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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, August 15, 2024, Vol. 25, No. 164
Headlines
A N T I G U A A N D B A R B U D A
LIAT: Returns to the Caribbean Skies
B A H A M A S
FTX GROUP: Must Pay $12.7B to Customers; Plan Votes Due Tomorrow
B R A Z I L
AVON PRODUCTS: S&P Downgrades ICR to 'D' on Bankruptcy Filing
G U Y A N A
GUYANA: Officials Hope for Removal of Catfish Exportation Ban
M E X I C O
CEMEX SAB: Divesting Dominican Republic Operations
OPERADORA DE SERVICIOS: S&P Cuts ICR to 'CC' on Missed Payment
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A N T I G U A A N D B A R B U D A
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LIAT: Returns to the Caribbean Skies
------------------------------------
Trinidad Express reports that the newly formed LIAT Ltd., formerly
known as Leeward Islands Air Transport or LIAT, 2020 made its
inaugural flight to St Lucia, signaling the return to the skies of
the inter-regional airline, whose previous owners, LIAT (1974) Ltd
went bankrupt in January this year.
LIAT 1974 Ltd has been under administration since July 24, 2020 and
the new entity, has been formed in partnership with Air Peace, a
private Nigerian airline founded in 2013, Trinidad Express
recalls.
Earlier this year, Prime Minister Gaston Browne said that Air Peace
would be putting in close to US$65 million, while the government is
investing US$20 million, according to the report.
Speaking at the launching ceremony, Prime Minister Browne said
"today is indeed a momentous occasion in which we celebrate the
inaugural flight of LIAT 2020," the report notes.
Trinidad Express says that Browne said he was pleased to be
participating in the event "considering the difficulties that we
had with LIAT 1974 four years ago.
"I believe that this is a great story of courage, of patience, of
resilience and perhaps the message to all of us is that
notwithstanding the challenges we should always press on with
determination, with optimism, knowing that invariably there is a
brighter future for those who have the courage and resilience to
fight whatever obstacles are placed in their way," the report
notes.
Browne said the launch of the inaugural flight "represents a
rebirth of LIAT," recalling having written a re-organisation in
2020 "In which I was trying to convince the other shareholder
governments of LIAT 1974, not to collapse LIAT, not to liquidate
LIAT," the report relays.
He said the re-organisation plan was titled "LIAT rising like a
phoenix "and today we are actually experiencing LIAT rising like a
phoenix from the ashes and I have no doubt based on the quality of
the staff and the service that we will provide that LIAT will
literally start at the top of the food chain to be the number one
carrier within our region," the report notes.
Browne said that the partnership with Air Peace will result in the
new company having at least seven new aircraft to service the
routes, the report relays.
"We hope to expand LIAT in the coming years as the demand for
travel increases within the region," Browne said, adding that the
company will be a "significant contributor" to the country's
economy, the report discloses.
He said jobs would be created, airport taxes collected as well as
improving the tourism product here, the report relays.
"LIAT will be a net economic benefit to the government and people
of Antigua and we are also looking forward to a profitable LIAT,
one that could generate profits and one in which, perhaps on an
annual basis, the government of Antigua and Barbuda could look
forward to a dividend cheque, the report notes.
"But in any event, even if it struggles to make a profit, I am
absolutely confident that it will be a net economic contributor to
the economy of Antigua and Barbuda and my government is absolutely
committed to the sustainability, and certainly, the viability of
LIAT," the report says.
But Browne said that "clearly we can't do it alone," saying "we
need the support of all stakeholders" praising also the workers of
LIAT 1974, who had accepted salary cuts in keeping the airline
flying, the report notes.
He said LIAT was necessary for an effective integration movement,
saying "LIAT has been and will continue to be a critical aspect of
the integration movement as it contributes to moving people within
our region, the report relays.
He said with regards to sustaining the airline, it should not be
viewed as an opportunistic institution "seeking to cover a
short-term demand, but we should see this institution as an
institution we are building long term, an institution we can
bequeath to future generations," the report adds.
About LIAT
LIAT Ltd., formerly known as Leeward Islands Air Transport
or LIAT, is an airline headquartered on the grounds of V. C. Bird
International Airport in Antigua. It operates high-frequency
inter-island scheduled services serving 15 destinations in the
Caribbean. The airline's main base is VC Bird International
Airport, Antigua and Barbuda, with bases at Grantley Adams
International Airport, Barbados and Piarco International Airport,
Trinidad and Tobago.
