/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/230926.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, September 26, 2023, Vol. 24, No. 193 Headlines B R A Z I L ATLAS LITHIUM: Form S-3 Registration Statement Declared Effective BRAZIL: Banco do Brasil Launches $250MM Financing Program with IDB BRAZIL: Expects to be Affected by Russia's Fuel Slash C U B A CUBA: Oil Discovery Raises Economic Prospects D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Merchants Support Decision for Border Closure H O N D U R A S HONDURAS: IDB OKs $56.1MM to Improve Water & Sanitation Services J A M A I C A JAMAICA: Looking to Create New Revenue Streams for Postal Service M E X I C O GRUPO POSADAS: S&P Upgrades ICR to 'B' on Continued Improvement P E R U GRUPO EMBOTELLADOR: Fitch Hikes LongTerm IDRs to BB, Outlook Stable P U E R T O R I C O GAFC SERVICES: Hires Rodriguez Roman as Financial Advisor T R I N I D A D A N D T O B A G O [*] TRINIDAD & TOBAGO: Signs Deal to Share Gas Profits W/Venezuela - - - - - =========== B R A Z I L =========== ATLAS LITHIUM: Form S-3 Registration Statement Declared Effective ----------------------------------------------------------------- Atlas Lithium Corporation filed with the Securities and Exchange Commission Amendment No. 1 to the Form S-3 Registration Statement it submitted on Aug. 25, 2023. On Sept. 18, the Company notified the SEC that the Form S-3 has become effective. Atlas Lithium submitted the Registration Statement in connection with the Company's offer and sale of up to $75,000,000 of common stock and preferred stock in one or more offerings. "We may offer or sell common stock and preferred stock in one or more offerings. The aggregate offering price of the securities we sell pursuant to this prospectus will not exceed $75,000,000. Each time securities are offered with this prospectus, we will provide a prospectus supplement that will describe the specific amounts, prices and terms of the securities being offered and the net proceeds we expect to receive from that sale," the Company said. The Company currently has authorized 200,000,000 shares of common stock, par value $0.001 per share. "As of August 25, 2023, 10,662,060 shares of common stock were issued and outstanding. We may offer shares of our common stock either alone or underlying other registered securities convertible into or exercisable for our common stock," stated the Company. Additionally, the Company currently has authorized 10,000,000 shares of preferred stock, par value $0.001, one share of which is issued and outstanding. "As of August 25, 2023, one share of our preferred stock has been designated as Series A Convertible Preferred Stock, which one share of Series A Convertible Preferred Stock is issued and outstanding, and 1,000,000 shares of our preferred stock have been designated as Series D Convertible Preferred Stock, of which zero shares are issued and outstanding," the Company added. Amendment No. 1 to the Registration Statement on Form S-3 was filed solely for the purpose of filing certain exhibits. A full-text copy of the Form S-3/A, along with Exhibits 23.3-23.5 is available at: https://tinyurl.com/4zmvr4zu About Atlas Lithium Atlas Lithium Corporations formerly Brazil Minerals, Inc. is focused on advancing and developing its 100%-owned hard-rock lithium project in Brazil's Lithium Valley, a well-known lithium district in the state of Minas Gerais. The Company's exploration mineral rights for lithium cover approximately 308 km2 and are located primarily in Brazil's Lithium Valley. In addition, Atlas Lithium has 100% ownership of mineral rights for other battery and critical metals including nickel (222 km2), rare earths (122 km2), titanium (89 km2), and graphite (56 km2). The Company also owns approximately 45% of Apollo Resources Corp. (private company; iron) and approximately 28% of Jupiter Gold Corp. (OTCQB: JUPGF) (gold and quartzite). Atlas Lithium has posted a net loss every year since 2018. The Company reported a net loss of $5.66 million in 2022, a net loss of $4.03 million in 2021, a net loss of $1.55 million in 2020, a net loss of $2.08 million in 2019, and a net loss of $1.85 million in 2018. It also declared a net loss of $13.86 million for the six months ended June 30, 2023. As of June 30, 2023, the Company had $28.13 million in total assets, $23.66 million in total liabilities, and $4.46 million in total stockholders' equity. Atlas Lithium said, "Our future short- and long-term capital requirements will depend on several factors, including but not limited to, the rate of our growth, our ability to identify areas for mineral exploration and the economic potential of such areas, the exploration and other drilling campaigns needed to verify and expand our mineral resources, the types of processing facilities we would need to install to obtain commercial-ready products, and the ability to attract talent to manage our different business activities. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations and growth plans, which could have an adverse impact on our business and financial prospects and could raise substantial doubt about our ability to continue as a going concern." BRAZIL: Banco do Brasil Launches $250MM Financing Program with IDB ------------------------------------------------------------------ The Inter-American Development Bank (IDB) and Banco do Brasil signed a letter of intent paving the way for a $250 million financing program, part of a Conditional Credit Line for Investment Projects (CCLIP) of up to $1 billion. The program will promote the bioeconomy and sustainable infrastructure initiatives, with an emphasis on connectivity and renewable energy sources, in Brazil's Amazonian states. The announcement was made during a meeting between IDB President Ilan Goldfajn and Banco do Brasil President Tarciana Medeiros. The "Bioeconomy Program for the Amazon - BB Amazon BID-Banco do Brasil" is aligned with the bioeconomy pillar of Amazonia Forever, the IDB's holistic umbrella program for the sustainable development of the Amazon region. It aims to promote an inclusive and sustainable development model in the region, based on two components. The first aims to support the development of bio-enterprises and rural producers that are part of the Amazon's bioeconomy value chains. The IDB and the Green Climate Fund will provide resources for this component. The second component will finance projects that generate energy from renewable sources and improve connectivity in urban, rural and forested areas of Brazil's Amazonian states, prioritizing isolated locations. This component aims to accelerate the energy transition and reduce connectivity bottlenecks in the region, especially in rural and forested areas, where fossil fuel sources are still used, promoting their replacement with solar energy. The program also includes technical support from the IDB to train local stakeholders in the preparation and improvement of bioeconomy projects. "This funding is intended to support initiatives that will yield income and reduce carbon emissions by combating deforestation, preserving biodiversity, responsibly utilizing soil and natural resources, and restoring degraded areas," explained President Medeiros. "Taking full advantage of the world's gaze on New York for the U.N. General Assembly, we intensified our business agenda in the city. This is yet another demonstration of how we, as a bank, can bring together our corporate dealings with our function of helping the nation's development, with projects that have the ability to create jobs and turn businesses into cornerstones of sustainability and technology in the Amazon region," she said. The letter of intent is also aligned with the objectives of the Green Coalition, launched in August in Belem, Brazil, which seeks to promote financial solutions and favorable conditions to create and strengthen local economies in the Amazon, as well as boost socially, environmentally and economically sustainable projects, respecting local and regional characteristics. The Green Coalition already has 20 development banks and international partners, and the Latin American Association of Development Financing Institutions (ALIDE) and the Brazilian Development Association (ABDE) are contributors. "In addition to boosting the forest economy and improving connectivity and the use of renewable energy, we will take advantage of this project to promote the sustainable business of bio-enterprises in the Amazon and organize the commercial promotion of products in the region. These actions aim to create economic alternatives for the population of Brazil's Amazonian states, which is one of the main pillars of Amazonia Forever. We are honored to have Banco do Brasil as a partner in these efforts and for this important milestone for the Green Coalition," said IDB President Goldfajn. Banco do Brasil has submitted a letter of inquiry seeking authorization for the program from Brazil's External Financing Committee (Cofiex), which is expected to evaluate the request in December. Cofiex is a body within the organizational structure of the Ministry of Planning and Budget that is responsible for analyzing and approving the preparation of projects financed with external resources and guaranteed by the federal government. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. Fitch Ratings upgraded on July 26, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB', from 'BB-', with a Stable Outlook. The upgrade reflects better-than-expected macroeconomic and fiscal performance amid successive shocks in recent years, proactive policies and reforms that have supported this, and Fitch's expectation that the new government will work toward further improvements. In mid-June 2023, S&P Global Ratings, revised the outlook on its long-term global scale ratings on Brazil to positive from stable. S&P affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil. S&P also affirmed its 'brAAA' national scale rating, and the outlook remains stable. The transfer and convertibility assessment remains 'BB+'. The positive outlook reflects signs of greater certainty about stable fiscal and monetary policy that could benefit Brazil's still-low GDP growth prospects. Continued GDP growth plus the emerging framework for fiscal policy could result in a smaller government debt burden than expected, which could support monetary flexibility and sustain the country's net external position. Moody's credit rating for Brazil was last set at Ba2 in 2018 with stable outlook. Moody's affirmed the Ba2 issuer ratings and senior unsecured bond ratings in April 2022. DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term Foreign and Local Currency - Issuer Ratings to BB from BB (low). At the same time, DBRS Morningstar confirmed Brazil's Short-term Foreign and Local Currency - Issuer Ratings at R-4. The trend on all ratings is Stable (March 2018). BRAZIL: Expects to be Affected by Russia's Fuel Slash ----------------------------------------------------- Richard Mann at Rio Times Online reports that Russia is cutting back on gasoline and diesel exports to address local shortages and high prices and Brazil, a major importer of Russian diesel, will feel the pinch. There's no set end date for these limitations, according to Rio Times Online. High oil prices, a weak ruble, and seasonal refinery work have driven up Russia's fuel costs, the report relays. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. As recently reported in the Troubled Company Reporter-Latin America, Fitch Ratings, in December 2022, affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. The ratings are constrained by high government indebtedness, a rigid fiscal structure, weak economic growth potential, and a record of governability challenges that have hampered efforts to address these fiscal and economic issues and clouded policy predictability. The Stable Outlook reflects Fitch's expectation that growth will slow in the coming year and that recent fiscal improvement will erode under a new government, but within a margin consistent with the current rating, and from a better starting point than previously expected. Uncertainty is elevated regarding the plans of the incoming government and the extent to which these could ease or aggravate fiscal and economic challenges. However, Fitch does not expect policies that jeopardize broad economic stability. Standard & Poor's affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil, and the outlook remains stable (June 2022). The stable outlook reflects S&P's base-case assumption that Brazil will maintain its fiscal anchors over the next two years despite an increasing interest burden, preventing significant fiscal slippage and limiting the rise in its already high debt burden. Moody's credit rating for Brazil was last set at Ba2 in 2018 with stable outlook. Moody's affirmed the Ba2 issuer ratings and senior unsecured bond ratings in April 2022. DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). ======= C U B A ======= CUBA: Oil Discovery Raises Economic Prospects --------------------------------------------- RJR News reports that international oil companies operating in Cuba are buoyed by a potentially transformative onshore discovery made on the Caribbean island. Australian independent Melbana Energy, in partnership with Angola state-owned company Sonangol, have successfully unlocked oil in a block with two wells, suggesting a production development could be on the cards, according to RJR News. Melbana hailed the wells as a "tremendous success", with the Alameda-2 well flowing at rates of 1,903 barrels of oil per day, the report notes. The finds have sparked new interest in Cuba, and the country's state-run company, Cupet outlined potential plans that could soon be explored, the report adds. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Merchants Support Decision for Border Closure ----------------------------------------------------------------- Dominican Today reports that the National Union of Retail Merchants announced its unwavering support for President Luis Abinader's recent decision to close the border completely. This move comes in response to the crisis unfolding on the Haitian side due to the construction of a canal intended to divert the course of the Massacre River, which serves as a natural border, according to Dominican Today. Martina Ventura, William Lantigua, and Milcides Tejada, representing the retail sector, commended the president for taking the right step in the face of provocations from a group of Haitian businesspersons determined to proceed with the construction, even though it violates established agreements between both nations, the report notes. They emphasized that the retail sector in the Dominican Republic fully stands behind this measure, the report relays. These leaders expressed their willingness to make sacrifices for the sake of supporting the president's actions, much as they did during the challenging times of the pandemic, the report discloses. They recognize that this issue profoundly affects the country and commend President Abinader for addressing it with courage and dedication, the report says. Furthermore, they asserted that Dominicans will always stand united in safeguarding national sovereignty, the report notes. At the same time, they called upon opposition political leaders to exercise common sense and avoid politicizing the matter, 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. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA reported in April 2019 that the Dominican To 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." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. On August 14, 2023, the TCR-LA reported that Moody's Investors Service changed the outlook on the Government of Dominican Republic's ratings to positive from stable and affirmed the local and foreign-currency long-term issuer and senior unsecured ratings at Ba3. Moody's said the key drivers for the outlook change to positive are: (i) sustained high growth rates have enhanced the scale and wealthclevels of the economy; and (ii) a material decline in the government debt burden coupled with improved fiscal policy effectiveness will support medium-term debt sustainability. The affirmation of the Ba3 ratings balances the Dominican Republic's strong economic growth dynamics and relatively contained susceptibility to event risks, with a comparatively weaker fiscal position, reflecting long-standing credit challenges which include: (i) a shallow revenue base compared to peers, (ii) weak debt affordability metrics, and (iii) high exposure to foreign currency borrowing. S&P Global Ratings, in December 2022, raised its long-term foreign and local currency sovereign credit ratings on the Dominican Republic to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed its 'B' short-term sovereign credit ratings. S&P also revised its transfer and convertibility (T&C) assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12-18 months that will likely stabilize the government's debt burden. In February 2023, S&P said its BB ratings reflect the country's fast-growing and resilient economy. It also incorporates the country's historical political and social challenges in passing structural reforms to contain fiscal deficits, despite recent improvements in the electricity sector. The ratings are constrained by relatively high debt, a hefty interest burden, and limited monetary policy flexibility. In September 2023, S&P Global Ratings assigned its 'BB' issue rating to the Dominican Republic's 11.25% Dominican peso (DOP) linked bond for DOP71 billion (equivalent to US$1.25 billion) maturing in 2035. The rating on the bond is the same as the long-term local currency sovereign credit rating on the Dominican Republic (BB/Stable/B). The country used about 57% of the DOP-linked bond to roll over a peso-denominated bond maturing in 2026, and will use the rest of the proceeds for general budgetary purposes. Fitch Ratings, in December 2022, affirmed the Dominican Republic's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Rating Outlook. =============== H O N D U R A S =============== HONDURAS: IDB OKs $56.1MM to Improve Water & Sanitation Services ---------------------------------------------------------------- The Inter-American Development Bank (IDB) approved up to $56.1 million in financing to enhance the continuity of and quality of access to water and sanitation services for the residents of Honduras's Central District. The program's reforms will consolidate municipal control over this the services and enhance the sector's governance and management, in the context of climate change. Around 1.3 million people from the Central District will benefit from this reform process, which aims to boost the Municipal Drinking Water and Sanitation Unit's efficiency as it operates and manages its water and sanitation services. The IDB contribution will also help enhance the governance and management of the sector nationwide, as a result of the Central District's fundamental importance and influence. In the context of climate risk, these improvements will center on ensuring water security and climate resilience. This loan, which has been approved by the IDB's Board of Executive Directors, also aims to bolster the financial sustainability of the Municipal Drinking Water and Sanitation Unit's services, strengthen planning at this service provider, and reinforce the sector's framework through better governance, regulations, and resource management. The proposed policy reforms reinforce the commitment of the IDB and the Government of Honduras to improving operations, institutional coordination, and strategic planning in order to provide better access