation. ETB's ratings are constrained by its limited geographic diversification in its home business and a 28% up take on its FTTH network penetration as od December 2018 that could limit the company's ability to achieve meaningful revenue and EBITDA growth in the short to medium term; specially as its copper legacy service revenue continues to contract following shifting consumer preferences for data consumption, connectivity and convergence. KEY RATING DRIVERS Competitive Position under Pressure: Fitch expects the company's competitive position to remain under pressure as Colombian integrated telecom operators grow their market shares and subscriber base, while ETB continues to lose customers on its legacy copper network amid slow subscriber growth (16%) on its fibre networks. During 2018, Claro surpassed ETB as the leading fixed voice and internet provider in Bogota. As of June 30, 2018, ETB's market shares for LIS and internet declined by 3.8 percentage points and 1.2 percentage points respectively, while Claro strengthened its clear leadership position. Fitch believes ETB's continuing underperformance in the penetration and uptake of its FTTH network compared to its previous 2018 forecast could lead to a weakening of its competitive position, considering the average churn of 2.5% experienced in 2017 - 2018 on its copper internet based subs. Cost Efficiencies Benefit EBITDA: During 2018, ETB's EBITDA was supported by a reduction in operational expenses combined with marginal revenue increase and credit loss provision adjustments, which led to margin expansion. Although the company's recent profitability improvement is positive, it has been driven primarily by the realization of cost efficiencies, which in Fitch's opinion will be difficult to sustain over time, especially as the company resumes its commercial capex execution and associated opex to support revenue growth. Fitch projects in its base case, that ETB will post an average EBITDA margin close to 27% in 2019 - 2022, according to Fitch's calculation methodology. Reduced Capex Execution: ETB has redefined its subscriber growth strategy based on a lower projected average capex intensity of 22% of projected revenues in 2018 - 2022. The new capex strategy focuses on promoting double play bundles over triple play bundles both on its FTTC and FTTH deployments, which in Fitch's opinion, will slow the pace at which it diversifies its revenue structure away from traditional copper services to higher ARPU fibre services and simultaneously reduces the projected capex outlay in support of higher cash preservation for general corporate purposes. The reduced commercial capex execution led to a lower network penetration compared to 2018 forecast, and responded to a 2.2% home operational revenue contraction, including a 2.2% contraction in Home revenues experienced during 2018. Going forward, Fitch believes ETB may find it difficult to meet its adjusted network penetration target amid expected low single digit revenue growth for 2019 - 2022, which may again lead to the company's underperforming on its projected commercial capital investments during the projection period. Fitch remains cautious about the company's ability to materially improve its revenue base in the medium term and instead projects a revenue growth close to 1% during the projection period. Negative to Neutral FCF: Fitch's base case projects average CFFO of COP315 billion per year in 2019 - 2022 vis a vis average capex expenditure of COP 330 billion during the same period, resulting in an average free cash flow margin of -1% without pressuring the company's liquidity. Low Leverage: ETB's EBITDA improvement, along with its relatively low capex execution during 2018, reduced its financing needs and allowed the company to maintain its gross and net adjusted leverage at 1.9x and 1.3x, both by December 2018. Fitch expects the adjusted EBITDAR leverage metric to remain close to 1.8x during 2019-2022, below the trigger for a negative rating action of 2.5x at the current rating level. DERIVATION SUMMARY ETB is rated at the same level as ColTel (BB+/Outlook Stable), a more diversified Telco, with a growing fixed operation and a strong mobile foot print in Colombia, but that exhibits a more levered capital structure (2.6x) than ETB's (1.9x). ETB is also rated at the same level as Comcel Trust (BB+/ Outlook Stable) a mobile operator focused on Guatemala that exhibits a strong competitive position and low leverage (1.5x). ETB is rated two notches above TalkTalk (TT), a UK based broadband service provider with a less profitable business model (20% EBITDAR) and weaker technology portfolio, which have led to deterioration in the company's leverage structure. ETB is rated on a standalone basis, as any recurring support from the District of Bogota (BBB/Stable), its controlling shareholder, is unlikely. Fitch views the district's 2017 decision to restructure ETB's dividend liability into a 10-year obligation with a two-year grace period as an extraordinary support of the company's cash position, which is not likely to reoccur in the future. No Country Ceiling and/or operating environment constraint were in effect for these ratings. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Total and Operating Revenues grow at 0.4% and 0.7% average per year in 2019 to 2022; -- Adjusted gross and net debt is forecast at 1.8x and 1.2x during the projection period. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action is unlikely given the difficulty faced by the company to achieve meaningful revenue growth in the short to medium term, which will continue to constrain CFFO performance. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Muted revenue growth due to a slower-than-expected subscriber growth in non-traditional services amid continued material revenue erosion in copper-based services; -- Market share contraction on its main home services to the detriment of its competitive position; -- Negative FCF generation with a low cash balance on a sustained basis; -- Profitability deterioration with the adjusted leverage increasing to 2.5x on a sustained basis. LIQUIDITY ETB's liquidity profile improved in 2018 as available cash balances increased to COP 400 billion by December 2018 (above the 2017 balance of COP 248 billion) with zero short-term debt. ETB does not face any material debt maturity until 2023 when its COP530 billion notes become due. ETB reported non committed lines of credit of COP 387 billion available as of December 2018, 74% of which were short term, further bolstering its liquidity position. FULL LIST OF RATING ACTIONS Fitch has affirmed the following: Empresa de Telecomunicaciones de Bogota S.A. E.S.P. -- Long-Term Foreign Currency IDR at 'BB+'; Outlook Stable; -- Long-Term Local Currency IDR at 'BB+'; Outlook Stable; -- COP530 billion senior notes due 2023 at 'BB+'; -- National Long-Term Rating at 'AA+(col)'; Outlook Stable. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Paid US$12MM to Contractor Before Debt Spat --------------------------------------------------------------- Dominican Today reports that the dams and canals agency (Indrhi) said on Feb. 11 and 13 it paid US$12.2 million (RD$626.3 million) to the consortium that builds the dam at Monte Grande, Barahona (south). It said there are no excuses not to complete the work by April next year as agreed with the Government, according to Dominican Today. The report notes that the agency said it has no outstanding debt with the dam's contractors and subcontractors. The Indrhi said it makes the clarification regarding the complaint lodged by the subcontractor Consorcio Dominicano del Sur that it's allegedly owed RD$3.0 million, the report relays. The statement comes one day after that company blocked the entrance to the construction site to demand payment, the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =========== M E X I C O =========== GRUPO KUO: Fitch Affirms LT IDRs at BB, Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed Grupo KUO, S.A.B. de C.V.'s (KUO) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'. In addition, Fitch has affirmed KUO's National Scale Long-Term rating at 'A(mex)'. The Rating Outlook is Stable. The ratings reflect KUO's diversified business portfolio, leading market positions across the industries where it participates, and its joint ventures (JVs) with recognized companies as Repsol Quimica S.A. and Grupo Herdez, S.A.B. de C.V. Fitch projects KUO's pro forma net leverage in 2019 will be close to 2.5x despite negative free cash flow (FCF) associated with its investments in the pork meat and transmission businesses. KUO's ratings are tempered by its export diversification, which represents around 52% of its total revenues, and its strategy to develop high value-added products with attractive returns. The ratings are limited by the company's exposure to volatility in product demand and input costs across its business units and the uncertainties associated with world trade policy and economic activity in Mexico. For analytical purposes, Fitch incorporates the financial information of KUO under the proportional consolidation of its JVs in Herdez Del Fuerte and Dynasol (pro forma). In addition, Fitch considers reported consolidated figures, which account for the JVs under the equity method (consolidated). KEY RATING DRIVERS Positive Performance: KUO's operating results in 2018 were within Fitch's previous projections and it is expected that the company will maintain a positive trend in 2019. The company's revenues on a pro forma basis increased 8% in 2018 and reached MXN42.6 billion when compared to 2017, while its EBITDA increased 2% to MXN5.4 billion. Revenues growth was mainly driven by the pork meat and polystyrene businesses which more than offset a weak performance in the transmission business. EBITDA growth was supported by good results in the consumer and chemical business. Fitch forecasts KUO's revenue, on a pro forma basis, will grow 13% in 2019 and then increase to around 14% in 2020, supported mainly by capacity expansions in the pork meat and transmission businesses. In terms of EBITDA growth and profitability, Fitch projects KUO's EBITDA will grow approximately 11% in 2019 and 15% in 2020, while its EBITDA EBITDA margin will be around 12% to 13% in 2019 and 2020. Stable Leverage: KUO's leverage metrics on a pro forma basis are projected to be similar to 2018 levels. Its pro forma total debt/EBITDA and net debt/EBITDA, adjusted by USD21 million of nonrecourse factoring, was around 3.0x and 2.4x, respectively, in 2018. The increase in these metrics compared to 2017 was within Fitch's previous expectation as KUO is investing in expanding the production capacity of its pork meat and business in Mexico and dual clutch transmissions, which resulted in negative FCF. Fitch projects KUO's pro forma total debt/EBITDA and net debt/EBITDA will be around 2.9x and 2.5x, respectively, by YE 2019. A gradual deleveraging of gross and net debt ratios to approximately 2.6x and 2.2x, respectively, is expected until 2020, as capex declines. On a consolidated basis, accounting for the JVs under the equity method, Fitch projects gross and net leverage to be around 3.8x and 3.5x, respectively, at YE 2020. Negative FCF: The ratings incorporate KUO's expected negative FCF in 2019, considering the proportional consolidation of its JVs, due to capex and dividends of approximately USD174 million and USD17 million, respectively. In 2018, Fitch estimated that the company had negative FCF of around USD130 million due to higher net working capital and capex requirements. Fitch believes that KUO could start having neutral to positive FCF in the midterm as capex gradually decreases. Diversified Business Portfolio: KUO has a diversified business portfolio in the consumer, automotive and chemical industries, which allows the company to mitigate the volatility economic and industry cycles. The company's most important businesses, pork meat and the Herdez Del Fuerte JV, are oriented to the more stable consumer segment and represented in 2018 around 46% revenues EBITDA 50% of EBITDA. The chemical and automotive business segments are more volatile, with higher exposure to demand cycles. The chemical sector, or synthetic rubber JV and polystyrene business, and the automotive sector, or transmission and aftermarket business, contributed in 2018 with around 38% and 12%, respectively, of KUO's EBITDA. Fitch believes KUO's investment strategy in the pork meat and transmission businesses and its focus on value-added products in the chemical sector improve its portfolio and reduce volatility in revenue and cash flow generation. Leading Positions in Key Markets: KUO's businesses continue to maintain important market positions in their respective industries. It is Mexico's largest pork meat producer with vertically integrated operations serving the domestic market. KUO also exports products to Japan and South Korea. Around 33% of the company's products are exported, 33% is sold by KUO owned stores called "Maxicarne" and the rest in sold in the commodity market. Under the Herdez Del Fuerte JV, KUO has highly recognized brands, with a leading market share in Mexico of different products, such as tomato paste and mole, among others. In addition, the JV gives the company operations in the U.S. that include a JV with Hormel Foods Corp. This positions KUO as a producer and distributor of Hispanic brands in the U.S. with a leading position as a distributor of guacamole. The transmissions business is a leading producer of rear wheel transmissions in North America for the high performance original equipment manufacturers segment. In the aftermarket business, KUO is a leader in engine components, with recognized proprietary brands and third-party products in Mexico. The company is the largest producer of synthetic rubber in Mexico through a JV with Dynasol and is the country's main producer of polystyrene. DERIVATION SUMMARY KUO's ratings are supported by its diversified business portfolio, solid business position of its main brands and products in different industries, geographic diversification, and stable financial position. Its credit profile is comparable with other diversified groups as Alfa, S.A.B. de C.V. (BBB-/Stable) and Votorantim, S.A. (BBB-/Stable). KUO has lower size and scale and geographic diversification and relatively weaker competitive position of its main businesses when compared to peers as Alfa and Votorantim. While KUO's leverage metrics are slightly stronger than Alfa and Votorantim, these companies have higher profitability levels and more consistent positive FCF generation that provide more flexibility to deleverage. KUO's current leverage is considered strong for its 'BB' rating, but its negative FCF across the business cycle, mainly associated with its higher capex requirements, limits the ratings. Other comparable companies in the 'BB' category are Cydsa, S.A.B. de C.V. (BB+/Stable) and Grupo Cementos de Chihuahua, S.A.B. de C.V. (BB+/Stable). KEY ASSUMPTIONS Fitch's key assumptions on a pro forma basis, including proportional consolidation of JVs, include: -- Revenue growth of around 13% in 2019 and 14% in 2020; -- EBITDA margin of around 12% in 2019 and close to 13% in 2020; -- Total debt/EBITDA and net debt/EBITDA of around 2.6x and 2.2x, respectively, by YE 2020. Fitch's key assumptions on a consolidated basis, excluding proportional consolidation of JVs, include: -- Revenue growth of around 13% in 2019 and 18% in 2020; -- EBITDA margin of around 11% in 2019 and 2020; -- Total debt/EBITDA and net debt/EBITDA of around 3.8x and 3.5x, respectively, by YE 2020.. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Neutral to positive FCF through the economic cycle; -- Maintaining a strong liquidity position; -- Sustaining lower leverage ratios for pro forma total debt/EBITDA and net debt/EBITDA of around 2.5x and 2.0x, respectively. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Higher than expected negative FCF over the next two years; -- A weak liquidity position; -- Sustained deterioration in operating performance across the company's businesses leading to pro forma total debt/EBITDA and net debt/EBITDA consistently above 3.0x and 2.5x, respectively. LIQUIDITY Adequate Liquidity: KUO's liquidity position was adequate, as of Dec. 31, 2018, with a cash balance of MXN2.8 billion, on a pro forma basis, and MXN1.1 billion consolidated. These cash levels are sufficient to cover short-term debt maturities, adjusted by nonrecourse factoring of MXN1.1 billion, on a pro forma basis, and MXN925 million consolidated. KUO's liquidity position is supported by available committed credit lines of USD97 million. Fitch considers KUO's debt maturity profile manageable and that it provides financial flexibility to cover its capex program during 2019 and 2020. The debt amortization schedule, on a pro forma basis for 2020 and 2021 is USD47 million and USD139 million, respectively. Fitch believes KUO has good access to capital markets and banks loans and will refinance a portion of these maturities before they are due. KUO's total debt, including nonrecourse factoring, as of Dec. 31, 2018, was MXN15.6 billion, on a pro forma basis, and MXN14.9 billion consolidated. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: -- Long-Term Foreign Currency IDR at 'BB'; -- Long-Term Local Currency IDR at 'BB'; -- Long-term national scale rating at 'A(mex)'; -- USD450 million senior notes due 2027 at 'BB'. The Rating Outlook is Stable. SERVICIOS CORPORATIVOS: Fitch Affirms B+ LT IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Servicios Corporativos Javer, S.A.B. de C.V.'s (Javer) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) at 'B+' and affirmed Javer's outstanding USD159 million senior notes due 2021 at 'B+'/'RR4'. The Rating Outlook is Stable. Javer's ratings and Stable Outlook are supported by the company's solid business position as one of the largest homebuilding companies in Mexico, its ability to adjust its sale strategy to market dynamics and moderate net debt to EBITDA levels. The company specializes in the construction of affordable entry-level, middle-income and residential housing. Operations are concentrated in the states of Nuevo Leon and Jalisco. Javer's geographic footprint includes some of the Mexican states with the highest income per capita and positive economic and population growth trends. These factors have a positive correlation with the number of available mortgages offered by the Infonavit system. The company's debt has remained relatively stable after the debt repayment completed in 2016 with the proceeds from the company's IPO and cash on hand. Javer's debt is composed primarily of senior unsecured notes for USD159 million which mature in April 2021. Net leverage ratios (net debt / EBITDA) have remained below 3.0x since 2016 and are expected to remain below 3.0x during the rating horizon. Fitch's previous year's assumptions included a successful refinancing of the notes prior to maturity. The company has been actively working for the past couple of years on refinancing its senior notes but has been unable to complete this process. While the company's liquidity in the form of cash balance is sound compared to short-term debt obligations (Dec. 31, 2018 MXN579 million in cash and short-term debt of MXN150 million), Javer's refinancing risk is gradually increasing as the maturity date of the notes approaches. The ratings could be pressured if the company does not complete or secure financing alternatives in the coming months. KEY RATING DRIVERS Leading Market Position: Javer is the leading homebuilding company in Mexico based on the number of units sold through the Infonavit system. During 2018, the company sold 18,962 units, out of which 91.7% were through Infonavit mortgages to final clients and 2.0% were sold through Cofinavit. The company holds a leading position in its main markets (states of Nuevo Leon and Jalisco). Javer has presence in some of the states with the highest income per capita (Nuevo Leon, Jalisco and Queretaro) and positive economic and population growth trends (Queretaro and Estado de Mexico); these variables have a positive relation with the number of available mortgages through the Infonavit system. Javer remains the leader of new homes sold through the Infonavit system with 9.3% of the new housing units sold in Mexico during 2018. Ability to Adjust Sales Strategy: The company has shown the ability to adjust its sales strategy according to market dynamics. Housing demand is exposed to consumer income and population growth. For year-end 2018, 79.9% of the company's units sold were middle-income houses, 13.1% were affordable entry level and the remaining 7.1% were residential houses. Average sale price for Javer during 2018 was MXN437.0 thousand, up from MXN398.5 thousand in 2017. Given the uncertain market conditions regarding subsidies to low-income houses, the company shifted its sales mix toward middle-income and residential housing. Fitch's projections do not consider any housing units sold with subsidized prices and estimate an average sale price above MXN510 thousand as the portfolio moves to middle-income and residential housing. Limited Geographic Diversification: Historically, revenue has been concentrated in only two states. As of Dec. 31, 2018, 59.6% of the total revenue was generated in Nuevo Leon and Jalisco, relatively in line with 63.0% in the previous year. This concentration increases the company's dependence upon specific local and municipal governments to secure land and permits, and translates into exposure to individual market dynamics. This concentration has been decreasing gradually as the company increases operations in other markets such as Estado de Mexico and Quintana Roo. FCF Key to Maintain Stable Leverage Ratios: Javer's average pre-dividend FCF continues to be robust and can potentially be used to reduce debt. During 2018 increased investments in land, above the company's policy of replacing the land inventory used, lowered cash flow generation. The company's FCF was negative MXN263.2 million; additional land purchased during 2018 will be utilized in the next couple of years. Fitch expects Javer will continue with a strict working capital management, which could be translated into a neutral to positive FCF generation. Dividend payments are subject to shareholders' approval annually and were absent during 2018 in light of the additional working capital requirements. Approaching Maturity Date: The company's financial flexibility could be pressured as the notes come closer to their due date. Javer has no material debt maturities until its senior notes come due in April 2021. Fitch's projections assume a successful refinancing of the notes prior to maturity, during 2019. Javer continues working on the execution of its refinancing strategy. The company has maintained a relatively stable debt level since the debt repayment completed in 2016 with the proceeds from the company's IPO and cash on hand. Net