/raid1/www/Hosts/bankrupt/TCRLA_Public/240208.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, February 8, 2024, Vol. 25, No. 29
Headlines
A R G E N T I N A
ARGENTINA: IMF Says Move to Delay Spending Cuts is 'Pragmatic'
B R A Z I L
BRAZIL: Industry Stalls in 2023
GOL LINHAS: Court OKs $950MM DIP Loan from TMF Group
C O L O M B I A
COLOMBIA: Delivers Hawkish Rate Cut as Inflation Risks Loom
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Peasant Movement Warns of High Production Costs
J A M A I C A
NATIONAL COMMERCIAL BANK: Adjusts Online Transaction Limits
P A R A G U A Y
FRIGORIFICO CONCEPCION: Moody's Rates New $300MM Global Notes 'B1'
FRIGORIFICO CONCEPCION: S&P Rates New Senior Secured Notes 'B'
P U E R T O R I C O
TMC MANAGEMENT: Seeks to Hire Victor Torres Burgos as Accountant
X X X X X X X X
LATAM: Decline in Exports from Region Softens
- - - - -
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A R G E N T I N A
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ARGENTINA: IMF Says Move to Delay Spending Cuts is 'Pragmatic'
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Eric Martin at Bloomberg News reports that the International
Monetary Fund (IMF) said that Argentine President Javier Milei's
decision to water down spending cuts in his sweeping reform bill in
an attempt to get it through Congress is "pragmatic," and that the
lender is satisfied with the impact it would have on the country's
US$44-billion loan program.
Managing Director Kristalina Georgieva also said that the IMF and
Argentina aren't discussing a new loan, but that the new government
has taken a welcome and "dramatically different approach" to policy
making than former president Alberto Fernandez, according to
Bloomberg News.
"We have been backing up the Argentine people; we will continue to
do so," Georgieva said in a briefing with reporters in Washington,
Bloomberg News relays. "I'm impressed how open the president and
government are to advice, good policy discussions," he added.
Milei, who took office in December, ditched the main austerity
measures in his reform bill, but Economy Minister Luis Caputo
implied that there will be deeper spending cuts in the future,
Bloomberg News notes.
The IMF executive board approved a US$4.7-billion disbursement to
Argentina, Bloomberg News says. The loan was beset by uncertainty
for months during the election campaign that saw Milei oust
Fernandez's Peronist government, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
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B R A Z I L
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BRAZIL: Industry Stalls in 2023
-------------------------------
Richard Mann at Rio Times Online reports that 2023 saw Brazil's
industrial output barely move, with just a 0.2% rise. This small
upturn follows a 0.7% dip in 2022, according to Rio Times Online.
The Brazilian stats agency IBGE shared these findings on February
2, 2024, the report notes. Despite the overall stagnation, this is
an improvement from the previous year, the report relays.
Growth occurred in several areas. Semi and non-durable goods went
up by 2.1%. Durable goods saw a 1.2% rise, the report discloses.
Intermediate goods increased by 0.4%, the report says. Yet,
capital goods fell sharply by 11.1%, the report adds.
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).
GOL LINHAS: Court OKs $950MM DIP Loan from TMF Group
----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized GOL Linhas Aereas Inteligentes S.A. and affiliates to
use cash collateral and obtain postpetition financing, on an
interim basis.
GOL Finance obtained postpetition, superpriority, senior secured,
priming debtor-in-possession financing, subject to the terms and
conditions set forth in that certain Superpriority Senior Secured
Priming Debtor-in-Possession Term Sheet, which provides for:
(a) upon entry of the Interim Order, term loans in an
aggregate principal amount of $350 million, which will
subsequently
be exchanged for or refinanced by, on a cashless basis, the
issuance of $350 million of notes under and subject to the terms
and conditions of the Superpriority Senior Secured Priming
Debtor-in-Possession Note Purchase Agreement;
(b) upon entry of the Final Order:
1. additional notes in an aggregate principal amount of
$150 million under and subject to the satisfaction of the terms
and conditions of the DIP Note Purchase Agreement; and
2. additional notes in an aggregate principal amount that
will not, when combined with all Initial DIP Notes and Final DIP
Notes, exceed $950 million in aggregate principal amount in one
additional issuance under and subject to the satisfaction of the
terms and conditions of the DIP Note Purchase Agreement.
TMF Group New York, LLC is the collateral agent and GLAS Trust
Company LLC is the trustee, paying agent, transfer agent, and
registrar for the DIP Notes under the DIP facility.
The DIP facility is due and payable on the earliest to occur of:
(a) 12 months from the Closing Date, provided that the Issuer
will be permitted to extend the Termination Date, on not more than
two occasions, by up to an additional three months for each
extension upon payment of an extension fee (payable in kind) in an
amount equal to (x) 2.00% of the Total DIP Amount for the first
extension and (y) 2.50% of the Total DIP Amount for the second
extension;
(b) conversion of any of the Chapter 11 Cases to a case under
chapter 7 without the prior written consent of the Required DIP
Noteholders;
(c) dismissal of any of the Chapter 11 Cases without the
prior written consent of the Required DIP Noteholders;
(d) the appointment of a chapter 11 trustee or an examiner
with expanded powers;
(e) the date of consummation of a sale of all or
substantially all assets of the Debtors;
(f) the effective date of a chapter 11 plan; and
(g) the date the DIP Obligations become due and payable in
full under the DIP Documents, whether by acceleration or
otherwise.
The Debtors are required to comply with these milestones:
1. The Debtors must have commenced their Chapter 11 Cases in
the U.S. Bankruptcy Court for the Southern District of New York on
or before January 31, 2024;
2. The Debtors must have entered into definitive
documentation governing the DIP in the form of a note purchase
agreement or an indenture on or before the earlier of (x) February
16, 2024 and (y) the date of the hearing for the Final DIP Order;
3. The Debtors must have proposed a business plan for the
reorganization and restructuring of the Debtors' business that is
reasonably acceptable to the Required DIP Noteholders by no later
than 120 days after the Petition Date;
4. No later than 90 days after the Petition Date, the
Debtors
must have entered into stipulation agreements for no less than 90
aircraft;
5. The Debtors must file a motion seeking approval of the DIP
on the Petition Date;
6. An interim order of the Bankruptcy Court, in form and
substance reasonably acceptable to the Required DIP Noteholders,
approving the DIP on an interim basis must be entered in the
Chapter 11 Cases by no later than three business days after the
Petition Date;
7. A final order of the Bankruptcy Court, in form and
substance reasonably acceptable to the Requited DIP Noteholders,
approving the DIP on a final basis must be entered in the Chapter
11 Cases by no later than 45 days after the Petition Date;
8. The Debtors must file an Acceptable Plan by no later than
260 days after the Petition Date;
9. An order approving a disclosure statement for an
Acceptable Plan, which disclosure statement must be reasonably
acceptable to the Required DIP Noteholders, must be entered in the
Chapter 11 Cases by no later than 305 days after the Petition
Date;
10. An order confirming an Acceptable Plan must be entered in
the Chapter 11 Cases by no later than 14 days before the Scheduled
Termination Date; and
11. Such confirmed Acceptable Plan must become effective by
no later than the Scheduled Termination Date.
On March 2, 2023, the Debtors entered into a Senior Secured Note
Purchase Agreement with TMF Brasil Administracao e Gestao De
Ativos
Ltda., as collateral agent, which provided an aggregate principal
amount of $896.664 million.
On September 29, 2023, the Debtors entered into a Senior Secured
Exchangeable Note Purchase Agreement with TMF as collateral agent,
which provided an aggregate principal amount of $1.180 million, a
portion of which were issued in exchange for the redemption and
retirement of $1.180 million aggregate principal amount of GOL
SSNs.
On December 23, 2020, the Debtors entered into an Indenture with
the Bank of New York Mellon, as trustee, transfer agent and paying
agent and (d) TMF Brasil Administracao e Gestao De Ativos Ltda.,
as collateral agent, in an aggregate principal amount of $650
million.
The Debtors require the use of cash collateral and postpetition
financing to make payroll, to satisfy other working capital and
operational needs and to fund expenses of these Chapter 11 Cases.
Each Prepetition Secured Party is entitled to adequate protection
of its respective interests in all Prepetition Secured Notes
Collateral pledged by the applicable Debtors in an amount equal to
the aggregate diminution in the value of its respective interests
in such Prepetition Secured Notes Collateral from and after the
Petition Date, for any reason provided for under the Bankruptcy
Code.
A final hearing on the matter is set for February 20, 2024 at 2
p.m.
A copy of the order is available at https://urlcurt.com/u?l=idyi6w
from PacerMonitor.com.
About GOL Linhas Aereas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and
cargo; and maintenance services for aircrafts and components
in Brazil and internationally. The company offers Smiles, a
frequent-flyer programs to approximately 20.5 million members,
allowing clients to accumulate and redeem miles. It operates a
fleet of 146 Boeing 737 aircraft with 674 daily flights.
The company was founded in 2000 and is headquartered in Sao Paulo,
Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
Judge Martin Glenn oversees the case.
The Debtors tapped MILBANK LLP as counsel; SEABURY SECURITIES LLC
as restructuring advisor, financial advisor and investment banker;
ALIXPARTNERS, LLP, as financial advisor; and HUGHES HUBBARD & REED
LLP as aviation related counsel. KROLL RESTRUCTURING
ADMINISTRATION LLC is the claims agent.
Dechert LLP serves as primary counsel for certain DIP Noteholders.
Padis Mattar Advogados acts as Brazilian local counsel for certain
DIP Noteholders.
Akin Gump Strauss Hauer & Feld LLP serves as counsel to Elliott
Investment Management, L.P. and its affiliates.
===============
C O L O M B I A
===============
COLOMBIA: Delivers Hawkish Rate Cut as Inflation Risks Loom
-----------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that Colombia
maintained the pace of monetary policy easing with a second
straight quarter-point cut to interest rates as consumer price
increases remain above target and inflationary threats abound.
The central bank cut its key rate to 12.75%, Governor Leonardo
Villar told reporters in Bogota, according to globalinsolvency.com.
Ten of 26 economists surveyed by Bloomberg correctly forecast the
move, while 15 expected a half-point cut and one a cut to 12.25%.
The report notes that the board voted 5-2 for the 25 basis-point
cut, with the minority favoring a larger half-point reduction.
Policymakers cut interest rates "in a cautious way to control the
risks that a more accelerated reduction will lead to a situation in
which the process has to be slowed down or even eventually
reversed," Villar said, the report discloses.
Colombia just last month joined Brazil, Chile, Peru and other
smaller Latin American economies that have started easing monetary
policy as inflation slows toward target and economic activity
cools, the report says.
Annual inflation slowed for a ninth straight month to 9.28% in
December, below the forecasts of all economists surveyed by
Bloomberg and hitting single-digits for the first time in 18
months. Economists see an even bigger deceleration in January,
with consumer prices rising 8.37% from a year ago, the report
adds.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Peasant Movement Warns of High Production Costs
-------------------------------------------------------------------
Dominican Today reports that the Dominican Peasant Movement
denounced that the high cost of production is causing producers to
stop producing staple foods and opt for other, more profitable
products.
They also pointed out that the situation of small producers has
always been "difficult" but that for some, they have now improved
their living conditions, assuring that "when the agricultural
product rises, they benefit," according to Dominican Today.
In this sense, they made a general appeal indicating that some
politicians want to help them, but they always refer to the fact
that "the product is expensive," but they do nothing about it, the
report notes.
"When we plant cassava, if cassava goes to five pesos, that lady in
Hato Mayor who produces cassava, she does not plant cassava again
the following year because she loses. The cost of production has
increased a lot, and if the cassava is sold cheaply, the producer
loses," they said, the report relays.
They also stated that many officials would be interested in the
products being "on the ground" because the people benefit and they
only think about the vote, the report notes. Still, in reality,
this situation harms the producer who sows, the report says.
They took the opportunity to make a call that they need basic
foodstuffs to continue producing a subsidy in agricultural
production, the report discloses. And they warned that "they are
not going to eat cheaply" because the cost of production does not
depend on them, 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.
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J A M A I C A
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NATIONAL COMMERCIAL BANK: Adjusts Online Transaction Limits
-----------------------------------------------------------
RJR News reports that the National Commercial Bank said it is
adjusting its online transaction limits.
The banks says this is in a bid to enhance access controls in light
of increased levels of cyber attacks, especially phishing and
smishing, according to RJR News.
Effective immediately default limits have been imposed for
transactions done via the personal banking platform, the report
notes.
Third party transfers to NCB account holders, wire transfers and
transfers to other banks, now have a daily limit of $150,000, down
from $500,000, the report says.
The monthly limit for these transfers is now at $500,000, coming
from $1 million for NCB third party transfers and transfers to
other banks, and $1.5 million for wire transfers, the report
notes.
The daily limit for bill payment and transfers between personal
accounts remains at $2 million per day, the report relays.
NCB says customers can request for the limit to be adjusted upward,
the report adds.
As reported in the Troubled Company Reporter-Latin America on Sept.
19, 2023, S&P Global Ratings raised its long-term issuer credit
ratings on domestic lender National Commercial Bank Jamaica Ltd.
(NCBJ) to 'BB-' from 'B+'. The outlook is stable. S&P also affirmed
its 'B' short-term issuer credit ratings.
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P A R A G U A Y
===============
FRIGORIFICO CONCEPCION: Moody's Rates New $300MM Global Notes 'B1'
------------------------------------------------------------------
Moody's Investors Service has affirmed Frigorifico Concepcion
S.A.'s B1 corporate family rating and assigned a B1 rating to the
proposed up to $300 million Senior Secured Global Notes due in
2030. The outlook remains stable.
The company will use the net proceeds of the notes for working
capital, capital expenditures, repayment of outstanding borrowings
and/or general corporate purposes.
The rating of the proposed notes assumes that the final transaction
documents will not be materially different from draft legal
documentation reviewed by Moody's to date and that these agreements
are legally valid, binding and enforceable.
RATINGS RATIONALE
The B1 ratings of Frigorifico Concepcion S.A. (Frigorifico
Concepcion) reflect its leading position in the production and sale
of fresh beef and pork, with regional diversification of production
through facilities located in Paraguay, Bolivia and Brazil, which
in turn supports the company's access to a diversified pool of
export markets. The rating also incorporates Frigorfico's ability
to significantly increase revenues through expansion of processing
capacity and strategic acquisitions since 2020, while at the same
time maintaining strong profitability aided by its experienced
management and good operating environment in Latin America,
particularly in Paraguay, where the company benefits from a lower
tax burden relative to regional peers. Moody's expects Frigorfico
Concepcion will maintain a prudent capital structure with
conservative financial policies to preserve the company's liquidity
and address capital spending requirements.
The proposed notes issuance, which will partially be used for
liability management, will improve the company's liquidity.
Frigorifico Concepcion is heavily reliant on external sources to
cover cash requirements associated to high working capital needs
related to production ramp-up and debt maturities through the next
12 months. As of September 30, 2023, Frigorifico Concepcion's cash
balance of $29 million represented 15% of short-term debt, but the
company does not face significant debt maturities until its $300
million senior unsecured notes are due in 2028. Also supporting
liquidity is the company's track record of access to local and
international financial institutions and capital markets.
Frigorifico Concepcion's ratings are mainly constrained by its
small scale relative to global peers, most of which are based in
Latin America. Moody's considers scale as an important factor for
the rating because it is an indicator of the company's ability to
weather changing market conditions, economic cycles, geopolitical
barriers and animal diseases. This risk is partially offset by the
diversification provided by the company's export revenue. In this
regard, Frigorifico Concepcion's credit profile would benefit from
a longer track-record as it continues to ramp up new operations in
Brazil and Bolivia in 2024, and a new pork processing plant in
Paraguay by the second-half of 2024. Also constraining the rating
is the company's exposure to the cyclical nature of the protein
industry and overall volatility of protein prices, particularly in
beef, which is the company's main protein in terms of revenue,
because EBITDA and working capital requirements may suffer
significantly in response to a sudden rise in cattle costs.
As of the last twelve months ended in September 2023 (LTM Sep-23),
the company's revenues amounted to $1.4 billion, which Moody's
expects will rise to around $1.8 billion by 2024 and $2.0 billion
in 2025, from $1.1 billion in 2022 and $673 million in 2021. Such
growth was accomplished through a significant expansion of its
processing capacity through strategic acquisitions. The company's
consolidated beef slaughtering capacity across Paraguay, Bolivia,
and Brazil stands at 8,445 heads per day, and its pork slaughtering
capacity in Brazil is 2,028 heads per day. This represents a
substantial growth from 3,128 heads/day only in beef slaughtering
capacity back in 2021.
Frigorifico Concepcion has laid out plans to continue expanding its
slaughtering capacity for both beef and pork in 2024. Concurrently,
it anticipates the completion of its hog processing plant in
Paraguay, in collaboration with INCKA Foods S.A., by the second
half of 2024. This expansion will lead to a significant increase in
the company's slaughtering capacity. This increase in capacity is
likely to enhance the company's production capabilities and
potentially its market share and profitability.
Although higher working capital requirements derived from high
revenue growth will rise the company's debt levels to around $850
million in 2024, from $535 million in September 2023, improving
EBITDA and higher cash flow generation as a result higher
production and exports volumes will allow the company to lower
leverage and partially pay down debt by 2025. Overall, Moody's
expects EBITDA to rise to around $200 million in 2024 and $220
million in 2025, from $163 million in LTM Sep-23. As a result,
Moody's adjusted gross debt to EBITDA will rise to 4.3x in 2024
before lowering to 3.6x in 2025. Regarding interest coverage,
higher interest expenses as debt levels rise in 2024-2025 will be
partially compensated by higher EBITA, and the ratio of EBITA to
interest expense should remain around 3.0x in that period, down
from 4.8x as of LTM Sep-23, but appropriate for its rating level.
Also, high working capital requirements have resulted in negative
cash from operations (CFO) since 2020 through LTM Sep-2023 and will
continue to weigh on CFO during 2024. But higher EBITDA in
2025-2026 will aid the company's cash generation, with CFO of
around $100 million by 2025, up from a -$20 million expected for
the full-year of 2023.
The stable outlook reflects Moody's view that even though
Frigorifico Concepcion's credit metrics may remain slightly beyond
the expected range for its current rating level over the next 12-18
months, they will converge to levels commensurate to the B1 rating
within the rating horizon. Additionally, the stable outlook
reflects Moody's view that the company will maintain sufficient
liquidity to underpin its growth strategies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade to Frigorifico Concepcion's ratings would require the
company to perform in a more resilient manner regardless of the
underlying operating environment in the countries of operations,
maintaining good liquidity aided by positive free cash flow (FCF).
Quantitively, a rating upgrade would require the company to
maintain debt to EBITDA (Moody's adjusted) ratio close to 3.5x,
Cash from Operations (CFO) to gross debt above 15% and
EBITA/interest expense above 4.0x, on a sustained basis.
The ratings could be downgraded if there is a deterioration in
Frigorifico Concepcion's liquidity and operational performance.
Specifically, Moody's would downgrade the rating if the company's
Moody's-adjusted gross debt to EBITDA ratio were to rise above 4.0x
and EBITA to interest expense ratio were to fall below 3.0x, on a
sustained basis. Although Moody's anticipates that Frigorifico
Concepcion will momentarily exceed the leverage trigger in 2024,
reaching approximately 4.3x, the company's ability to quickly
revert back to levels more consistent with its B1 rating will be
crucial. Any signs of difficulty in achieving this could result in
negative pressure on the company's outlook or rating.
The principal methodology used in these ratings was Protein and
Agriculture published in November 2021.
Founded in 1997 and headquartered in Asuncion, Paraguay,
Frigorifico Concepcion S.A. has a leading position in the
production and sale of fresh beef and pork in Latin America, with
regional diversification of production through facilities located
in Paraguay, Bolivia and Brazil. The company also owns a
state-of-the art casing processing plant in Paraguay and a
refrigerated truck freight company in Brazil.
FRIGORIFICO CONCEPCION: S&P Rates New Senior Secured Notes 'B'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating to Paraguayan
protein-processing company Frigorifico Concepcion S.A.'s proposed
senior secured notes. At the same time, S&P revised its rating
outlook on Concepcion to stable from positive and affirmed its 'B'
issuer credit rating.
The stable outlook reflects the company's stronger business risk
profile, balanced by the risks stemming from higher leverage due to
the need to continue investing heavily.
Frigorifico proposed senior secured notes will support growth and
industrial diversification, improving its business profile and
financial flexibility.
The company continues expanding and diversifying its business at
profitable margins. With the acquisition of Brazilian assets in
2022, and other plant openings and the new facilities under
construction, the company's capacity, production, and EBITDA
generation significantly increased in 2023.
In addition, part of the bonds' proceeds will support capital
expenditure (capex) expansion, allowing for an estimated increase
in heads processed of 20% in 2024 and 40% in 2025, especially after
obtaining license to export to the U.S. from its Paraguayan
facility and to China from its Brazilian subsidiary.
The company is expanding through greater geographic and product
diversification from bovine and pork facilities in Paraguay,
Brazil, and Bolivia. S&P now estimates around 55% of total
production will come from Brazilian assets and around 25% from pork
production in 2024, with pork contribution increasing to around 40%
in 2025.
S&P said, "We now expect slaughtering volumes of 1.9 million heads
in 2024 (versus 1.6 million heads in 2023) and 2.6 million heads in
2025. We also expect EBITDA of around $190 million in 2024 (versus
an estimated $170 million in 2023) and $215 million in 2025. In
addition, we expect the company to sustain EBITDA margins of around
10%-11%.
"We expect Concepcion's leverage to peak at 4.5x in 2024 with the
$300 million proposed new issuance. The company will use about $150
million for working capital and about $50 million for capital
expenditures, which we believe will result in negative free
operating cash flow in 2024 and 2025. We expect leverage to improve
in 2025 to 3.8x."
At the same time, Concepcion is launching a consent solicitation to
its 2028 bondholders to waive its debt incurrence covenant and to
incorporate the same collateral package that's in the proposed
notes.
=====================
P U E R T O R I C O
=====================
TMC MANAGEMENT: Seeks to Hire Victor Torres Burgos as Accountant
----------------------------------------------------------------
TMC Management Group Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ VIB CPA, Victor I
Torres Burgos CPA.
The Debtor requires an accountant to:
(a) assist in preparing monthly reports of operation;
(b) prepare the necessary financial statements;
(c) assist the Debtor in preparing the cash flow projections
or any other projection needed for the disclosure statement;
(d) assist the Debtor in financial and accounting pertaining
to, or in connection with, the administration of the estate;
(e) assist the Debtor in the preparation and filing of
federal, state and municipal tax returns; and
(f) assist the Debtor in any other assignment that might be
properly delegated.
The firm will be paid at these rates:
Staff $50 per hour
Senior $60 per hour
Partner $100 per hour
Víctor Torres Burgos of VIB CPA disclosed in a court filing that
his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The accountant can be reached at:
Víctor I. Torres Burgos, CPA
VIB CPA, Víctor I Torres Burgos CPA
HW Santaella #4
Coamo, PR 00769
Telephone: (787) 825-2266
Email: cpavitb@gmail.com
About TMC Management Group
TMC Management Group Inc. operates a franchise of The Taco Maker
Inc., which operates a "Mexican style" food restaurant in Trujillo
Alto, P.R.
TMC Management Group filed voluntary Chapter 11 petition (Bankr.
D.P.R. Case No. 23-04254) on December 21, 2023, with $58,423 in
assets and $1,284,831 in liabilities. Luis Gonzalo Benabe Negron,
president, signed the petition.
Judge Edward A. Godoy oversees the case.
The Debtor tapped Homel Mercado Justiniano, Esq., as legal counsel
and Victor I. Torres Burgos, CPA as accountant.
===============
X X X X X X X X
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LATAM: Decline in Exports from Region Softens
---------------------------------------------
The value of exports from Latin America and the Caribbean
contracted by 2.2% in 2023 after having grown by 17.0% in 2022, a
new report from the Inter-American Development Bank (IDB) finds.
The decline in the region's exports is due to a fall in export
prices and a slowdown in volumes, according to the latest edition
of Trade Trends Estimates for Latin America and the Caribbean
report, which presents cumulative data for the past year.
Although the rate of the decline slowed in the last quarter of
2023, the outlook remains skewed to the downside. Early indications
are that the region's exports would not change in trend in the
first half of 2024.
Paolo Giordano, Principal Economist at the IDB's Integration and
Trade Sector, said that "after the two years of growth that came
with the Covid-19 recovery, exports from Latin America and the
Caribbean entered a contractionary phase in 2023."
"The balance of risks suggests that the trade contraction will ease
in the coming months, although a great deal of uncertainty still
surrounds the timing and intensity of a potential recovery," added
Giordano.
The export performance deteriorated throughout most of the region.
South America and the Caribbean were the subregions hit hardest by
the fall in commodity prices. In contrast, exports from
Mesoamerica, which includes Mexico and Central America, grew driven
by Mexico's shipments to the United States. Sales from Central
America were flat.
Export prices
The report found that the average prices of the main Latin American
and Caribbean export commodities were lower in 2023 than in 2022.
However, most prices stabilized over the year and are still at
historically high levels. The price of oil (-16.7%), soybeans
(-8.6%), copper (-3.6%), and iron (-0.9%) decreased year-on-year.
Sugar prices were an exception, rising by 27.7% year-on-year.
The report also forecasts that "commodity prices are expected to be
highly volatile with a downward trend in the current context of
weak demand." However, new economic, political, or climate-related
shocks could alter this outlook.
Performance by subregion
In South America, exports are estimated to have decreased by 5.3%
in 2023 after growing by 16.4% in 2022. Falling commodity prices
accounted for most of the subregion's performance, while volumes
are estimated to have increased by 1.7%.
Exports from Mesoamerica increased by 2.6% in 2023 after growing by
16.1% on average in 2022. There was a 2.9% increase in exports from
Mexico in 2023. In contrast, sales from Central America were flat
(0%).
Exports from the Caribbean countries contracted at an estimated
rate of 31.9% in 2023 after growing by 72.1% in 2022 driven by the
energy sector (oil and gas).
The region's total imports are estimated to have fallen by 5.9% in
2023 after increasing by 20.9% in 2022.
The report contains detailed data on the export performance of 24
countries in Latin America and the Caribbean.
Variation in export values
(Year-on-year variation rate, percentages, 2022 and 2023)
*********
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
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
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