The airline is owned by seven Caribbean governments, with three
being the major shareholders: Barbados, Antigua & Barbuda and St.
Vincent and the Grenadines along with Dominica(94.7 %); other
Caribbean governments, private shareholders and employees (5.3%).
In the last few years, LIAT has been challenged with financial
difficulties, often needing additional funding as the airline
dealt with the high cost of operations. In November 2016, the
Barbados government defended LIAT's operations, even as opposition
legislators called for a cessation of the business. In early
2015, LIAT offered early retirement packages to employees in
efforts to downsize. In 2014, LIAT knew it had to deal with
unprofitable routes to make operations viable. In the third
quarter of 2013, the airline's top management was shaken, with
news Chief Executive Officer Captain Ian Brunton's sudden
resignation.
LIAT's current chief executive officer is Julie Reifer-Jones,
chairman is Jean Holder, and chief financial officer is Rojer
Inglis.
Dr. Ralph Gonsalves, prime minister of St. Vincent & the
Grenadines, serves as chairman of LIAT shareholders.
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B A H A M A S
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FTX GROUP: Must Pay $12.7B to Customers; Plan Votes Due Tomorrow
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Jasper Ward and Dietrich Knauth at Reuters report that a U.S. court
has ordered bankrupt cryptocurrency exchange FTX to pay $12.7
billion in relief to its customers, the Commodity Futures Trading
Commission said.
FTX drew customers in with "an illusion that it was a safe and
secure place to access crypto markets," then misappropriated their
customer deposits to make its own risky investments, CFTC Chairman
Rostin Behnam said in a statement, according to Reuters.
The repayment order implements a settlement between the CFTC and
the bankrupt crypto exchange, which has committed to a bankruptcy
liquidation that will repay customers whose deposits were locked
during its late 2022 collapse, the report notes.
FTX has said that its customers will receive 100% recovery on their
claims against the company, based on the value of their accounts at
the time it filed for bankruptcy, the report relays.
The CFTC agreement resolves a potential roadblock to that
repayment, ensuring that the government's lawsuit against FTX will
not reduce the funds available to its customers, the report
discloses. The CFTC agreed not to collect any payment from FTX
until all its customers are repaid, with interest, the report
says.
The CFTC settlement requires FTX to pay $8.7 billion in restitution
and $4 billion in disgorgement, which will be used to further
compensate victims for losses suffered during the exchange's
collapse, the report notes.
FTX did not immediately respond to a request for comment.
Its founder Sam Bankman-Fried was sentenced in March to 25 years in
prison for stealing $8 billion from customers, the report relays.
He has appealed the conviction.
FTX has used its bankruptcy to reach settlements with U.S.
regulators and former business partners and to sell assets that had
been purchased with misappropriated customer funds, including real
estate and investments in crypto and other tech companies, the
report notes.
FTX is currently soliciting votes on its bankruptcy proposal but
faces opposition from some customers who feel short-changed by the
decision to repay them based on much-lower cryptocurrency prices
from November 2022, the report says. Votes are due on Aug. 16, and
FTX intends to seek final approval of its wind-down plan on Oct. 7,
the report adds.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9, 2022, struck a deal to
sell itself to its giant rival Binance, but Binance walked away
from the deal amid reports on FTX regarding mishandled customer
funds and alleged US agency investigations. Bankman-Fried agreed to
step aside, and restructuring vet John J. Ray III was quickly named
new CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
billion in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
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B R A Z I L
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AVON PRODUCTS: S&P Downgrades ICR to 'D' on Bankruptcy Filing
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On Aug. 13, 2024, S&P Global Ratings lowered its issuer credit
rating on Avon Products Inc. (API), a subsidiary of Natura & Co
Holding S.A, to 'D' from 'BB-'. At the same time, S&P lowered its
issue rating on API's debt to 'D' from 'BB-'.
The company is a nonoperating subsidiary of Natura (BB/Stable/--;
brAAA/Stable/--) that holds about $22 million of senior unsecured
debt due in 2043 and other liabilities, especially those related to
lawsuits for talcum powder products. API's parent company, Natura,
purchased most of its debt a year ago by performing a tender offer
on its bond due 2043, as well as purchasing API's operations in the
largest Latin American markets as Brazil, Argentina, and Mexico.
API still holds subsidiaries through (BB-/Stable/--) that operate
in Poland, the Philippines, the U.K., Italy, and Hungary, for which
Natura made an offer to acquire for $125 million.
Natura would pay for the acquisition with loans that were granted
to API. S&P estimates API's subsidiaries represent around 20% of
Natura's revenues, with no EBITDA generation in the past few years.
Currently, S&P doesn't expect cross-default clauses or anticipated
debt payments to affect Natura's debt. API is not a guarantor for
the parent's debt.
API is a nonoperating subsidiary of Natura. Its subsidiaries
operate in Latin America, the Middle East, Europe, and North
America--API has gradually been selling these companies to Natura.
The subsidiaries manufacture cosmetics products and sell through
the direct sales model via representatives.
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G U Y A N A
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GUYANA: Officials Hope for Removal of Catfish Exportation Ban
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RJR News reports that agricultural officials in Guyana are hoping
that an almost seven-year ban on the exportation of catfish to the
United States will be lifted.
The US Department of Agriculture's Food Safety and Inspection
Service is conducting another review of documents submitted by the
CARICOM country, according to RJR News.
In 2017, Guyana was among several countries that were banned from
exporting catfish to the US over safety concerns, the report
recalls.
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M E X I C O
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CEMEX SAB: Divesting Dominican Republic Operations
--------------------------------------------------
Jamaica Observer reports that Cemex, SAB de CV is set to sell its
Dominican Republic operations for US$950 million ($155.93 billion)
to Cementos Progreso Holdings, S.L. and its strategic partners as
the Mexican cement giant continues its divestment of
emerging/non-core markets and reallocates capital to key markets in
North America and Europe.
The deal which was announced Monday, Aug. 5, would see Cemex divest
asset in the Dominican Republic including one cement plant with an
installed capacity of 2.4 million tonnes, two integrated production
lines and related cement, concrete, aggregates and marine terminal
assets, according to Jamaica Observer. The deal also includes
export businesses to Haiti and is set to close in the fourth
quarter of 2024 subject to closing conditions, the report notes.
CEMEX Dominicana, SA is Cemex's operating subsidiary in the
Dominican Republic and falls under its South, Central America and
the Caribbean (SC&C) segment, the report relays.
Cemex Dominicana grew its revenue by five per cent in 2023 to
US$360 million and had an operating profit of US$130 million
(J$19.97 billion), the report discloses. Its EBITDA (earnings
before interest, tax, depreciation and amortisation) improved to
US$139 million, the report says. It was the second-largest market
in the SC&C segment in terms of revenue behind Colombia which
reported US$458 million, but Cemex Dominicana was the most
profitable market, the report relays.
Cemex Dominicana's had US$233 million in total assets and US$138
million in equity/net assets at the end of 2023, the report
recalls. It invested US$16 million in capital expenditure during
2023 and was set to spend an extra US$20 million in its operations
during 2024, the report notes. This is crucial as informal cement
demand has been weak while formal construction in tourism and
infrastructure remains robust, the report says.
Cemex Dominicana is the second largest producer of Cement in the
Dominican Republic, just behind Domicen which is the largest player
in a market that had 5.4 million tonnes of cement consumption, the
report discloses. Domicen is the 70 per cent parent company of
Buying House Cement Limited, a cement distributor based in St.
James, Jamaica, the report says.
"This transaction advances us significantly in our portfolio
rebalancing strategy which is focused on reducing our exposure in
Emerging Markets and redeploying capital into growth investments in
priority markets, primarily the US," said Cemex Chief Executive
Officer Fernando A Gonzalez Olivieri in the press release, the
report discloses.
The acquisition of Cemex's Dominican Republic operations continues
to serve as the growth platform for Cementos Progreso, the report
relays. The Guatemalan construction company acquired Cemex's Costa
Rican and El Salvador operations in August 2022 for US$325 million,
a deal which saw Cemex record a US$240-million gain on disposal,
the report notes. This acquisition will serve as Cementos' eighth
market and further improve its cement production capacity which
currently sits at six million tonnes, the report says.
This is the second announced divestment for Cemex in 2024 following
its April announcement to sell its operations and assets in the
Philippines to DACON Corporation, DMCI Holdings, Inc and Semirara
Mining & Power Corporation for an estimated US$305 million, the
report notes. Its last major divestment was in March 2021 for the
sale of 24 concrete plants and one aggregates quarry in Lyon,
France to LafargeHolcim for US$44 million, the report says.
Cemex achieved an investment grade credit rating of BBB- from S&P
Global Ratings and Fitch Ratings earlier in 2024, the report
relays. The company has also cut its leverage ratio to 2.13 times
at the end of June 2024 and is currently aiming to bring that
figure down to 1.5 times over the next three years, the report
notes. It also restarted its dividend programme where it will pay
US$120 million over the next year with the next payment set to
September 17, the report discloses.
This improved financial position is reflected in the second quarter
results as it generated US$4.49 billion in net sales and US$238.58
million in consolidated net profit, with US$230.39 million being
attributable to owners, the report says. The SC&C segment's net
sales improved by three per cent to US$457 million with the
operating EBITDA at US$110 million, the report notes. The strong
growth in the Jamaican tourism sector was noted as a reason for
higher volumes while Panama saw volume growth related to
infrastructure projects such as the metro and fourth bridge over
the canal, the report discloses.
The positive contribution from the Jamaican market is expected to
continue climbing steadily as its subsidiary Caribbean Cement
Company Limited (CCC) looks to spend about J$4 billion this year
for its capacity expansion, the report relays. CCC has already
spent J$2.32 billion in capital expenditure for the first six
months of 2024 as it seeks to improve its capacity by 30 per cent
to about 1.5 million tonnes, the report notes. This additional
capacity will not only allow for the company to satisfy domestic
demand, but also better serve export markets in the Caribbean, the
report relays. CCC has been exporting cement to Turks & Caicos in
recent times.
However, with the expansion to be completed in the first quarter of
2025 and the company to shutdown the plant for maintenance in the
third quarter, CCC might be importing cement in the coming months
from one of the other regional Cemex plants to satisfy the market,
the report discloses. The length of the shutdown and demand from
the local market will dictate the cost of the shutdown and
associated imports, the report notes. This won't be a major
problem for the company which has accumulated J$9.46 billion in
cash and has parked J8.7 billion (US$56 million) with Cemex
Innovations Holdings Limited, the report says.
CCC's second quarter sales increased to J$7.67 billion with
operating profit coming in at J$2.76 billion, the report discloses.
Due to the additional financial income and lower taxes, CCC's net
profit grew nine per cent to J$2.35 billion, the report relays.
For the overall six months, CCC's revenue was up seven per cent to
J$15.28 billion with operating profit 68 per cent to J$5.39 billion
due to the prior period having a general shutdown, the report
notes. Net profit grew 75 per cent to J$4.28 billion and was
slightly behind the J$5.58 billion earned in all of 2023, the
report recalls.
CCC shareholders are set to receive a J$1.9655 dividend totaling
J$1.67 billion to be paid on September 3. Its parent company
Trinidad Cement Limited (TCL) will receive J$1.24 billion while
Cemex collects J$82.92 million, the report notes. TCL shareholders
are to receive a TT$0.08 dividend on September 9 totalling TT$29.97
million. Sierra Trading (Cemex SA de CV) will receive TT$20.93
million, the report says.
As reported in the Troubled Company Reporter-Latin America on
Feb. 27, 2024, S&P Global Ratings affirmed its 'BB+' global and
'mxAA/mxA-1+' national scale issuer credit ratings on Cemex S.A.B.
de C.V., following the assignment of the new M&G assessment. At the
same time, S&P affirmed its 'BB+' global scale issuer credit
ratings to Cemex's rated subsidiaries. Outlook remains positive on
both scales.
OPERADORA DE SERVICIOS: S&P Cuts ICR to 'CC' on Missed Payment
--------------------------------------------------------------
On Aug. 13, 2024, S&P Global Ratings lowered its long-term global
scale issuer credit and issue-level ratings on Operadora de
Servicios Mega S.A. de C.V. SOFOM E.R. (GFMega) to 'CC' from 'CCC-'
and placed them on CreditWatch with negative implications.
On Aug. 13, 2024, GFMega announced that it missed a coupon payment
on its senior unsecured notes due 2025. The company has 30 days to
make the payment before it defaults under the current indenture and
is working with bondholders to reach an agreement.
GFMega failed to make a scheduled interest payment of about $25
million on its $352 million senior unsecured notes due Feb. 11,
2025. It has 30 days to make the payment. The company is currently
holding discussions and examining strategic alternatives with its
lenders to reach an agreement on a possible recapitalization.
S&P said, "There's a significant risk, in our view, that the
company will choose to not make this payment within the grace
period or announce a debt restructuring that we would consider to
be distressed and, therefore, tantamount to default. In our
opinion, GFMega's liquidity is very vulnerable, with its 2025 bond
maturing in six months, and the company doesn't have enough
resources to cover the outstanding principal, which represents
around 45% of its total liabilities."
*********
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 2024. All rights reserved. ISSN 1529-2746.
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