leverage ratios (net debt / EBITDA) have remained below 3.0x since 2016. Fitch estimates that this ratio will continue below 3.0x and strengthen toward 2.5x during the rating horizon, as a result of expected higher EBITDA. Fitch expects a challenging business environment in 2019, resulting from increased uncertainty in the political landscape, low GDP growth and increased interest rates. Javer's financial strategy includes the use of hedges to mitigate FX exposure; these hedges cover both interest payments and principal until April 2020. If the partial hedges were taken into consideration, the result of a 20% depreciation of the Mexican peso against the U.S. dollar would be mitigated and could result in an increase of net leverage, measured as net debt/EBITDA, of only 0.3x; interest coverage could fall by 0.3x. DERIVATION SUMMARY Javer's rating is supported by its market leadership and product diversification in Mexico. The company continues to be leader of new homes sold through the Infonavit system in Mexico, representing 9.3% of units sold nationwide as of Dec. 31, 2018. Javer's operations are concentrated in seven states where the company holds the largest or second-largest market share. Homebuilding companies in the U.S. such as KB Homes (formerly Kaufman and Broad Home Corp.) (BB-/Stable), Beazer Homes USA, Inc. (B-/Positive), M/I Homes, Inc. (BB-/Stable) and Meritage Homes Corporation (BB/Stable) are larger in scale in terms of revenues and market diversification. Compared with Javer, U.S. peers have weaker EBITDA margins and net leverage metrics, similar interest coverage and stronger FCF margins. Also, U.S. peers have access to a broader range of sources of financing. The U.S. macroeconomic indicators include lower interest rates and lower unemployment rates than the Mexican market. Javer is exposed to FX volatility as 90.9% of its debt is U.S. dollar-denominated while all revenues are generated in Mexican pesos. The company partially mitigates currency mismatch with financial hedges for interest and principal payments KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for Javer include: -- Revenue decreases as sales mix does not contemplate affordable entry level houses, which revenues are partially offset by higher middle income and residential housing units sold; -- Average sales price increases to above MXN500 thousand as sales mix shifts; -- EBITDA margin remains at current levels of 12%; -- No material working capital requirements until 2021; -- Annual dividends based on previous years' cash flow generation and future expenses; -- The company maintains current debt levels and successfully refinances the notes due in 2021; -- Net Debt/ EBITDA improves toward 2.5x by 2021 due to higher EBITDA generation. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Strong operational results, reaching revenue targets in the near future while improving EBITDA margin; - Continued positive FCF generation across the cycle and net adjusted leverage (net debt/EBITDA) at or below 2.0x; - The successful refinancing of the outstanding USD159 million notes due 2021, reducing the FX exposure. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Sustained EBITDA margin reductions below current level of 12%; - Land investment levels substantially above current expectations of investing to replace land reserves used; - Negative FCF for consecutive years driven by increasing working capital needs; - Net debt to EBITDA above 3.0x; - A material stall in current refinancing strategy on the senior notes due 2021. LIQUIDITY Adequate Liquidity but Refinancing Risk Exists: The company's ratings assume the successful refinancing of the notes ahead of their maturity. Javer's financial flexibility is gradually diminishing as the company has been unable to find alternate sources of financing. Javer maintains sound liquidity related to short-term debt maturities and projected investments. As of Dec. 31, 2018, the company's short-term debt of MXN150 million represented 4.6% of the total debt, while cash balances were MXN579 million. The capex plan for the next few years is expected to be funded with the internally generated cash flow and cash on hand. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Servicios Corportativos Javer, S.A.B. de C.V. -- Long-Term Local Currency IDR at 'B+'; -- Long-Term Foreign Currency IDR at 'B+'; -- Senior unsecured notes for USD159 million due 2021 at 'B+'/'RR4'. The Rating Outlook is Stable. ===================== P U E R T O R I C O ===================== 4J CUSTOM DESIGN: April 3 Plan Confirmation Hearing --------------------------------------------------- The Bankruptcy Court has conditionally approved the disclosure statement explaining the small business Chapter 11 plan of 4 J Custom Design, Inc., and scheduled the confirmation hearing for April 3, 2019 at 09:00 AM. CLASS 3 - General Unsecured Creditors: General unsecured claims whose claims are more than $1,000.00. The following creditors are not secured by property of the estate. The total of claims relating to this class are $78,470.60. General unsecured Creditors are impaired. On the consummation date, the entire Class 3 claimants and creditors shall receive from the Debtor a non-negotiable, non-interest bearing promissory note, dated as of the Effective Date, providing for a total amount of $10,000.00 plus 4% annual interest which shall be payable in consecutive monthly installments of $184.17 during a period of five (5) years, starting on the Effective Date; with a monthly pro-rata distribution among all members of this Class 3. CLASS 2 - Special Class - General Unsecured Creditors. This class shall consist of the general unsecured creditors with a claim of $1,000.00 or less. The following creditors are not secured by property of the estate and are not entitled to priority under Sec. 507 (a) of the Code. The total amount of claims in this class is $2,410.81. Centro de Recaudaciones de Ingresos Municipales (CRIM) (Claim 2) are impaired with amount owed $805.97. The Debtor will pay 50% of claim within 12 months counting from the effective date. The expected effective date is May 2019 or 60 days after plan confirmation date Order, No interest will be paid. Banco Popular de Puerto Rico - Special Loans (Claim 3) are impaired with amount owed $497.00. Debtor will pay 50% of claim within 12 months counting from the effective date. The expected effective date is May 2019 or 60 days after plan confirmation date Order. No interest will be paid.. CLARO (Claim 3) are impaired with amount owed $632.32. The Debtor will pay 50% of claim within 12 months counting from the effective date. The expected effective date is May 2019 or 60 days after plan confirmation date Order. No interest will be paid. Quality Water Service (No Claim was filed) are impaired with amount owed $475.52. The Debtor will pay 50% of claim within 12 months counting from the effective date. The expected effective date is May 2019 or 60 days after plan confirmation date Order. No interest will be paid. Class 4 - Equity interest holders are impaired. Equity Security Interest Holders will not receive any cash dividend throughout this plan. Moreover, any payment on their behalf is subordinated to full payment of the allowed claims as detailed in this plan. The Plan will be implemented as required under Section 1123 (a) (5) of the Bankruptcy Code with the daily operations of the business and its resulting operating cash flows. The Debtor will retain property of the estate to operate its business and produce cash flow for the execution of the Plan. A full-text copy of the Disclosure Statement dated February 19, 2019, is available at https://tinyurl.com/y3kphbab from