/raid1/www/Hosts/bankrupt/TCRLA_Public/231206.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
Wednesday, December 6, 2023, Vol. 24, No. 244
Headlines
A R G E N T I N A
GAUCHO GROUP: To Raise $4M Through Private Placement Financing
B R A Z I L
AMERICANAS SA: Vibra Pays BRL192MM, Ends JV
SIMPAR S.A.: S&P Affirms 'BB-' Issuer Credit Rating, Outlook Pos.
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Sales Pace of Ready Homes Slows Down in 1H 23
[*] DOMINICAN REPUBLIC: Collects US$500M From Cigarette Exports
[*] DOMINICAN REPUBLIC: Exports Grow Towards the European Union
E L S A L V A D O R
FONDO DE CONSERVACION: S&P Assigns 'B-' Rating to US$500MM Notes
G U A T E M A L A
CENTRAL AMERICAN: Moody's Affirms Ba2 CFR, Outlook Remains Stable
P U E R T O R I C O
ZAGACITY TECH: Hires Vilarino & Associates as Legal Counsel
X X X X X X X X
LATAM: CPDC to Push for Debt Relief and Climate Justice at COP 28
- - - - -
=================
A R G E N T I N A
=================
GAUCHO GROUP: To Raise $4M Through Private Placement Financing
--------------------------------------------------------------
Gaucho Group Holdings, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that it will be raising funds
for working capital for gross proceeds of up to $4,000,000 through
the sale of shares of common stock at a price per share which
equals the Nasdaq Rule 5653(d) Minimum Price definition, but in no
event at a price per share lower than $0.60).
Each investor in the Private Placement will be afforded certain
anti-dilution protections for a period of 18 months following each
closing of the Private Placement, pending approval by the
stockholders at the Company's Special Meeting of Stockholders
scheduled for Dec. 28, 2023. If, during the 18-month period
following each closing of the Private Placement, the Company issues
or sells any shares of common stock of the Company, then each
participant in the Private Placement will automatically be issued
such number of shares of common stock as is necessary to maintain
the percentage ownership that such participant would have had if
the Dilutive Issuance had not occurred.
The Company presently intends to use the net proceeds from the
Private Placement to extinguish debt, fund infrastructure
development at Algodon Wine Estates, and for general working
capital. The Company anticipates that the Private Placement will
be completed within a month from date of commencement.
The Private Placement will be conducted pursuant to Section 4(a)(2)
of the Securities Act of 1933, as amended and/or Rule 506(b) of
Regulation D promulgated under the Securities Act. The shares will
only be offered to a small select group of accredited investors, as
defined in Rule 501 of Regulation D, all of whom have a substantial
pre-existing relationship with the Company. The shares will not be
registered under the Securities Act and may not be offered or sold
in the United States absent registration or an applicable exemption
from the registration requirements of the Securities Act and other
applicable securities laws. The shares constitute "restricted
securities" and shall bear a restrictive legend.
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc.'s
(gauchoholdings.com) mission has been to source and develop
opportunities in Argentina's undervalued luxury real estate and
consumer marketplace. The Company has positioned itself to take
advantage of the continued and fast growth of global e-commerce
across multiple market sectors, with the goal of becoming a leader
in diversified luxury goods and experiences in sought after
lifestyle industries and retail landscapes.
Gaucho Group reported a net loss of $21.83 million for the year
ended Dec. 31, 2022, compared to a net loss of $2.39 million for
the year ended Dec. 31, 2021. As of March 31, 2023, the Company
had $21.01 million in total assets, $8.60 million in total
liabilities, and $12.40 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated
April 17, 2023, citing that the Company has a significant working
capital deficiency, has incurred significant losses and needs to
raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
===========
B R A Z I L
===========
AMERICANAS SA: Vibra Pays BRL192MM, Ends JV
-------------------------------------------
Tais Fuoco of Bloomberg News reports that fuel distributor Vibra
Energia S.A. said it has terminated a partnership on convenience
stores with Brazilian retailer Americanas after payment of BRL192
million.
