/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190625.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 Tuesday, June 25, 2019, Vol. 20, No. 126 Headlines B R A Z I L BRISTOW GROUP: Unsecured Noteholders Pushing for Alternate Plan HIDROVIAS DO BRASIL: Fitch Affirms BB LT IDRs, Outlook Stable NETSHOES CAYMAN: Consummates Merger with Magazine Luiza D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Utility Plays Cat-And-Mouse With Power Plant M E X I C O DIAMOND OFFSHORE: Egan-Jones Lowers Senior Unsecured Ratings to B P U E R T O R I C O DISTRIBUIDORA LEQUAR: Seeks to Hire Caribbean Asset as Auctioneer V E N E Z U E L A VENEZUELA: Army and Police Officials Detained, Activists Say - - - - - =========== B R A Z I L =========== BRISTOW GROUP: Unsecured Noteholders Pushing for Alternate Plan --------------------------------------------------------------- In the Chapter 11 cases of debtors Bristow Group, Inc., et al., the ad hoc group of certain unaffiliated holders of more than 60% of the aggregate amount of the Debtors' 6.25% Senior Notes and 4.50% Convertible Senior Notes said in a statement submitted to the Bankruptcy Court that Holders of Unsecured Notes -- the Debtors' fulcrum security in these cases -- have offered to sponsor a reorganization plan that raises sufficient equity capital to repay the 8.75% Senior Secured Notes Due 2023 in full in cash, and more than adequately capitalizes the reorganized Debtors. Rather than engage in good faith negotiations around that proposal, the Debtors have, to date, disregarded it. The Debtors instead negotiated an RSA with the Secured Noteholders that effectively hands the keys to this restructuring (and a sizeable portion of the reorganized equity) to a single group of secured creditors. The RSA, among other things, (i) provides that all of the reorganized equity and the exclusive right to invest in the reorganized Debtors will be distributed to the Secured Noteholders, less only those amounts the Secured Noteholders agree to dribble out to other stakeholders, (ii) bars the estate from prosecuting any plan that the Secured Notes do not endorse, (iii) limits the Debtors' ability to pursue alternative transactions, and (iv) gives the Secured Noteholders undue control over important case milestones, plan equity value, the distributions to Unsecured Noteholders and general unsecured creditors, the fleet configuration, and corporate governance matters. The RSA adds insult to injury by further disenfranchising the Unsecured Noteholders with a "death-trap" that seeks to limit Unsecured Noteholders' recoveries to what they would receive in a Chapter 7 liquidation if they dare oppose the Plan. The terms of the RSA guarantee otherwise avoidable litigation over the value of (i) the equity in the reorganized Debtors, (ii) the rights being distributed exclusively to the Secured Noteholders to invest in that equity, and (iii) the Debtors' assets. Regrettably, absent an immediate change in course by the Debtors, the Debtors will expend resources far better spent on the Debtors' business operations rather than fighting over valuation with a constituency that wants only to support their reorganization. It bears repeating -- Unsecured Noteholders are willing to engage with the Debtors on a plan that will provide the Debtors with the equity capital necessary to fund a plan that cashes out the Secured Noteholders, maximizes recoveries for unsecured creditors, and paves the way for a consensual and expeditious exit from chapter 11. Section 7.03 of the RSA allows the Debtors the flexibility to act in a manner consistent with their fiduciary duties, and needless to say, the law requires it. The Board has a fiduciary obligation to maximize value for the Company's creditors, and yet they are ignoring a proposal that would accomplish just that. The silence is deafening. Nevertheless, the Unsecured Noteholders remain willing to commence negotiations over a consensual restructuring and believe that prompt engagement with all key creditor constituents is necessary to avoid massive litigation and delay. The Unsecured Noteholders reserve their rights to object or respond to the first day motions on any grounds whatsoever, including the right to raise objections at or before any hearings on the first day motions. Counsel to the Ad Hoc Group of Unsecured Noteholders can be reached at: PORTER HEDGES LLP John F. Higgins, Esq. Eric J. English, Esq. M. Shane Johnson, Esq. 1000 Main Street, 36th Floor Houston, TX 77002 Telephone: (713) 226-6000 Facsimile: (713) 226-6248 E-mail: jhiggins@porterhedges.com eenglish@porterhedges.com sjohnson@porterhedges.com - and - KRAMER LEVIN NAFTALIS & FRANKEL LLP Douglas H. Mannal, Esq. P. Bradley O'Neill, Esq. Anupama Yerramalli, Esq. 1177 Avenue of the Americas New York, NY 10036 Telephone: (212) 715-9100 Facsimile: (212) 715-8000 E-mail: dmannal@kramerlevin.com boneill@kramerlevin.com ayerramalli@kramerlevin.com A copy of the statement from at PacerMonitor.com is available at http://bankrupt.com/misc/Bristow_Group_53_Rule2019.pdf About Bristow Group Bristow Group Inc. -- http://www.bristowgroup.com/-- provides industrial aviation and charter services to offshore energy companies in Europe, Africa, the Americas, and the Asian Pacific. It also provides search and rescue services for governmental agencies and the oil and gas industry. Headquartered in Houston, Bristow Group employs approximately 3,000 individuals around the world. Bristow has major operations in the North Sea, Nigeria, the United States Gulf of Mexico and in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, Canada, Russia and Trinidad. Bristow Group and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 19-32713) on May 11, 2019. As of Sept. 30, 2018, the Debtors had $2.861 billion in assets and $1.886 billion in liabilities. The cases are assigned to Judge David R. Jones. The Debtors tapped Baker Botts LLP as bankruptcy counsel; Wachtell, Lipton, Rosen & Katz as co-counsel with Baker Botts; Alvarez & Marsal and Houlihan Lokey Capital, Inc., as financial advisors; and Prime Clerk LLC as claims, noticing and solicitation agent. HIDROVIAS DO BRASIL: Fitch Affirms BB LT IDRs, Outlook Stable ------------------------------------------------------------- Fitch Ratings has affirmed Hidrovias do Brasil S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings at 'BB' and National Scale long-term rating at 'AA(bra)'. The Rating Outlook is Stable. Hidrovias' ratings reflect the company's stable operating cash flow generation derived from its competitive position in the waterway transportation industry in the North and Centre-Western of Brazil and the Parana-Paraguay river system, where logistic infrastructure is relatively limited, combined with its favorable business model, with the majority of its EBITDA coming from long-term take-or-pay contracts (+80%) that mitigate volume volatility. The ratings also incorporate Fitch's expectation that Hidrovias will continue to maintain a solid liquidity position and manageable debt amortization schedule. The ratings are tempered by the company's relatively small business scale compared to peers in the transportation sector in Brazil, its client concentration, and its short track record of operations and access to capital markets. The Stable Outlook reflects Fitch's expectation that Hidrovias will continue to manage its growing business and dividend distributions in a conservative manner that will lead to a decline in leverage. Hidrovias is still ramping up its operations while also seeking opportunities to leverage its business scale. The ratings could be pressured by any material acquisition and/or new project that is fully debt financed and that leads net adjusted leverage to be above 4.0x on recurring basis. Fitch's base scenario forecasts net adjusted leverage/EBITDAR ratios moving around 2.5x-3.5x during 2020-2021, considering around BRL120 million in capex (mostly expansion) and/or small acquisitions during the next three years. For 2019, Fitch forecasts net adjusted leverage at 3.8x, which already represents an important deleverage process from the 4.6x in 2018 and 5.2x in 2017. KEY RATING DRIVERS Take-or-Pay Contracts Protect Cash Flow: Hidrovias' ratings incorporate its stable cash flow generation, which reflects the majority of its EBITDA being generated under long-term take-or-pay contracts. These contracts provide cash flow visibility, as they contain features that allow inflation-adjusted price increases and the pass-through of fuel charges. Considering the ramp-up of projects and contracts through 2021, Hidrovias has around 82% of its total capacity contracted under long-term take-or-pay agreements. Its largest contracts duration reach more than 12 years. Fitch expects Hidrovias' annual cash flow generation, measured as EBITDA, to average BRL550million during 2019-2020. Limited Client Diversification: Hidrovias' main clients are Vale, COFCO and Alunorte, which represent 39%, 25% and 17%, respectively, of EBITDA. There are opportunities to diversification as the company is able to add new clients/sector to its portfolio, including the announced studies for the salt operations in Rio Grande do Norte State (Brazil). This portfolio concentration risk was highlighted in 2018 when the company lost a client, Multigrain, which represented around 16% of EBITDA; positively, the financial impact was mitigated by the BRL306 million penalty paid by the client to Hidrovias, due to the termination of the take-or-pay contract. For the 2019-2020 period, Fitch forecasts EBITDA margin moving around 49%-50%, trending towards 55% in 2021, as the ramp-up of projects reduces. The margin improvement is due to less reliance upon spot contracts, which resulted from the loss of Multigrain. Route and Product Concentration: In terms of products, grains& fertilizer, iron ore, and bauxite represent 44%, 39%; and, 17%, respectively, of Hidrovias' 2018 EBITDA. In terms of routes, the Miritituba-Vila do Conde and Corumba-San Nicolas routes represents approximately 39% of the company's total EBITDA each. Company operations result in approximately 56% and 44% of the total EBITDA being generated in Brazil and Uruguay/Paraguay, respectively. Positive and Increasing FCF: Fitch expects Hidrovias to reach positive FCF during 2019-2020 due to expanding revenues, improving profitability and strengthening cash flow generation coupled with significantly lower capex levels. The company completed an important capex plan of approximately BRL1.8 billion, 47% of which was funded with equity injections, during 2014-2017, and Fitch estimates Hidrovias will incur maintenance capex lower than USD7 million from 2019 onwards. FCF levels are projected to reach approximately BRL10 million and BRL120 million, in 2019 and 2020, respectively. On May 2019, Hidrovias paid its first dividends in amount of BRL136 million, and it will be the driver for this weaker FCF generation in 2019. Deleveraging Trend: The rating considers Hidrovias' adequate capital structure, with net leverage - measured as net debt/EBITDA - moving toward 2.5x-3.5x during the next three years. These ratios compare with 4.6x in 2018, 5.2x in 2017 and 10.3x in 2016. The trend is driven by the ramp-up of its operations and the relatively lower capex from 2019 onwards. Fitch base case assumes capex (mostly expansion) and/or small acquisitions totalling around BRL120 million during the next three years. DERIVATION SUMMARY Hidrovias is well-positioned in the 'BB' rating category relative to transportation/logistics peers across the region, which are generally rated in the 'BB' to 'BBB' categories. Hidrovias' main constraint derives from its business concentration and short track record of operations. On the National Scale Rating, Hidrovias's ratings incorporate considerations such as its still low track record in operational performance, capital structure and scale versus Brazilian peers such as MRS Logistica S.A. (Long-Term Foreign Currency IDR BB/Stable; Long-Term Local Currency IDR BBB-/Stable; National Long-Term Rating AAA(bra)/Stable); Rumo S.A. (Long-Term Foreign Currency IDR BB/Stable; Long-Term Local Currency IDR BB+/Stable; National Long-Term Rating AAA(bra)/Stable) and VLI S.A. (National Long-Term Rating AA+(bra)/Stable). Hidrovias is starting to build a good track record in terms of profitability, FCF generation and net leverage metrics based on new take-or-pay contracts, which should help in the comparison going forward. Hidrovias' expected 2019-2021 net leverage metrics are higher that net leverage expected for other rated Brazilian peers in the transportation/logistics sector, with more mature operation. Rumo, VLI and MRS Logistica are forecast to reach 2019 net leverage ratios of 2.2x, 2.7x, and 1.5x, respectively. Hidrovias's ratings factor in the expectation the company's net leverage ratio trending to around 3.8x by 2019. KEY ASSUMPTIONS -- Revenue growth in the high single digit, mainly supported by increasing volumes; -- EBITDA margins around 49%-50% in 2019-2020; -- Capex around BRL120 million, mostly to support growth opportunities; -- Dividends distributions at 50% Net Income; -- Salt project to be approved during 2020. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Hidrovias's FC IDR should be capped at Brazil's Country Ceiling considering the major of the company's growth opportunities continues to be originated within the operations in the country. For the national scale and local currency ratings, the following triggers would apply: -- Broader client diversification. -- Net leverage (net adjusted debt / EBITDAR) consistently below 3x and total adjusted debt/EBITDAR to be below 4.5x. -- Interest coverage (EBITDAR/paid Interest ratio+ rents) consistently above 4x. -- Maintenance of strong liquidity to avoid refinancing risks, with cash/short-term ratio at minimum of 1.5x. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Recurring Negative FCF. -- Interest coverage (EBITDA/paid interest) consistently below 2.5x during 2019-2021. -- Net leverage (net debt / EBITDA ratio) consistently above 4x during 2019-2021. -- Deterioration of liquidity position, with cash to short term ratio being below 1.0x. LIQUIDITY Strong Liquidity Position: Fitch expects Hidrovias to maintain a solid cash position while conservatively managing its free cash flow generation with growth strategy and dividends distribution. As of March 31 2019, the company's cash position was very strong at BRL991 million, while short-term debt was BRL130 million. This cash position benefits from a BRL306 million cash inflow from the termination of the take-or-pay contract with Multigrain S.A. in June 2018, and it is expected to finance further capex. The company's total adjusted debt, per Fitch's calculation was BRL3.0 billion, which is mainly composed of cross-border bonds (BRL2.3 billion) and BNDES financing (BRL542 million). Fitch includes BRL96 million (USD24.5 million) of guarantees related to one of its 50% joint-venture (Obrinel S.A.). The company presents a very comfortable debt amortization schedule, with an average of BRL198 million due between 2020 and 2022 and BRL2.3 billion due in 025. Hidrovias does not have a committed standby credit facility. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Hidrovias do Brasil S.A. -- Long-Term Foreign Currency IDR at 'BB'; -- Long-Term Local Currency IDR at 'BB'; -- Long-Term National Scale rating at 'AA(bra)'. The Rating Outlook is Stable. Hidrovias International Finance S.a.r.l. -- USD600 million senior unsecured notes due 2025 at 'BB'. NETSHOES CAYMAN: Consummates Merger with Magazine Luiza ------------------------------------------------------- Netshoes (Cayman) Limited related the consummation of the previously announced merger with a Magazine Luiza wholly-owned subsidiary (the "Merging Company") (the "Merger") as a result of all conditions precedent for the consummation of this merger having been satisfied, including approval by (i) Brazilian anti-trust authorities and (ii) a 90.32% favorable vote by shareholders present, either in person or by proxy, at the Company’s extraordinary general meeting of shareholders held on June 14, 2019. Pursuant to the terms of this transaction, the Merging Company merged with and into the Company, with the Company continuing as the surviving company (the "Surviving Company") and as a wholly owned subsidiary of Magazine Luiza S.A. As a result of the consummation of the Merger, the Company’s shareholders, other than those who have validly exercised their statutory right to dissent to the merger, will be entitled to receive the merger consideration of US$3.70 in cash per common share, without interest and less any applicable withholding taxes (the "Merger Consideration"). Magazine Luiza and the Surviving Company will now cause the paying agent to mail to each holder of record of common shares, (i) transmittal materials, including a letter of transmittal in customary form as agreed by Magazine Luiza and the Company and (ii) instructions for surrendering book-entry common shares in exchange for the Merger Consideration. The Company has notified the New York Stock Exchange ("NYSE") of the completion of the Merger, and trading in the Company's common shares on the NYSE will have ceased as of the start of trading on June 17, 2019 and will be suspended effective before the opening of trading on that same day. About Netshoes Netshoes (Cayman) Limited, through its subsidiaries, operates as a sports and lifestyle online retailer in Brazil and internationally. It offers various products, including athletic shoes, jerseys, apparels, accessories, and sporting equipment of international, local, and private brands, as well as fashion primarily under the Netshoes and Zattini brands. The company operates through its e-commerce Websites, such as netshoes.com, shoestock.com, and zattini.com. Netshoes (Cayman) Limited was incorporated in 2000 and is headquartered in Sao Paulo, Brazil. Netshoes recently disclosed in its Form 20-F filing with the U.S. Securities and Exchange Commission for the fiscal year ended December 31, 2018 that it experienced net losses and significant cash outflows from cash used in operating activities in 2018, and its business performance and financial condition has faced increasing pressure since December 31, 2018. Moreover, the Company said it has engaged financial and other advisors to assist it in its efforts to preserve its cash, liquidity and financial position and obtain access to alternative sources of capital. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Utility Plays Cat-And-Mouse With Power Plant ---------------------------------------------------------------- Dominican Today reports that in recent days, the blackouts have been felt in much of the Dominican Republic, stoking concern among the people who are subjected to long hours without energy. The blackouts have also been affecting sectors included within the "24-hour circuits," where in addition to households, businesses also express concern over the situation, according to Dominican Today. The blackouts began before the State Electric Utility (CDEEE) announced the start of operations of the first unit of the Punta Catalina power plant with 150 megawatts into the National Grid (SENI), though intermittently, the report notes. The utility then said that the first unit's output was raised to 330 megawatts before being shut down, as citizens renewed complaints for the constant and prolonged blackouts, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Fitch Ratings affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook in September 2018. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." =========== M E X I C O =========== DIAMOND OFFSHORE: Egan-Jones Lowers Senior Unsecured Ratings to B ----------------------------------------------------------------- Egan-Jones Ratings Company, on June 10, 2019, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Diamond Offshore Drilling Inc. to B from BB-. EJR also downgraded the rating on commercial paper issued by the Company to B from A3. Diamond Offshore Drilling, Inc. is an offshore drilling contractor. The company is headquartered in Houston, Texas, United States, and has major offices in Australia, Brazil, Mexico, Scotland, Singapore, and Norway. The company operates 17 drilling rigs including 13 semi-submersible platforms and 4 drillships. ===================== P U E R T O R I C O ===================== DISTRIBUIDORA LEQUAR: Seeks to Hire Caribbean Asset as Auctioneer ----------------------------------------------------------------- Distribuidora Lequar, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire an auctioneer. The Debtor proposes to employ Caribbean Asset Recovery, Inc. to list and offer for sale its inventories and other assets. An auction commission of 15% will be deducted from the proceeds of the liquidation. Antonio Pagan, president of Caribbean Asset, disclosed in a court filing that the officers, directors and shareholders of the firm are "disinterested persons" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Antonio Pagan Caribbean Asset Recovery, Inc. P.O. Box 1736, Bayamon, P.R. 00960 About Distribuidora Lequar Inc. Founded in 1963, Distribuidora Lequar, Inc. is engaged in the business of selling men's, women's and children's footwear. It is located in Rio Piedras, P.R. Distribuidora Lequar sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 18-05107) on September 1, 2018. In the petition signed by Albert Bejar Bitton, vice president, the Debtor disclosed $4,095,449 in assets and $8,011,822 in liabilities. Judge Enrique S. Lamoutte Inclan presides over the case. Charles A. Cuprill, P.S.C. Law Office is the Debtor's legal counsel. ================= V E N E Z U E L A ================= VENEZUELA: Army and Police Officials Detained, Activists Say ------------------------------------------------------------ BBC News reports that six members of Venezuela's military and police have been arrested, activists say, weeks after a failed uprising against President Nicolas Maduro. They include an Air Force brigadier general and former police officers, according to BBC News. The government has not yet commented. Some of the arrests took place as UN human rights chief Michelle Bachelet finished a visit to the country, the report relays. She called on Mr. Maduro to release people arrested for peacefully protesting, the report says. President Maduro has intensified a crackdown on the opposition since a failed military uprising led by opposition leader Juan Guaido on April 30, the report says. More than 700 people have been detained in Venezuela for political reasons, including 100 members of the military, according to local rights group Penal Forum, the report relays. Organization of American States Secretary-General Luis Almagro, a vocal critic of President Maduro, has called on the country's "dictatorship" to provide information about those detained, saying the "repression and torture must end in Venezuela," the report discloses. Speaking in Caracas at the end of her three-day visit, Ms. Bachelet called for the release of "all those who are detained or deprived of their liberty for exercising their civil rights in a peaceful manner," the report notes. Mr. Maduro, whose government has been accused by activists of serious human rights violations, said he would take her "suggestions, recommendations and proposals seriously," the report says. The crisis in Venezuela deepened in January after Mr. Guaido, head of the National Assembly, declared himself interim president, arguing that Mr. Maduro's re-election last year had been "illegitimate," the report notes. He has since been recognized by more than 50 countries, including the US and most of Latin America, the report relays. But Mr Maduro retains the loyalty of most of the military and important allies such as China and Russia, the report notes. Since April's failed rebellion, described by Mr. Maduro as part of a US-orchestrated coup, many opposition parliamentarians have lost their parliamentary immunity and some have been arrested, the report says. While Mr. Guaido's parliamentary immunity has been lifted, he has so far not been jailed, the report notes. Some four million people have fled Venezuela since 2015, according to the United Nations, amid a severe year-long economic crisis that has resulted in high unemployment and chronic shortages of food and medicine, the report adds. 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 * * *