PacerMonitor.com at no charge. About 4J Custom Design Inc. 4J Custom Design Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 18-05704) on Sept. 28, 2018, estimating under $1 million in assets and liabilities. Jaime Rodriguez Perez, Esq., at Hatillo Law Office, PSC, is the Debtor's counsel. CAGUAS COPY: Seeks to Hire Carrasquillo CPA as Accountant --------------------------------------------------------- Caguas Copy Equipment Inc. seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Carrasquillo CPA Group, PSC, as accountant to the Debtor. Caguas Copy requires Carrasquillo CPA to: Non-recurrent services -- provide Bookkeeping, Bank reconciliations, and Tax services; Recurrent services -- assist in the projected financial statements as needed; -- assist in the preparation of standard monthly operating reports; and -- assist in the preparation of the liquidation analysis. Carrasquillo CPA will be paid at an annual rate of $4,800 for non-recurrent services and $3,600 for recurrent services. Any additional service will be charged at $100 per hour. Carrasquillo CPA will be paid a retainer in the amount of $2,500 Carrasquillo CPA will also be reimbursed for reasonable out-of-pocket expenses incurred. Hector Carrasquillo, partner of Carrasquillo CPA Group, PSC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Carrasquillo CPA can be reached at: Hector Carrasquillo CARRASQUILLO CPA GROUP, PSC 200 Avenida Rafael Cordero Caguas, PR 00726 Tel: (787) 258-7835 About Caguas Copy Equipment Inc. Caguas Copy Equipment Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 19-00470) on Jan. 31, 2019, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Victor Gratacos Diaz, Esq., of Gratacos Law Firm, PSC. CHARLOTTE RUSSE: Hires Cooley as General Bankruptcy Counsel ----------------------------------------------------------- Charlotte Russe Holding, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Cooley LLP, as general bankruptcy and restructuring lead counsel to the Debtors. Charlotte Russe requires Cooley to: (a) advise the Debtors of their rights, powers, and duties as debtors in possession under chapter 11 of the Bankruptcy Code; (b) prepare, on behalf of the Debtors, all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules, and other documents, and review all financial and other reports to be filed in these Cases; (c) advise the Debtors concerning, and prepare responses to, applications, motions, other pleadings, notices, and other papers that may be filed and served in these Cases; (d) advise the Debtors with respect to, and assist in the negotiation and documentation of, financing agreements and related transactions; (e) review the nature and validity of any liens asserted against the Debtors' property and advise the Debtors concerning the enforceability of such liens; (f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; (g) counsel the Debtors in connection with any plan of reorganization and related documents; (h) advise and assist the Debtors in connection with any potential property dispositions; (i) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments, and rejections as well as lease restructurings and recharacterization; (j) assist the Debtors in reviewing, estimating, and resolving claims asserted against the Debtors' estates; (k) commence and conduct litigation necessary or appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 11 estates, or otherwise further the goal of completing the Debtors' successful reorganization; (l) provide corporate, employee benefit, litigation, tax, and other general non-bankruptcy services to the Debtors to the extent requested by the Debtors; and (m) perform all other necessary or appropriate legal services in connection with these Cases for or on behalf of the Debtors. Cooley will be paid at these hourly rates: Partners $995 Special Counsels $955 Associates $670 to $825 Paralegals $275 On Jan. 3, 2019, the Debtors paid Cooley a general retainer of $500,000, that had been replenished from time to time in the period prior to the Petition Date. During the twelve (12) months immediately preceding the Petition Date, the Debtors were invoiced and paid Cooley the aggregate amount of $2,219,618 in the ordinary course of business on account of fees and expenses incurred and, since Jan. 3, 2019, by application of retainer amounts. In addition, after application of all payments received from the Debtors on account of all Cooley invoices that had been issued as of the Petition Date, Cooley is still holding $102,886.42 to secure payment of anticipated post-petition fees and expenses. Cooley will also be reimbursed for reasonable out-of-pocket expenses incurred. In accordance with Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the following is provided in response to the request for additional information: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: Yes. Cooley agreed to a 15% reduction in its standard hourly rates in connection with this engagement. Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Response: Cooley represented the Debtors' during the 12 months prepetition solely in connection with restructuring alternatives and bankruptcy preparation. Cooley provided the Debtors with a 15% discount of its standard hourly rates during the 12 months prepetition and has agreed to continue providing this discount in connection with these Cases. Question: Has your client approved your prospective budget and staffing plan, and, if so for what budget period? Response: Yes. For the period from February 3, 2019 through April 30, 2019. Seth Van Aalten, a partner at Cooley LLP, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Cooley can be reached at: Seth Van Aalten, Esq. Michael Klein, Esq. Summer M. McKee, Esq. COOLEY LLP 1114 Avenue of the Americas New York, NY 10036 Tel: (212) 479-6000 Fax: (212) 479-6275 Email: svanaalten@cooley.com mklein@cooley.com smckee@cooley.com About Charlotte Russe Charlotte Russe Holding, Inc., is a specialty fashion retailer of young women's apparel and accessories comprised of seven entities. The company and its affiliates are headquartered in San Diego, California and have one distribution center located in Ontario, California. In addition, the companies lease office space in Los Angeles, California and San Francisco, California, where they primarily conduct merchandising, marketing, e-commerce and technology functions. The companies sell their merchandise to customers in the contiguous 48 states, Hawaii, and Puerto Rico through their online store and 512 Charlotte Russe brick-and-mortar stores located in various regional malls, outlet centers, and lifestyle centers. The bulk of the companies' apparel and accessory products are sold under the Charlotte Russe brand with ancillary brands for denim and perfume (Refuge), young women's plus-size apparel (Charlotte Russe Plus), and cosmetics (Charlotte by Charlotte Russe). Charlotte Russe Holding and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-10210) on Feb. 3, 2019. At the time of the filing, Charlotte Russe Holding estimated assets of $100 million to $500 million and liabilities of $100 million to $500 million. The cases are assigned to Judge Laurie Selber Silverstein. The Debtors tapped Bayard, P.A., and Cooley LLP as their bankruptcy counsel; Guggenheim Securities, LLC as their investment banker; A&G Realty Partners, LLC as lease disposition consultant and business broker; Gordon Brothers Retail Partners LLC, Hilco Merchant Resources LLC and Malfitano Advisors, LLC as liquidation consultant; and Donlin, Recano & Company, Inc. as claims and noticing agent. CHARLOTTE RUSSE: Seeks to Hire Guggenheim as Investment Banker -------------------------------------------------------------- Charlotte Russe Holding, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Guggenheim Securities, LLC, as investment banker to the Debtors. Charlotte Russe requires Guggenheim to: a. review and analyze the business, financial condition and prospects of the Debt; b. evaluate the liabilities of the Debtors, its debt capacity and its strategic and financial alternatives; c. In connection with any Transaction: i. evaluate from a financial and capital markets point of view alternative structures and strategies for the Transaction; ii. prepare offering, marketing or other transaction materials concerning the Debtors and the Transaction for distribution and presentation to the Creditors, Acquirors, and/or Investors; iii. develop and implement a marketing plan with respect to such Transaction; iv. identify and solicit of, and the review of proposals received from, the Investors and other prospective Transaction Counterparties; and v. negotiate the Transaction. d. In connection with these chapter 11 cases: i. provide financial advice and assistance to the Debtors in developing and seeking approval of any such Transaction, including a plan or reorganization or liquidation (as the same may be modified from time to time, a "Plan"), which may be a plan under Chapter 11 of the Bankruptcy Code in Bankruptcy Court; and ii. participate in hearing before any applicable Insolvency Authority with respect to the matters upon which Guggenheim Securities has provided advice, including, as relevant, coordinating with the Debtors' legal counsel with respect to testimony in connection therewith. e. provide such other matters as may be agreed upon by Guggenheim Securities and the Debtors in writing during the term of the engagement. Guggenheim will be paid as follows: -- Monthly Fees. A non-refundable Monthly Fee of $125,000 per month, due and payable on the first day of each month during the period of Guggenheim Securities' engagement under the Engagement Letter, whether or not any Transaction is consummated. Commencing with the sixth Monthly Fee payment made pursuant to the Engagement Letter, an amount equal to 50% of each Monthly Fee payment received will be credited (to the extent actually paid and only once) against any Restructuring Transaction Fee or Sale Transaction Fee payable under the Engagement Letter. -- Restructuring Transaction Fees. If (A) any Restructuring Transaction is consummated or (B) (I) an agreement in principle, definitive agreement or Plan to effect a Restructuring Transaction is entered into and (II) concurrently therewith or at any time thereafter, any Restructuring Transaction is consummated, the Company shall pay Guggenheim Securities a cash fee (a "Restructuring Transaction Fee") in an amount equal to $2,000,000 promptly upon the consummation of such Restructuring Transaction. -- Financing Fees. If the Company consummates any Financing Transaction or enters into (or becomes bound by) any agreement (including any Plan) pursuant to which a Financing Transaction is subsequently consummated or accepts written commitments with respect to a Financing Transaction, then, in each case, the Company shall pay Guggenheim Securities one or more Financing Fees in an amount equal to the sum of: i. 150 basis points (1.50%) of the aggregate face amount of any debt obligations to be issued or raised by the Company in any Debt Financing (including the face amount of any related commitments) that is secured by first priority liens over any portion of the Company's or any other person's assets; plus ii. 300 basis points (3.00%) of the aggregate face amount of any debt obligations to be issued or raised by the Company in any Debt Financing (including the face amount of any related commitments) that is not covered by Section 4(c)(i)(A) of the Engagement Letter; plus iii. 500 basis points (5.00%) of the aggregate amount of gross proceeds raised by the Company in any Equity Financing; plus iv. With respect to any other securities or indebtedness issued that is not otherwise covered by Section 4(c)(i)(A) to 4(c)(i)(C) in the Engagement Letter, such financing fees, underwriting discounts, placement fees or other compensation as customary under the circumstances and mutually agreed in advance by the Company and Guggenheim Securities. Notwithstanding the foregoing, the Financing Fee payable by the Company to Guggenheim Securities in respect of any Debt Financing that constitutes debtor-in-possession financing shall equal $500,000. Financing Fees for any Financing Transaction will be payable upon the earlier to occur of (x) consummation of the related Financing Transaction or (y) acceptance by the Company of written commitments with respect to the related Financing Transaction. -- Sale Transaction Fees. In the event that (A) a Sale Transaction is consummated or (B) (I) an agreement in principle, definitive agreement or Plan to effect a Sale Transaction is entered into and (II) concurrently therewith or at any time thereafter, any Sale Transaction is consummated, the Company shall pay Guggenheim Securities a cash fee (a "Sale Transaction Fee") in an amount equal to the greater of (x) 2.50% of the Aggregate Sale Consideration relating to the Sale Transaction and (y) $2,000,000, promptly upon the consummation of such Sale Transaction. Stuart E. Erickson, a senior managing director at Guggenheim Securities, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Guggenheim can be reached at: Stuart E. Erickson GUGGENHEIM SECURITIES, LLC 330 Madison Avenue New York, NY 10017 Tel: (212) 739-0700 About Charlotte Russe Holding Charlotte Russe Holding, Inc., is a specialty fashion retailer of young women's apparel and accessories comprised of seven entities. The company and its affiliates are headquartered in San Diego, California and have one distribution center located in Ontario, California. In addition, the companies lease office space in Los Angeles, California and San Francisco, California, where they primarily conduct merchandising, marketing, e-commerce and technology functions. The companies sell their merchandise to customers in the contiguous 48 states, Hawaii, and Puerto Rico through their online store and 512 Charlotte Russe brick-and-mortar stores located in various regional malls, outlet centers, and lifestyle centers. The bulk of the companies' apparel and accessory products are sold under the Charlotte Russe brand with ancillary brands for denim and perfume (Refuge), young women's plus-size apparel (Charlotte Russe Plus), and cosmetics (Charlotte by Charlotte Russe). Charlotte Russe Holding and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-10210) on Feb. 3, 2019. At the time of the filing, Charlotte Russe Holding had estimated assets of $100 million to $500 million and liabilities of $100 million to $500 million. The cases are assigned to Judge Laurie Selber Silverstein. The Debtors tapped Bayard, P.A. and Cooley LLP as their bankruptcy counsel; Guggenheim Securities, LLC as their investment banker; A&G Realty Partners, LLC as lease disposition consultant and business broker; Gordon Brothers Retail Partners LLC, Hilco Merchant Resources LLC and Malfitano Advisors, LLC as liquidation consultant; and Donlin, Recano & Company, Inc. as claims and noticing agent. ================= V E N E Z U E L A ================= CITGO PETROLEUM: Confirms Board and Names Officers -------------------------------------------------- CITGO Petroleum Corporation confirmed its newly appointed Board of Directors, which held its first official meeting [on] Friday, Feb. 22. The Board includes Luisa Palacios as Chairwoman, Rick Esser, Edgar Rincon, Angel Olmeta, Luis Urdaneta and Andres Eloy Padilla. Together