The Lojas Local business continues with a company 100% owned by
Americanas and the BR Mania business, with a new company whose
shares are fully owned by Vibra and which will continue to use the
corporate name Vem Conveniencia.
A payment of BRL192 million was made to Americanas with settlement
and
reciprocal release between the parties of their obligations in
relation to partnership.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust
e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White
& Case LLP, led by John K. Cunningham, is the U.S. counsel.
SIMPAR S.A.: S&P Affirms 'BB-' Issuer Credit Rating, Outlook Pos.
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' global scale and 'brAA+'
national scale issuer credit and issue-level ratings on Simpar
S.A.
The positive outlook indicates that S&P could raise the ratings in
the next six to 12 months if Simpar delivers the expected
improvements in its credit metrics, with EBIT interest coverage of
at least 1.7x and funds from operations (FFO) to debt in the
mid-teens.
The group expanded operations significantly in recent years, both
organically and through acquisitions. S&P said, "We forecast about
32.5 billion Brazilian reals (R$) in net revenue in 2023, compared
with R$13.9 billion in 2021. We believe Simpar will continue
consolidating itself as Brazil's largest transportation and
logistics group, with leading positions in several of its
businesses." The group made over 20 acquisitions in 2020-2023,
adding significant scale and business diversification.
Simpar has a solid track record in consolidating acquisitions and
absorbing synergies, maintaining solid profitability. The group's
larger scale gives it more access to discounts and fast service
from original equipment manufacturers--more access than what
smaller players get, and similar access to what a main peer and
market leader, Localiza, gets for light vehicles.
S&P expects the group to keep working on efficiency measures,
gradually expanding EBIT margin to 22%-25% in 2024-2025 from about
21% in 2023. Additionally, the group has a high-quality asset base
and adequate secondary market structure, and it operates
predominantly medium-to-long-term contracts with high renewal rates
and significant cross-selling opportunities. These factors
supported our revision of the business risk profile to satisfactory
from fair.
After Movida expanded aggressively in recent years helped by heated
demand, we forecast that Movida will have a total fleet of about
215,000 vehicles in 2023-2024, lower than the 223,984 it had at the
end of 2022 with a decrease in the Rent-a-Car (RaC) business and
moderate growth in its fleet with long-term contracts (known as the
GTF fleet). This should lead to an increase in the company's
average utilization rate in the RaC business--to 80.0% in the next
few years from 75.7% in 2022--spurred by efficiency gains with a
smaller fleet.
S&P said, "We expect Vamos to expand mostly by signing new lease
contracts, and to post consistent revenue growth of over 45% in
2023 and over 35% in 2024. We expect two other Simpar subsidiaries,
JSL and Automob, to continue consolidating the market, increasing
their solid market positions. We expect JSL revenue growth of about
25% in 2023 and about 30% in 2024, from new contracts signed,
cross-selling opportunities, and the consolidation of recent
acquisitions. Automob will continue expanding via strategic
acquisitions. Because it's uncertain when any future M&A actions
would take place or how large they would be, we don't incorporate
future M&A activity in our base case."
The group expanded in recent years mainly through debt issuances;
that, coupled with Brazil's elevated interest rates, generated a
significant interest burden over the past two years. S&P now
forecasts weaker EBIT interest coverage in 2023 and 2024 (1.2x and
1.8x, respectively) relative to what we previously expected (2x and
2.8x, respectively). The consistent delays in reaching stronger
credit metrics are what limit rating upside at this point.
S&P said, "We expect some subsidiaries to finance investments with
internal cash flows and to continue refinancing upcoming maturities
at lower cost, while other entities continue to benefit from the
group's good access to capital markets in order to fund growth at
reasonable cost, decreasing interest burden.
"The positive outlook indicates that we could raise the ratings in
the next six to 12 months if we see stronger cash flows and lower
interest burden in coming years as Simpar continues to benefit from
the diversification of its business segments and solid growth.