to water and sanitation services in Tegucigalpa, thus reducing inequity. The bank has provided ongoing support to the Government of Honduras on water and sanitation through its investment programs, which have included robust institutional strengthening and grant funding components, as well as other policy-based loans like this one. This is the second loan in a programmatic series to support policy reform. Its support includes up to $19.6 million in ordinary capital and up to $36.46 million in concessional ordinary capital, a 20-year repayment term, a 1-year disbursement period, and an interest rate based on the Secured Overnight Financing Rate (SOFR). This period of the two-phase operation will focus on cementing the work achieved in the first operation, within a policy matrix structured around five pillars: macroeconomic stability; developing the operational and management framework for water and sanitation services; establishing the rate policy for the services; strengthening water and sanitation planning instruments; and modernizing the national sector framework. ============= J A M A I C A ============= JAMAICA: Looking to Create New Revenue Streams for Postal Service ----------------------------------------------------------------- RJR News reports that the Jamaican government is looking at creating new revenue streams for the local postal service. Minister without portfolio in the Office of the Prime Minister, Dr. Dana Morris Dixon, say the introduction of new commercial activities can help government entities tap into new markets and ensure long-term sustainability, according to RJR News. Dixon says while there may be concerns about the service moving in new areas of commercial activity, the risk must be taken, "as the traditional areas of postal activities are no longer viable,” the report notes. She says the postal services must adapt to digital changes, the report relays. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. S&P Global Ratings raised on September 13, 2023, its long-term foreign and local currency sovereign credit ratings on Jamaica to 'BB-' from 'B+', and affirmed its short-term foreign and local currency sovereign credit ratings at 'B'. The stable outlook reflects S&P's expectation that the government will remain committed to prudent fiscal policies and reducing debt, as well as supportive economic policies including a flexible exchange rate regime and effective monetary policy. This is the best credit rating that Jamaica has received from S&P since it started rating the country's sovereign debt in 1999, according to The Gleaner. In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. Moody's credit rating for Jamaica was last set at B2 with stable outlook (December 2019). =========== M E X I C O =========== GRUPO POSADAS: S&P Upgrades ICR to 'B' on Continued Improvement --------------------------------------------------------------- S&P Global Ratings, on Sept. 21, 2023, raised its long-term issuer credit rating on Mexico-based lodging company Grupo Posadas S.A.B. de C.V. (Posadas) to 'B' from 'B-'. S&P said, "The stable outlook on Posadas reflects our expectation that its RevPAR and EBITDA will continue to improve in the next 12 months thanks to solid occupancy rates, increasing ADRs, and tight operating costs control. We expect its adjusted net debt to EBITDA to approach 4x and its EBITDA interest coverage to be about 2.6x by the end of 2024. "In our view, Posadas has fully recovered from severe operating setbacks it faced during the pandemic. In the first half of 2023, it registered RevPAR 24% and 20% above the 2019 and 2022 levels, respectively, averaging on a system-wide basis. This was possible thanks to solid occupancy and ADRs of more than 64% and MXN1,284, respectively. "In the next 12 months, we expect Posadas to continue benefiting from favorable industry trends, including solid occupancy rates above 65% and higher ADRs, amid the recovery in group travel and events, and a resilient demand in beach resorts. As a result, we forecast Posadas' revenue and adjusted EBITDA to be above MXN10.30 billion and MXN1.98 billion, respectively, for the next 12 months, well above its pre-pandemic levels. This, coupled with our expectation that Posadas will maintain a prudent capital allocation strategy and protect its cash balance, should result in adjusted net debt to EBITDA approaching 4x and EBITDA interest coverage near 2.6x by the end of 2024." S&P believe the solid recovery in Posadas' operating metrics reflects some business strengths such as: -- The attractiveness of its high-quality assets in the country's main tourist destinations like Cancun and Los Cabos; -- Its leading position in a highly fragmented Mexican lodging industry; and -- Its diversity of brands that allows to target tourists in a wide range of socioeconomic segments. S&P said, "Moreover, we expect the company to continue benefiting from its loyalty program that incentivizes recurring travel and contributes to the stabilization of new properties. These factors should also help Posadas to continue increasing its ADRs above inflation in 2023 and at 4%-5% in 2024, which will mitigate the impact of relatively high inflation without pressuring its occupancy rates. Moreover, we believe Posadas' leaner corporate structure and renegotiation with suppliers, particularly on food and other key input costs, should help the company to maintain adjusted EBITDA margins at 19%-20% in the next 12 months. "We forecast Posadas will generate adjusted operating cash flows (OCF) near MXN1.4 billion for the next 12 months, while it continues to act prudently on its investment plan. Our OCF expectation incorporates the step-up coupon feature in its international notes, the recent disbursal of the last payment for about MXN415 million, as part of the 2017 agreement with the tax authority, and that it will continue netting taxes through the amortization of tax-loss carry-forwards at least until 2024. "Thus, we think that Posadas' OCF will be sufficient to cover its annual capital expenditures (capex) of MXN330 million – MXN390. We anticipate about 3,400 new room openings over the next few years, with a vast majority of them in the managed or franchised formats that require less capex than the owned properties. Thus, we estimate Posadas' adjusted FOCF above MXN900 million in 2024. Moreover, under the indenture of its senior notes due 2027, the company is restricted from distributing dividends. Therefore, we expect Posadas' excess cash generation to increase its cash balance gradually, which should help deleverage its balance sheet further. "Although we expect Posadas to continue improving its profitability and cash flow in the next 12-18 months, we recognize that a prolonged period of high inflation and interest rates could diminish disposable income for travel and leisure, prompting companies to cut business travel expenses, which represent a significant share of lodging demand across some Mexican cities. Moreover, a volatile dollar-peso exchange rate could dent the company's operating and financial performance, because its coastal hotels operate under a dollar-denominated rate and its notes' principal is unhedged. "In our view, these factors could result in lower revenue, EBITDA, and cash flow, pressuring its financial position amid higher forecasted interest expenses in the next 12 months because of the 2027 notes' step-up coupon feature. Also, we think Posadas' smaller scale of operation than those of global rated peers and its revenue concentration in Mexico further expose the company to earnings volatility across economic cycles." Environmental, Social, And Governance S&P said, "Social factors are now a moderately negative consideration in our credit rating analysis of Posadas, reflecting the unprecedented decline in RevPAR, revenue, and cash flow during the pandemic, which pressured the company's capacity to honor its financial obligations and triggered the restructuring of its notes. Yet the company's key operating indicators rebounded to, or above, pre-pandemic levels. Although we think the pandemic was a rare and extreme disruption, safety and health care remain an ongoing risk for Posadas and for the lodging industry in general. "Governance factors are a moderately negative consideration in our credit rating analysis for the company. We consider that the company's risk management and tolerance limit its ability to absorb high-impact and low-probability events without the need for refinancing or restructuring its debt, given its debt burden and its exposure to foreign currency risk." ======= P E R U ======= GRUPO EMBOTELLADOR: Fitch Hikes LongTerm IDRs to BB, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has upgraded Grupo Embotellador Atic, S.A.'s Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-'. The Rating Outlook is Stable. The rating upgrade reflects Atic's maintenance of low leverage metrics, which Fitch forecasts to be around 1.0x in 2023-2024 combined with a consistent positive FCF margin of approximately 4% and low refinancing risks. The rating is constrained by its limited market position and weak governance practices. KEY RATING DRIVERS Low Leverage: Fitch expects Atic to maintain gross and net leverage metrics of around 1.5x and 1.0x, respectively, for the next 18 to 24 months. The company's leverage metrics are projected to be supported by higher EBITDA generation, as the prices of its main raw materials have gradually stabilized in 2023, and by additional debt reduction. Atic's total debt calculated by Fitch declined EUR16.8 million in 2022 to EUR235.4 million. This level compares favorably with EUR328 million at YE 2021. Fitch believes that the company will focus on executing its organic growth strategy and expects that will manage its gross leverage metrics profile below the 2.0x in the event of M&A activity. FCF Margin Improving: Fitch expects Atic's FCF margins to improve to around 3% in 2023 and 5% in 2024 as working capital requirements normalize. The company has generated a strong FCF margin over the rating horizon, which Fitch views as positive to its credit quality. In 2022, FCF was pressured by higher working capital requirements and capex needs. Fitch forecasts that Atic will maintain annual cash flow from operations (CFO) above EUR110 million that will be more than sufficient to cover capex of approximately EUR62 million in 2023 and EUR54 million in 2024. Profitability Recovery: Fitch's base case projections incorporate an EBITDA margin to increase toward 15% in 2023-2024 from close to 13% in 2022. The recovery in margins should be driven by a more favorable raw material cost environment, mid to high single digit revenue growth and commercial and operating efficiencies. Atic's operating results in 2022 faced pressures from higher sugar prices and PET costs and the inflationary environments across other inputs, that were not offset by operating efficiencies or price initiatives across its markets. The company's target customers are price-sensitive consumers in the lower economic classes. Geographic and Product Diversification: Atic's geographically diversified operations mitigate the exposure to cash flow generation from a single market. Its operational footprint is mainly located in Latin America and to a lesser extent in Asia. The company's revenues of EUR1.25 billion as of YE2022 were collected in Peru (30%), Central America (25%), Mexico (14%), Ecuador (11%), Colombia (10%), Thailand (8%) and Indonesia (1%). In addition, the product portfolio of Atic is balanced between carbonated soft drinks (CSD) and non-carbonated beverages (NCB). Approximately 46% of the company's revenues as of YE2022 were generated by CSD, while the remaining 54% came from NCB as citrus, water, isotonic, energy drinks, tea and nectar. Limited Market Share Position: Atic's ratings incorporate the brand recognition of its product portfolio, which is perceived to be weaker than other well-known non-alcoholic beverages brands. The company faces strong competition from large international bottlers in each market in which it operates as well as other producers of non-branded products in the 'B' brand segment of the market. This constrains Atic's ability to pass through cost pressures to consumers at a higher pace than competitors. The company also has a less developed owned distribution network in some countries compared with peers as it relies more on third parties, but it has strengthened in core markets as Peru. DERIVATION SUMMARY Atic's business profile is supported by its geographical diversification in Latin America and its stable position in the B brand segment within most of its markets. Its 'BB' ratings are below those of other beverage peers in the region, such as The Central America Bottling Corporation (BB+/Stable), or Embotelladora Andina, S.A. (BBB+/Stable) given its relatively smaller size and scale and weaker brand recognition and market shares in key markets when compared with the stronger brand equity of Coca-Cola or Pepsico products. Atic's exposure to low-rated countries such as Ecuador and mostly non-investment-grade countries within its Central America division, except Panama, is similar to the footprint of CBC. The company's financial profile compares well in terms of profitability margins with CBC (EBITDA margin 13%) and is lower than Andina (EBITDA margin 18%). Atic's projected net leverage at around 1.0x is stronger than CBC (2.0x) and Andina (1.5x); however, Atic's ratings are tempered by the company's corporate governance practices. KEY ASSUMPTIONS - Mid-single digit sales growth in 2023-2026; - EBITDA margin around 15% in 2023-2026; - Capex averaging around EUR55 million in 2023-2026. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch does not anticipate positive ratings actions in the mid-term, but the perception of a stronger track record of good corporate governance practices would be viewed positive for its credit quality. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Sustained deterioration of its operating performance due to adverse competition and industry dynamics; - Sustained negative FCF margins that materially affect its liquidity position; - Debt/EBITDA above 2x on a sustained basis; - Perception of a negative trend in corporate governance practices. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: As of June 30, 2023, Atic had EUR78 million of cash and cash equivalents and EUR200 million of total debt (EUR183 million excluding financial leases) of which EUR61 million was short-term debt (EUR53 million excluding financial leases). The total debt is mainly bank debt allocated at the subsidiary level, notably in Central America and Peru. The primary source of liquidity is the company's available cash, uncommitted bank lines and positive FCF. Secured debt/EBITDA was about 0.1x as of 2Q23. ISSUER PROFILE Grupo Embotellador Atic, S.A. produces and markets soft drinks through its flagship brand "BIG Cola." The company also produces juices, iced tea, energy drinks, mineral water and others products. The company's products are targeted toward middle-to-low-income consumers by providing them with a lower price point than its competitors. ESG CONSIDERATIONS Grupo Embotellador Atic, S.A. has an ESG Relevance Score of '4' for Group Structure due to the existence of related-party transactions, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Grupo Embotellador Atic, S.A. has an ESG Relevance Score of '4' for Governance Structure due to ownership concentration and strong influence on Atic's owners upon its management, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Grupo Embotellador Atic, S.A. has an ESG Relevance Score of '4' for Financial Transparency due to timing of financial disclosure, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Grupo Embotellador Atic, S.A. LT IDR BB Upgrade BB- LC LT IDR BB Upgrade BB- ===================== P U E R T O R I C O ===================== GAFC SERVICES: Hires Rodriguez Roman as Financial Advisor --------------------------------------------------------- GAFC Services, LLC seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Catherine Rodriguez Roman as financial advisor. The Debtor requires Catherine Rodriguez to assist the Debtor in the preparation of pro forma reports, and financial/business documentation as requested for and during Debtor's Chapter 11 case, specifically as it is related to and has an effect on Debtor, as well as recommendations and financial/business assessments regarding issues specifically related to Debtor and/or other assistance in accounting, taxes and/or operational matters. The Debtor has retained Catherine Rodriguez on the basis of $10,000 for retainer, against which the advisor has and will bill on the basis of $175 per hour, plus expenses, for work performed or to be performed by Ms. Rodriguez, $125 per hour for any senior staff, $75 per hour for junior staff, $55 per hour for any administrative assistants. Catherine Rodriguez Roman, Certified Public Accountant, 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. Catherine Rodriguez Roman can be reached at: Catherine Rodriguez Roman CATHERINE RODRIGUEZ ROMAN 405 Ave. Esmeralda, Suite 2 #421 Guaynabo, PR 00969-4427 Tel: (787) 998-7249 Fax: (866) 886-2741 E-Mail: cpacrroman@gmail.com About GAFC Services, LLC GAFC Services, LLC owns two properties in Puerto Rico valued at $1.98 million. GAFC Services, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-02567) on August 18, 2023. The petition was signed by Juan Carlos Arocha as president. At the time of filing, the Debtor estimated $2,245,501 in assets and $1,565,422 in liabilities. Jacqueline Hernandez, Esq. at Hernandez Law Offices represents the Debtor as counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== [*] TRINIDAD & TOBAGO: Signs Deal to Share Gas Profits W/Venezuela ------------------------------------------------------------------ Joel Julien at Trinidad Express reports that Trinidad and Tobago last night signed a profit-sharing agreement with Venezuela to export gas from the Dragon field, president of the South American nation Nicolas Maduro has said. Energy Minister Stuart Young in a post to his Facebook page confirmed the situation by sharing a social media post by Maduro stating "Historic moment at Miraflores, Caracas, Venezuela," according to Trinidad Express. "Trinidad and Tobago, and the Bolivarian Republic of Venezuela as good neighbours and brothers, we have taken a gigantic step! With the signing of the agreement to work the Dragon field in Venezuelan waters that will lead us to produce together, a project that is lost from sight. It is a message of peace, of complementarity, solidarity, exercised and shared sovereignty," Maduro posted, the report notes. Young said he met with Venezuela's executive vice president Delcy Rodriguez and Venezuela's petroleum minister Pedro Rafael Tellechea, the report relays. "Working together with Venezuela to advance the development and production of Venezuelan natural gas for export and utilization in Trinidad and Tobago. We have reached a significant agreement and milestone," he stated, the report discloses. Maduro stated that Venezuela has been organizing gas blocks throughout the Caribbean, the report relays. "We have internal legislation in accordance with our Constitution, to give advantages to investors, ready to receive countries and companies that want to invest. A win-win relationship and the benefit is shared," Madruo posted, the report notes. In January, the US waived sanctions against Venezuela clearing the way for T&T to develop the Dragon Gas field, the report adds. ********* 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 2023. 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 * * *