with CITGO senior leadership, the Board will work to guarantee the company's financial and operational stability; enhance its corporate governance; and protect its assets. "CITGO is a historic brand that provides enormous value to the American economy and the communities in which it operates," said Luisa Palacios, newly appointed Chairwoman of the CITGO Board. "With highly complex refineries and, more importantly, best-in-class employees that keep this company running smoothly, CITGO is -- and will remain -- a major player in the energy industry. This Board will be working hard to provide the stability, leadership and protection that ensures it remains so." Friday's meeting included an intensive review of the company's business units, which provided ample opportunity for the Board to interact with the internal management team. The meeting included an in-depth discussion of the company's finances, operations and immediate challenges so the Board can quickly develop and implement its vision going forward. Additionally, the Board nominated and elected several corporate officers, including unanimous approval of Rick Esser as Executive Vice President. With the full support of the Board, Rick will immediately assume responsibility for the day-to-day strategic decisions and operations of CITGO while the company conducts an intensive internal and external search for a chief executive officer. The following corporate officers were also confirmed on Feb. 22: Vice President of Refining - Art Klein Vice President and General Manager Lake Charles Refinery - Jerry Dunn Vice President and General Manager Lemont Refinery - Dennis Willig Vice President and General Manager Corpus Christi Refinery - Trina Martinez Vice President of Supply and Marketing - Karl Schmidt Vice President of Finance - Curtis Rowe Vice President of Shared Services - Glenn Hilman General Counsel and Assistant Secretary - Judith Colbert Corporate Treasurer - Gina Coon Corporate Controller - Barry Treas "These officers were chosen not only for their experience and knowledge, but also because of their demonstrated commitment to the company over the years," continued Palacios. "CITGO is a strong company and, working together as the corporate leaders, we will fortify it even further." The extraordinary oil and gas industry experiences of the Board and Officers will enhance corporate governance and add significant depth to the Company's strategic decision making and long-term vision. Last year, CITGO achieved one of its strongest earnings results in the last ten years, providing a solid foundation from which the new leadership team will operate. About the Board of Directors Luisa Palacios is the newly appointed Chairwoman of the Board of CITGO Petroleum Corporation. Prior to her appointment, Ms. Palacios was a Senior Managing Director and member of the Management Committee of Medley Global Advisors where, during her career, she also served as head of Emerging Markets Research and Latin America Research. She previously worked at Barclays Capital, Society Generale and the Japan Bank for International Cooperation. She graduated from Universidad Catolica Andr??s Bello and received a master's degree in international affairs from Columbia University's School of International and Public Affairs, and a Ph.D. in international affairs from The John Hopkins University School of Advanced International Studies. She is a non-resident fellow at the Center for Energy Policy at Columbia University and a Visiting Professor at the Energy Center of Caracas-based IESA's School of Management. Rick Esser is the newly appointed Executive Vice President of CITGO Petroleum Corporation. Prior to this appointment, Mr. Esser served as Vice President of Compliance and Chief Strategy Officer. With more than 28 years of refining industry experience, he joined CITGO in 1997, and has served in numerous roles, including General Manager Pricing; General Manager Product Supply, Distribution and Trading; General Manager Crude Supply; Assistant Vice President Supply & Marketing; and Vice President of Supply & Marketing. Prior to joining CITGO, he spent seven years at the UNO-VEN Company before it became part of CITGO with the acquisition of the Lemont Refinery. Mr. Esser holds a master's degree in business administration from Keller Graduate School of Management and a bachelor's degree in business administration, marketing and management from the University of Wisconsin-Madison. Edgar Rincon is the Senior Vice President of Operations for the Western Hemisphere for Nabors Drilling. During his career with Nabors, Mr. Rincon also worked as Senior Vice President of Operations for the United States, Chief Procurement Officer and Vice President of Supply Chain. Prior to joining Nabors, Mr. Rincon worked at Pacific Drilling and McKinsey & Company in various leadership positions. He holds a master's in business administration with distinction from the Stephen M. Ross School of Business at the University of Michigan and a bachelor's degree in mechanical engineering from the Universidad Simon Bol??var. Angel Olmeta had a long career in Petroleos de Venezuela S.A. (PDVSA), occupying various positions in strategic and corporate planning and corporate acquisitions, where he oversaw the purchase of CITGO by PDVSA. He also served as Executive Vice President of CITGO, Chief Operating Officer and a member of its Board. At the time of his retirement in 1998, he was a member of the Board of Directors of PDVSA. Mr. Olmeta received a bachelor's degree from the United States Military Academy (West Point) and graduate degrees from Columbia University, New York University and the University of Colorado. Luis Urdaneta is a former Vice President of PDVSA, former President of the CITGO Board and PDV America. He also served as Executive Vice President of an oil exploration and development company in Colombia and Chief Executive Officer of a coal company in Colombia. He spent more than 30 years in the Venezuelan oil industry. He graduated from the University of Zulia and received master's degrees in petroleum engineering and computer science from Pennsylvania State University. Andres Eloy Padilla is a Finance and Logistics Control Analyst at INABLO LLC, a full-service food import and export company. Prior to his current position, Mr. Padilla held finance-related positions in various Venezuelan companies. He received Bachelor of Business Administration and Master of Business Administration degrees from Florida International University. About the Board Secretary Fernando Vera is an attorney and the current Board Secretary of CITGO Petroleum Corporation. His practice specializes in energy project development and financial and corporate matters, including the restructuring and implementation of infrastructure projects and investments in hydrocarbons projects. Mr. Vera previously served as a member and corporate secretary of the boards of various oil and gas companies in Latin America. He is a retired counsel of G??mez & Vera Abogados and also served as an attorney in an affiliate of The AES Corporation: C.A La Electricidad de Caracas until 2005 and in The Third Party Unit of the Exploration and Production Division of PDVSA until January 2003. Mr. Vera graduated from Universidad Catolica Andr??s Bello in 1997 and holds a Master of Law (LL.M) degree from The Washington College of Law, The American University, and a Master of Business Administration from IE Business School, Madrid, Spain. As reported in the Troubled Company Reporter-Latin America on March 20, 2018, Moody's Investors Service upgraded CITGO Petroleum Corporation's Corporate Family Rating to B3 from Caa1; its Probability of Default rating