"For an upgrade, we would expect the company to maintain an EBIT
margin above 20% and to meet our expectations regarding EBIT
interest coverage and FFO to debt. We expect it to reach and
maintain EBIT interest coverage of at least 1.7x and FFO to debt in
the mid-teens.
"An upgrade would also depend on whether the company can maintain
comfortable liquidity, with limited short-term maturities. That
would allow us to rate Simpar above the 'BB-' sovereign rating on
Brazil."
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Sales Pace of Ready Homes Slows Down in 1H 23
-----------------------------------------------------------------
Dominican Today reports that in the first half of this year, the
pace of real estate sales in the Dominican Republic's Metropolitan
region slowed down, dropping from 1.9% to 0.5% compared to the same
period in 2022.
However, future expectations for the sector have risen to 48%,
largely due to the number of ongoing construction projects,
according to Dominican Today. This information comes from the
National Statistics Office (ONE) in its latest Building Supply
Registry (ROE), which assesses areas under construction and the
supply and demand of units under construction, completed, and
reserved, based on their intended use, the report notes.
The slowdown was particularly notable in housing units that had
been completed and on the market for more than three months, the
report relays. The ROE report uses a ratio of units ready for
approximately 90 days over those with immediate availability to
measure sales velocity, with a higher ratio indicating slower
sales, the report says.
As of the report, 76.4% of construction-suitable areas were under
active construction, while 20.7% were halted as of June, the report
discloses. Only 1.1% of the areas were completed, and 1.7% were
registered in plans for construction, the report notes. The total
square meterage under construction was 5,577,857.6, with the
majority (82.7%) intended for housing, followed by commerce (6.5%),
education (3.5%), health (2.7%), and other activities, the report
says.
The report also highlights the significant increase in the price of
low-cost homes, which surged by 114% as of June, rising from 3
million to 5 million pesos, the report relays. In terms of
location, Santo Domingo Este led with 11,044 housing units,
followed by Santo Domingo de Guzman with 10,828, and Santo Domingo
Norte with 9,161, the report discloses.
The most popular price range for housing units sold, separated, or
reserved was between 3 million to 5 million pesos, accounting for
30% of the total units and 23.9% of the salable construction area,
the report relays. Properties costing less than 3 million pesos
were the next most popular, followed by those priced between 8 and
15 million pesos, the report notes.
The total number of houses and apartments negotiated in the
metropolitan region until June 2023 was 19,365, the report
discloses. The salable construction area of works sold, separated,
or reserved was 1,938,825.5 m2, marking a significant increase of
110.8% compared to the previous year, the report relays. Notable
increases were observed in Boca Chica, Santo Domingo North, Santo
Domingo East, and Santo Domingo West, 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.
TCR-LA reported in April 2019 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 December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, 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 wealth levels 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.
[*] DOMINICAN REPUBLIC: Collects US$500M From Cigarette Exports
---------------------------------------------------------------
Dominican Today reports that in six months (January-June) of 2023,
cigarettes have become the agricultural product that has generated
the most export income for the Dominican Republic.
According to data from the Vice-Ministry of Agricultural Sector
Planning of the Ministry of Agriculture, the country has exported
22,028.73 metric tons (MT) for a value of US$507.8 million, the
report notes.
However, in a similar period in 2022, purebred registered US$511.4
million, representing an increase of US$4.5 million concerning this
year's collections, according to Dominican Today. The country
exported 25,977.1 MT for this amount, according to the institution,
the report relays.
In the first semester, March was the month in which the DR sent the
most metric tons to other countries: 4,325.81, valued at US$101.1
million, the report says.
Meanwhile, April had the lowest volume exported, with 3,089.62 MT,
equivalent to US$73.4 million, the report notes.
Imports
During the same period, cigarette imports into the country reached
US$22.1 million, with an entry of 606.58 metric tons, according to
data from the Ministry of Agriculture, the report discloses.
The amount collected is equivalent to a positive variation of
US$3.3 million, compared to the first semester of 2022, which
registered US$19.8 million with the entry of 541.59 MT. 64.99 less
than in 2023, the report says.
Other Import Data
According to the General Customs Directorate (DGA), the quantities
of imported cigarette packs in 10 months (January-October) of this
year decreased by -4,090,962 units in the same period of 2022,
presenting a relative variation of -8.11 %, the report relays.
Collections also dropped by RD$-163.26 million, experiencing a
relative variation of -5.88 % compared to the exact date of 2022,
according to data from the DGA, 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.
TCR-LA reported in April 2019 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 December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, 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 wealth levels 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.
[*] DOMINICAN REPUBLIC: Exports Grow Towards the European Union
---------------------------------------------------------------
Dominican Today reports that since its inception in 2008, the
Economic Partnership Agreement (EPA) between the Dominican Republic
and the European Union has significantly boosted bilateral trade.
Over the past 15 years, trade in goods between the two regions has
surged by 231%, reaching 4,154 million euros in 2022. Dominican
exports to European countries constitute 1.4 billion euros of this
total, according to Dominican Today.
Katja Afheldt, the European Union ambassador in the Dominican
Republic, remarked that trade between Europe and the Dominican
Republic has effectively tripled since the EPA's signing, the
report notes. The Dominican products entering Europe now are of
higher quality, reflecting a diversification in exports, the report
relays. The Dominican Republic has notably become a key supplier
of medical equipment, organic bananas, and organic cocoa to the EU,
the report discloses.
Afheldt highlighted the importance of maintaining high-quality
standards for exports, in line with Europe’s green pact, which
encourages a shift toward a more sustainable economy, the report
says. The EU market is increasingly attentive to environmental
concerns, such as deforestation and excessive chemical use in
production, the report relays.
Luis Araque, head of the commercial section of the EU in the
Dominican Republic, emphasized the positive impact of the agreement
and the diversification of the Dominican export portfolio, the
report notes. This diversification now includes sophisticated,
high-value products like medical equipment, supplies, cosmetics,
footwear, and clothing, the report discloses.
The Dominican Republic stands out as the leading exporter of
organic products to the EU, a testament to the country’s success
in adapting to market demands and the opportunities provided by the
EPA, the report relays. Araque noted this achievement as an
indicator of the progressive diversification of Dominican exports,
moving beyond traditional commodities to include more value-added
products, 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.
TCR-LA reported in April 2019 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 December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, 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 wealth levels 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.
=====================
E L S A L V A D O R
=====================
FONDO DE CONSERVACION: S&P Assigns 'B-' Rating to US$500MM Notes
----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue rating to Fondo de
Conservacion Vial de El Salvador's (Fovial) up to $500 million
notes. S&P considers the transaction a sovereign obligation exposed
to contingent risk. The rating on the notes is the same as the
long-term foreign currency sovereign credit rating on El Salvador
(B-/Stable/B).
S&P said, "Although we believe the likelihood of payment may be
somewhat weaker than that indicated by the sovereign credit rating,
this is already reflected in El Salvador's relatively low credit
rating. If we were to raise the rating on the sovereign, we would
likely differentiate the credit rating on Fovial's issue, rating it
lower than the sovereign rating."
Fovial, a government-owned entity created in 2000, is in charge of
developing, maintaining, and enhancing El Salvador's road network.
The entity receives funding from government taxes on gasoline,
diesel fuel, or any other mix, and from vehicle registration fees.
Receivables from taxes on fuel importers are assigned as collateral
for the debt service payments, and those taxpayers are committed to
deposit the payments in an off-shore collection account in the U.S.
Fovial will use the issuance proceeds to refinance its outstanding
loans and to execute infrastructure projects in the country.
S&P said, "Our 'B-' ratings on El Salvador incorporate the
country's institutional weaknesses, as indicated by long-standing
difficulties in predicting policy responses amid poor checks and
balances, modest per capita GDP at $5,200, and only moderate GDP
growth prospects due to persistently low investment and
productivity. In addition, the sovereign has a very high debt
burden, around 70% of GDP, and hefty debt service payments over the
next three to five years. It also lacks monetary flexibility
because of full dollarization.
"The stable outlook on the sovereign rating indicates our view of
balanced risks between El Salvador's recently reduced rollover
needs and its still-high debt service payments in the coming years,
along with its fragile economic profile."
=================
G U A T E M A L A
=================
CENTRAL AMERICAN: Moody's Affirms Ba2 CFR, Outlook Remains Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed The Central American Bottling
Corp. 's (CBC) Ba2 Corporate Family Rating, its Senior Unsecured
Global Notes and its Senior Unsecured Notes. The outlook is
maintained stable.
RATINGS RATIONALE
The Central American Bottling Corp.'s (CBC) Ba2 ratings reflect its
adequate credit metrics and liquidity; solid market position in its
territories of operation; diversified soft beverage product
portfolio; geographic diversification; and relationship with
PepsiCo, Inc. (PepsiCo, A1 stable), which has a 12% stake in CBC
and two seats on its board. The ratings also incorporate CBC's
relatively smaller scale than that of its industry peers, its
presence in some riskier markets and the continued event risk
because of its strategy to grow through acquisitions.
After a challenging year in 2022 due to high raw material prices
and overall inflation, pressure is receding for CBC's credit
profile. As of September 2023, CBC was able to sustain volume
growth virtually for all of its categories, being the fastest
growing Tea (25.6%), Water (18.6%) and Isotonics (16.2%). As a
result, CBC's revenue grew 13.9% on an annual basis. Moreover, in
the Q3 2023, CBC reported a reduction in costs that as percentage
of net sales, were 60.3%, already below the 62.0% reported the
prior year. The improvement is partly due to its program to capture
efficiencies through manufacturing, logistics and procurement
areas. CBC is also facing more favorable market conditions,
particularly in commodities such as fuel, diesel, and Polyethylene
Terephthalate (PET), resulting in improved margins. In the nine
months ended in September 2023, the company already reported a
gross margin expansion to 39.7% from 38.0% in the same period of
2022. Selling and administrative expenses surged in line with its
digital go-to-market strategy. As the company profits on these
initiatives while maintaining strict cost control measures through
its centralized procurement strategy and long-term agreements with
suppliers, profitability will continue to improve. On a Moody's
adjusted basis EBITA margin should be above 10% from 2024, compared
to 9.3% in 2023 and 9.4% in 2022.
Leverage surged after the recent issuance of CBC's
sustainability-linked bond, but should decline rapidly, supported
by both organic and inorganic growth. In January 2022, CBC issued a
sustainability-linked bond amounting to $1.1 billion, with maturity
in April 2029. The proceeds were used to repurchase its 2027 $700
million bond and increase cash reserves, securing funding for
potential future acquisitions. As a result, total debt as of
September 2023 was close to $1.4 billion compared with $1.2 billion
as of December 2021, including $151.6 million of loans related to
the Lender of Record Structure (LRS). CBC's adjusted debt excludes
LRS debt as its structure includes restricted cash expected to
settle net against debt and leverage calculation under its
covenants exclude it. However, Moody's calculations consider it as
under IFRS does not qualify for netting. In addition to the bond,
CBC's debt includes $37.2 million of short-term debt, $72.9 million
of long-term bank debt and $81.1 million of financial lease
obligations. Given the sustainability-linked bond issuance,
leverage (Moody's adjusted debt/EBITDA) surged in 2022 to close to
5.0x. Moody's expects adjusted debt/EBITDA to decline toward 4.0x
by year-end 2023 as the company reduces debt and EBITDA improves.
For 2024, leverage should fall toward 3.4x, supported by increased
EBITDA. Moody's expectation of a reduction in leverage is
underpinned by the company's own gross leverage target of 3.5x.
With the new bond, CBC was also able to reduce its overall cost of
debt, which should allow it to maintain adequate debt service
coverage.
CBC's liquidity position is strong. As of September 30, 2023, the
company reported cash on hand of $206.7 million, which is enough to
cover 5.5x its short-term debt. In addition, CBC has $400 million
in advised lines of credit, available to cover working capital
throughout the cycle. CBC has a comfortable long-term debt maturity
profile, with only $53 million due in 2024, $46 million due in
2025, $15 million due in 2026 and $1.1 billion due in 2029. The
company's free cash flow (FCF) (defined as cash from operations
minus dividends minus capital spending) improved due to a decrease
in working capital and higher cash from operations. Moody's expect
CBC to generate positive FCF in 2024.
The stable rating outlook incorporates Moody's expectation of a
slow improvement in profitability, positive FCF generation and a
gradual reduction in leverage over the next couple of years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade could be triggered as a result of an increase in
CBC's size while it maintains debt/EBITDA below 2.5x. In addition,
the company would need to generate FCF/debt of at least 15% on a
sustained basis.
A rating downgrade could be triggered if credit metrics deteriorate
significantly, for example, as a result of an acquisition or
because of negative results in the markets in which CBC operates.
An EBIT margin lower than 5%, debt/EBITDA above 4.5x or retained
cash flow/net debt below 12% on a sustained basis could also lead
to a rating downgrade.
The principal methodology used in these ratings was Soft Beverages
published in September 2022.
=====================
P U E R T O R I C O
=====================
ZAGACITY TECH: Hires Vilarino & Associates as Legal Counsel
-----------------------------------------------------------
Zagacity Tech LLC seeks approval from the U.S. Bankruptcy Court for
the District of Puerto Rico to employ Vilarino & Associates, LLC as
its counsel.
The firm's services include:
a) advising the Debtor with respect to its duties, powers and
responsibilities in this Chapter 11 case under the laws of the
United States and Puerto Rico in which the Debtor conducts its
operations, does business, or is involved in litigation;
b) advising the Debtor to determine whether reorganization is
feasible and, if not, helping the Debtor in the orderly liquidation
of its assets;
c) assisting the Debtor in negotiations with creditors for the
purpose of proposing and confirming a viable plan of
reorganization;
d) preparing legal papers;
e) appearing before the bankruptcy court, or any court in
which the Debtor asserts a claim interest or defense directly or
indirectly related to this bankruptcy case;
f) performing such other legal services for the Debtor as may
be required in these proceedings or in connection with the
operation of and involvement with the Debtor's business, including
but not limited to, notarial services;
g) employing other professional services, if necessary.
The firm will be paid at these rates:
Javier Vilarino, Esq. $300 per hour
Associates $225 per hour
Paralegals $150 per hour
Vilarino & Associates is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code, according to
court filings.
The firm can be reached through:
Javier Vilarino, Esq.
Vilarino & Associates, LLC
P.O. Box 9022515
San Juan, PR 00902-2515
Telephone: (787) 565-9894
Email: jvilarino@vilarinolaw.com
About Zagacity Tech LLC
Zagacity Tech LLC distributes and sells technological products,
home appliances, audio and TV, in the home and commercial lines.
Zagacity Tech LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-03787)
on November 17, 2023. The petition was signed by Nestor G. Cardona
as president. At the time of filing, the Debtor estimated $1
million to $10 million in both assets and liabilities.
Javier Vilarino, Esq. at Vilarino & Associates LLC represents the
Debtor as counsel.
===============
X X X X X X X X
===============
LATAM: CPDC to Push for Debt Relief and Climate Justice at COP 28
-----------------------------------------------------------------
Jamaica Observer reports that increasing the eligibility and
accessibility of Caribbean states to concessional and grant-based
climate financing will be high on the list of topics the Caribbean
Policy Development Centre (CPDC) will be placing at the forefront
of discussions at the 2023 United Nations Climate Change Conference
(COP 28).
COP28, which will be held from November 30 to December 12 in Dubai,
United Arab Emirates, will see world leaders and climate activists
gather to discuss and take action towards achieving the world's
collective climate goals as agreed under the Paris Agreement and
Convention, according to Jamaica Observer.
According to Jwala Rambarran, senior policy advisor at CPDC and who
will attend COP 28 on the organisation's behalf, COP 28 provides an
excellent platform to highlight critical climate and debt issues
facing the Caribbean, and to push for collaborations with other key
international stakeholders, the report notes.
"CPDC sees COP28 as an ideal opportunity to continue working
collaboratively with international civil society organisations and
other partners such as Debt Justice UK, Eurodad, and the Climate
Emergency Collaboration Group to build a global campaign for debt
and climate justice for Caribbean SIDS and other Global South
developing countries," he said, the report relays.
He also notes that this initiative is similar to the Jubilee 2000
debt campaign, which was one of the most successful and effective
international NGO movements in history, the report discloses.
Rambarran further pointed out that CPDC will be using the forum to
continue advocating for the Caribbean and other SIDS to have
increased eligibility and access to concessional and grant-based
climate finance, the report relays. "Our campaign calls on the
World Bank to supplement its Gross National Income (GNI) indicator
— which it uses to determine access to concessional finance —
with a multidimensional vulnerability index, which better captures
the economic, social and environmental causes of vulnerability of
Caribbean SIDS," he stated.
The report notes that CPDC's Officer in Charge Richard Jones also
indicated that CPDC will use the meeting to advance its call for
debt relief in the form of cancellation, forgiveness, or
restructuring as a main form of climate reparations to compensate
the Global South, especially Caribbean SIDS, for the destruction
and harm that the Global North has caused through global warming.
"Central to our reparation strategy is our call for half of the
unused US$40-billion worth of Special Drawing Rights (SDRs) sitting
idle in central banks in Global North countries to be re-channelled
as seed capital for the Loss and Damage Fund, emphasising that this
climate finance must come in the form of grants, not loans, with no
conditions attached," Jones continued, the report discloses.
Jones' comments are in line with the CPDC sovereign debt and
climate justice initiative dubbed Caribbean Emancipation 2030,
which seeks to cancel US$30 billion worth of Caribbean SIDS debt,
freeing up resources to boost climate resilience actions aligned
with the Paris Agreement and to support meeting the UN Sustainable
Development Goals (SDGs), the report says. Caribbean Emancipation
2030 provides a useful template which can be further refined and
expanded to include other heavily indebted, climate-vulnerable
Global South nations, the report notes.
Jones further noted that the organization is both sceptical and
eager to see decisions arising out of the upcoming COP28 meeting on
the Loss and Damage Fund, the report relays. The United Nations
Transitional Committee convened its fifth meeting on November 3-4,
2023 in Abu Dhabi, United Arab Emirates, which saw a number of
outcomes that will set the tone for decisions to be made on the
fund at COP28, the report notes. "However, the CPDC believes that
some of these outcomes may not be in the best interest of
developing countries, especially Caribbean small island developing
states," he explained, noting CPDC's concern about the choice of
the World Bank as an interim host for the fund, which may give the
United States too much influence over the body's loss and damage
work while facing high administrative charges, the report
discloses. Additionally, CPDC highlights that the lukewarm
interest shown by developed countries to contribute to the Loss and
Damage Fund is cause for consternation, the report says.
CPDC serves as a regional umbrella NGO for organisations comprising
small farmers, women, youth, indigenous people, rural populations,
persons with disabilities, and faith-based organisations located
across Caricom, the report says. Altogether, it serves some 35
regional, sub-regional and national (local) NGOs working at the
grass roots level in economic, social, and cultural areas across
the Caribbean, the report notes. The centre also has working
relationships with many other NGOs and development partners across
the region, the report discloses.
The organisation was established over 30 years ago and is mandated
to work with NGOs and civil society to understand how policies
affecting Caribbean people are made; to share information about
policies and decision-making processes; to work to influence and
bring change to the developmental process; and to support and lobby
for policies which improve the lives of Caribbean people, the
report relays. In fulfilling its mandate the CPDC seeks to build
the confidence and the ability of the Caribbean people to influence
public policy, 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 * * *