to B3-PD from Caa1-PD; and its senior secured ratings on term loans and global notes and IRB's to B3 (LGD3) from Caa1 (LGD4). The rating on Citgo Petroleum's senior secured revolving credit facility was upgraded to B2 (LGD3) from B3 (LGD4). CITGO PETROLEUM: Formally Cuts Ties With Petroleos de Venezuela --------------------------------------------------------------- Marianna Parraga at Reuters reports that U.S. refiner Citgo Petroleum Corp is formally cutting ties with its parent, state-run oil firm Petroleos de Venezuela SA, to meet U.S. sanctions imposed on the OPEC country, two people close to the decision said. Executives at the Houston-based firm set a Feb. 26 deadline to end relationships with PDVSA following sanctions designed to curb oil revenues to socialist President Nicolas Maduro and support the nation's transition government formed by Venezuelan congress head Juan Guaido, according to Reuters. The report notes that the United States, Canada and dozens of other nations have recognized Guaido as Venezuela's legitimate president, but Maduro still controls the military, public institutions and PDVSA, which provides 90 percent of the country's export revenue. Citgo has halted payments to its parent, subscriptions to corporate services, email communications and minimized mentions to PDVSA on marketing materials and its website, notes the report. Expatriate Venezuelan employees this month returned to Venezuela and a procurement subsidiary operating from Citgo's headquarters, PDVSA Services, was shut, the people familiar with the matter said, Reuters notes. The company is trying to free itself of sanctions that have hampered access to financing, the report relays. It is prioritizing refinancing a revolving credit and term loan by the end of July, the sources said. Credit rating firm Fitch placed Citgo on rating watch citing heightened refinancing risk due to sanctions, says he report. "We have been told that we have to organize the house by Feb. 26 to avoid conflicts with sanctions," one of the sources said, the report discloses. A new Citgo board of directors was appointed this month by the Venezuelan congress under Chairwoman Luisa Palacios, who last week named a management team under Rick Esser, the company's new executive vice president, Reuters says. New boards for PDVSA and subsidiaries, PDV Holding and Citgo Holding, also have been appointed by the Venezuelan National Assembly, the report notes. Citgo is Venezuela's main foreign asset. It is the eighth largest U.S. refiner, with a 750,000-barrel-per-day refining network capable of supplying 4 percent of the country's fuel through a network of some 5,000 gas stations in 30 states. The Venezuelan congress has been researching the South American nation's assets and bank account around the globe in an effort to gain access to cash and foreign facilities, Reuters notes. It is unclear if Citgo's new board has completed a registration process in Delaware to legally take control of the company, the report says. The new board could face a legal challenge by PDVSA's current leadership if the board was not legally constituted, the report adds. As reported in the Troubled Company Reporter-Latin America on March 20, 2018, Moody's Investors Service upgraded CITGO Petroleum Corporation's Corporate Family Rating to B3 from Caa1; its Probability of Default rating to B3-PD from Caa1-PD; and its senior secured ratings on term loans and global notes and IRB's to B3 (LGD3) from Caa1 (LGD4). The rating on Citgo Petroleum's senior secured revolving credit facility was upgraded to B2 (LGD3) from B3 (LGD4). VENEZUELA: Trade Invective With US at UN Security Council --------------------------------------------------------- EFE News reports that representatives of the United States and Venezuela crossed swords in the UN Security Council during a special session on the situation in the Andean nation, convened at Washington's request. The US is one of the roughly 50 nations that have recognized opposition leader Juan Guaido as Venezuela's acting head of state and denounced incumbent leftist President Nicolas Maduro as illegitimate, according to EFE News. "We call on the members of the Security Council to join us in meeting the growing needs in Venezuela and the region. We call on member states to consider what resources and tools they have to contribute to Venezuelan democracy and to pressure the illegitimate Maduro regime to peacefully step down," the US special representative for Venezuela, Elliott Abrams, said, the report notes. According to the report, he said that the world should back Guaido and "address the destabilizing results of Maduro's corrupt, fraudulent and incompetent reign, which just this weekend brought instability and violence" to the borders of Brazil and Colombia. The report discloses that Mr. Abrams was referring to clashes that occurred Saturday as Guaido supporters tried to force their way into Venezuela with US-donated aid rejected by Mr. Maduro as a stalking horse for military invention. Four people died on the Brazilian border and more than 200 others were injured in disturbances on the boundary with Colombia, the report says. The US official, who became famous in the 1980s for his role in the Iran-Contra scandal, went on to dismiss appeals from UN Secretary-General Antonio Guterres and others for dialogue between the Maduro government and the opposition, the report notes. The report discloses that Mr. Abrams told reporters ahead of the session that the US would present in the Security Council a resolution calling "for the admission of humanitarian aid into Venezuela" and demanding new elections in the oil-rich country. The two most powerful nations standing with Maduro, China and Russia, hold permanent seats on the council and can veto any resolution, the report says. In his remarks, Venezuelan Foreign Minister Jorge Arreaza asked the Security Council to pass a resolution rejecting "the threat and the use of force" against his country, the report notes. Citing what he described as US preparations for war in Venezuela, he urged the council to "exclude that option completely," after Abrams reiterated Washington's "all options are on the table" position, the report says. The foreign minister said that the violence on the Colombian border was initiated by Guaido supporters who accompanied the trucks loaded with aid, emphasizing that most of the wounded were members of the Venezuelan security forces, the report notes. "That was the last chapter in the coup on Saturday," he said, before directly addressing Abrams in English: "Read my lips -- it failed. Now is the time for us to return to sanity," the report relays. The report notes that Russian Ambassador Vassily Nebenzia also weighed in on the events at Venezuela's borders. "What took place on Saturday was reminiscent not of assistance but what is called force-feeding in the United States," he said, going on to ask rhetorically how other countries would have responded to "an attempted illegal state border crossing for the delivery of unknown cargo," the report quoted Mr. Nebenzia as saying. "One country even wants to build a huge wall on the border of another country to prevent an illegal border crossing," Nebenzia said, alluding to US President Donald Trump's desire to build a wall on his country's border with Mexico," he added. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings in May 2018 removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC-/C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. S&P's transfer and convertibility assessment remains at 'CC'. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2019. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *