/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/240910.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, September 10, 2024, Vol. 25, No. 182 Headlines A R G E N T I N A ARGENTINA: Milei Strikes Down Pension Bill to Boost Payments EMPRESA DISTRIBUIDORA: Fitch Assigns 'CCC' LT IDR B R A Z I L ATLAS LITHIUM: Amends RTEK Deal, Taps Rodrigo Menck as Director ATLAS LITHIUM: Director Rodrigo Menck Holds 1,450 Common Shares AZUL SA: Not Weighing Chapter 11, CEO Says BRAZIL: Sees Historic Unemployment Low of 6.8% in July 2024 C O L O M B I A TERMOCANDELARIA POWER: Fitch Rates New Sr. Unsec. Notes 'BB' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Cost of Family Basket Rose in All Quintiles J A M A I C A JAMAICA: Transport Costs up 11.5% for Year Ended July - - - - - ================= A R G E N T I N A ================= ARGENTINA: Milei Strikes Down Pension Bill to Boost Payments ------------------------------------------------------------ Buenos Aires Times reports President Javier Milei struck down a law passed by Congress that would force the government to boost spending on retirement and pensions by more than eight percent. Milei, 53, issued a veto to strike down the entire law passed by both chambers of Congress, which also established a new formula for calculating pension updates based on the evolution of prices and the wage index, according to Buenos Aires Times. The head of state signed the veto, but it was only published via decree 782/2024 in the Official Gazette, the report discloses. The government defended its move as a bid to maintain fiscal solvency, arguing the impact is too much of a strain on state coffers, the report relays. Citizens in Argentina are currently struggling with an inflation rate running at more than 250 percent per annum, the report notes. The minimum pension in Argentina is currently 225,454 pesos, or around US$230 at the official exchange rate, the report discloses. However, the basic basket of goods for retirees, as measured by the Defensoria de la Tercera Edad (Ombudsman for the Elderly) costs 685,041 pesos in March (around US$700, the most recent updated measurement), the report says. Private estimates suggest that the basket exceeded 900,000 pesos (around US$918), in July, due to increases in the price of medicines, rents and public services, the report discloses. Publication of the veto comes after Milei met with the heads of allied caucuses in a meeting also attended by presidential chief-of-staff Karina Milei and Cabinet Chief Guillermo Francos, the report relays. Congress can overturn the president's veto and make the law stand if it reaches a two-thirds vote in both chambers, where the ruling party is in the minority, the report notes. Casa Rosada sources stated that Milei explained his reasoning to the lawmakers as he sought to persuade them not to back the effort to overturn his veto and reinstate the law, the report relates. In a concession, the government announced that it would make a one-off payment to pensioners of up to 70,000 pesos in September, the report discloses. Since he took office on December 10, the president has made "fiscal balance" one of his government's main goals, the report says. According to the decree, Milei vetoed the law because it "manifestly violates the current legal framework in that it does not consider the fiscal impact of the measure, nor does it determine the source of its financing," the report notes. In contrast, at the end of July, Milei decreed an increase of some US$102 million for the Intelligence Secretariat's reserved expenses – without accountability – which represented an increase in its budget of more than 700 per cent, the report says. In the first half of this year, Argentina recorded its first fiscal surplus since 2008 thanks to the implementation of drastic spending cuts that led to the paralysis of public works, the layoff of tens of thousands of state employees and the freezing of funding for education, health and social welfare, the report discloses. Private studies estimate that more than 33 percent of Milei's fiscal adjustment has fallen on the retirement and pension system, from which some seven million people benefit, due to a lack of updating. Inflation has dropped from 20.6 percent monthly in January to four percent in June, though the economy is in the grips of a deep recession with a collapse in consumption and rising unemployment, the report says. GDP fell 5.1 percent year-on-year in the first quarter and more than half of the population now lives in poverty, the report 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 Aug. 8, 2024, affirmed its 'CCC/C' foreign and local currency sovereign credit ratings on Argentina. S&P also affirmed its 'raB+' national scale rating on the country. The outlook on the long-term ratings remains stable. S&P's 'CCC' transfer and convertibility assessment for Argentina remains unchanged. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and other uncertainties with recent progress in making fiscal adjustments, reducing inflation, and undertaking structural reforms to address long-standing microeconomic weaknesses that have contributed to poor economic performance for many years.s that it would likely consider to be distressed. Fitch Ratings 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. EMPRESA DISTRIBUIDORA: Fitch Assigns 'CCC' LT IDR ------------------------------------------------- Fitch Ratings has assigned Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR) a Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) of 'CCC'. Fitch has also assigned a 'CCC+'/'RR3' to EDENOR's proposed unsecured notes up to USD400 million to be issued the week of September 9. Net proceeds from the planned issuance will repay outstanding debt, finance capex plans, and for general corporate purposes. EDENOR's ratings reflect the tariff adjustment during February 2024, on average the company received 319.2% increase in ARS on the Added Distribution Value (VAD). EDENOR has a strong market position operating a long-term energy distribution concession in the north of Buenos Aires, Argentina (CC), combined with low leverage. The company operates in a challenging environment, marked by the country's economic issues, including hyperinflation and regulatory unpredictability, which significantly affect its credit strengths. EDENOR does not receive direct subsidies from the central Government, the company acts as the collector for the electric sector, retaining approximately 30% of the final bill, that corresponds to its regulated VAD. Key Rating Drivers Regulatory Update: EDENOR received 319.2% average tariff increase in ARS on the VAD in its concession area, during February 2024, coupled with monthly adjustment mechanisms based on a polynomial formula that includes 55% salary index, 25% Wholesale Domestic Price Index (IPIM), and 20% inflation. In addition, an updated tariff framework is expected to be implemented following the completion of the Integral Tariff Revision (RTI) process, applicable to the next five-year tariff review process for 2025-2029 reaching a 10.32% weighted average cost of capital (WACC), after taxes, for regulated energy distribution assets, expected to start during January 2025. Operating Environment Constrains Ratings: As a regulated utility company, EDENOR's revenues are exclusively generated in Argentina, making the company vulnerable to the country's volatile economy, the risk of abrupt interruptions in financial access, and the weak systemic governance. These factors constrained the company and negatively affect EDENOR's rating. The current administration plan centers on an aggressive overall fiscal adjustment, being the reduction of direct electric subsidies to end users one of these initiatives. EDENOR does not receive direct subsidies from the central Government, the company acts as the collector for the electric sector, retaining approximately 30% of the final bill, that corresponds to its regulated VAD. Debt Regularization with CAMMESA: EDENOR's tariff adjustment allows the company to recover accumulated debt for energy purchases with Compania Administradora del Mercado Mayorista Electrico S.A. (CAMMESA), which acts as an agent for an association representing electricity generators, transmission, distribution and large consumers or the wholesale market participants known as Mercado Mayorista Electrico. EDENOR agreed a payment plan with CAMMESA due to previous energy purchases reaching a debt recognition of approximately ARS328,676 million, including penalties, as of June 2024. EDENOR payment obligations to CAMMESA were deferred as a consequence of partial payments on energy purchase invoices, in order to finance the deficit resulting from the tariff delays. Since the agreement was reached, the company has paid CAMMESA 100% of the energy purchases since April 2024. Strong Leverage Profile: EDENOR has a strong leverage profile, with EBITDA leverage estimated below 2.0x over the rated horizon, including the USD400 million issuance and refinance of existing debt. Incorporating the tariff adjustment that took place during this year, Fitch anticipates an EBITDA reaching approximately USD240 million in 2024, and roughly USD680 million in 2025 considering the completion of the RTI process, reaching the regulated WACC implementation and assuming no additional debt. The company's EBITDA interest coverage, will remain around 5.0x over the rated horizon, considering these assumptions. Parent Linkage: EDENOR is 51% owned by Empresa de Energía del Cono Sur (Edelcos S.A.; not rated), a special purpose vehicle created solely for the purpose of acquiring and managing EDENOR by its ultimate parent South American Energy LLP, based in the United Kingdom (AA-/Stable). The ownership structure has a neutral impact on EDENOR's credit profile, as the 2021 purchase added no debt to EDENOR's balance sheet and has resulted in financial, managerial and operational continuity. Derivation Summary Relative to its peers, EDENOR's ratings are constrained by Argentina's (CC) rating as the company operates in a challenging environment, marked by the country's economic issues, including hyperinflation and regulatory unpredictability, which significantly affect its credit strengths. EDENOR's operates a long-term energy distribution concession serving 3.3 million customers, its business profile compares with regional peers such as Energisa S.A. (BB+/Stable), Cemig Distribuicao S.A.'s (Cemig D; BB/Stable), subsidiary of Companhia Energetica de Minas Gerais' (Cemig; BB/Stable), Energuate Trust (Energuate; BB/Stable) and Elektra Noreste S.A.(ENSA; BB+/Stable). Energisa is a non-operating holding company in the electric energy sector, mainly through nine energy distribution concessionaires serving around 8.6 million customers. The group is the fifth largest electric utility in Brazil with additional operations and investments in the energy transmission and generation segments and natural gas distribution. Cemig is the holding of one of the largest integrated power utility groups in Brazil. The group operates in the distribution segment through Cemig D and in generation and transmission mainly through Cemig Geracao e Transmissao S.A. (Cemig GT; BB/Stable). Energuate Trust is the holding trust of Guatemala's two largest rural electricity distribution companies, Distribuidora de Electricidad del Oriente S.A. (DEORSA) in the northeast and Distribuidora de Electricidad del Occidente S.A. (DEOCSA). ENSA is one of Panama's (BB+/Stable) three electricity distribution companies. Its concession area covers 39% of the country, spanning parts of Panama City and the provinces north and east of the capital. It serves 41% of customers and commands 40% of energy sales. EDENOR's expected gross leverage, measured as total gross debt/EBITDA, is below 2.0x over the rated horizon, stronger compared with ENSA and Cemig in the range of 2.5x and 3.0x, while Energuate has deleverage trajectory below 2.0x by 2026, and Energisa is expected to remain between 3.5x and 4.0x over the rated horizon. Compared to ENSA and Energuate, EDENOR does not receive direct subsidies from the central Government, ENSA's subsidies are estimated at 25% of ongoing EBITDA, and Energuate's subsidies represent approximately 40% of the company's EBITDA. EDENOR has lower scale of operations compared with European integrated utilities such Engie S.A. (BBB+/Stable), Enel Spa (BBB+/Stable), e-netz Suedhessen AG (BBB+/Stable) and EDF Energy Holdings Limited (BBB-/Stable). All well-diversified utilities in energy and natural gas distribution, as well as networks, energy solutions and nuclear assets. Key Assumptions - average 319.2% tariff adjustment during February 2024 for the VAD with monthly adjustments per inflation starting during august 2024; - Five-year tariff review process starting January 2025 reaching the regulated (WACC) of 10.32%, after taxes; - CAMESA debt recognition of ARS328,676 as of June 2024; - USD400 million issuance during 2024, to refinance existing debt and general corporate purposes; - Energy losses around 15%; - Accumulated capex of USD633 million during 2024-2026; - No dividend payments during 2024-2026. Recovery Analysis Argentina is assigned to Group D, where the assigned Recovery Ratings (RR) are capped at 'RR4'. Fitch believes the recovery prospects for Edenor is higher than the expected recovery of 31%-50% for the 'RR4' band. This is based on Fitch's bespoke recovery analysis for each individual issuer as well as precedents of debt exchange offerings driven by capital control restriction put into place by the Argentine Central Bank. In all cases, the calculated recovery was higher than the expected recovery of 51%-70% for the 'RR3' band, but Fitch capped the RRs at 'RR3' to reflect a less predictable range of outcomes. A RR of 'RR3' supports a one-notch uplift for the instrument rating from the issuer's Foreign Currency IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of Argentina's sovereign rating; - Implementation of the proposed tariff framework with automatic inflation adjustments through the final RTI process; - Improvement in the regulatory framework migrating to a constructive scheme, with low government interference in utility regulations with a clear tariff structure, enabling companies to recover costs of service from end users through tariffs. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Worsening of the regulatory environment, assessed as negative changes to the regulated framework not allowing EDENOR the implementation of the tariff structures eroding the company's liquidity, cash flow and capital structure; - Adverse change of control in EDENOR that modifies the company's business and financial strategy, dividends distribution and cash extraction, as well as changes in corporate governance practices. Liquidity and Debt Structure Adequate Liquidity: As of June 2024, the company had cash on hand and short-term investments reaching ARS177,025 million (USD186 million) with short-term debt maturities of USD21 million. EDENOR has successfully extended its debt maturity profile during 2024, and with the proposed USD400 million issuance due 2031, the company will improve the tenor of its financial debt. As of June 2024, EDENOR has approximately ARS328,676 million with CAMMESA, that started paying during April 2024. Issuer Profile EDENOR is the largest electricity distributor in Argentina in terms of the number of customers and electricity sold. The concession area comprises 20 municipalities in the northwest of Greater Buenos Aires and the northwest zone of the Autonomous City of Buenos Aires, covering an area of 4,637 square kilometers and a population of approximately 9 million inhabitants. Date of Relevant Committee 28 August 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR) LT CCC New Rating NR LC LT CCC New Rating NR senior unsecured LT CCC+ New Rating RR3 =========== B R A Z I L =========== ATLAS LITHIUM: Amends RTEK Deal, Taps Rodrigo Menck as Director --------------------------------------------------------------- Atlas Lithium Corporation disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on August 16, 2024, the Company and RTEK International DMCC entered into the second Amended and Restated Technical Services Agreement which modified certain aspects of the Amended and Restated RTEK Agreement dated March 31, 2024. RTEK is a consulting firm that advises lithium explorers, developers, and producers. The Company's engagement of RTEK as its consultant to provide services under now the Amended RTEK Agreement is enabling the Company to finalize, assemble, deploy, and commission its Working DMS Plant in a cost-effective method. As a result, personnel affiliated with RTEK who worked at the Company as salaried employees, officers, and in other capacities, will separate and no longer be employed by the Company, and will continue to provide services to the Company as RTEK consultants, compensated through RTEK. While this new arrangement entails a reduction in current 26 cash expenses for the Company, RTEK will receive additional incentive compensation in the form of restricted shares of the Company's common stock related to achievement of specific performance targets. A number of managerial and compensatory provisions in the Amended RTEK Agreement have been amended to provide for the following: i) Both parties have agreed to revise and amend the Stage Two Budget, as per the terms of the revised Appendix 2 of the Amended RTEK Agreement and further agreed to updated terms of services with respect to the Phase Two Services (as such services are described in the Amended RTEK Agreement); ii) The formation of an operations committee whose members will be Mr. Brian Talbot, RTEK principal, and three technical employees of the Company which shall meet weekly to ensure that the Company is progressing towards its operational goals of an installed Plant and its production of lithium concentrate. The Operations Committee shall have the power to adjust the timing of, but not increase the budget for contracted RTEK services under the Amended RTEK Agreement in connection with the Phase Two Services, as also outlined in Appendix I Part II of the Amended RTEK Agreement, and as consideration for RTEK's performance and achievement of enumerated milestones, the Company shall provide RTEK with additional stock-based incentive compensation as follows: a. issuance of restricted shares of the Company's common stock equivalent to $1,000,000 upon delivery of certain containers with approximately 90% of the parts of the Company's Plant; b. issuance of restricted shares of the Company's common equivalent to $500,000 when the vessel with the remaining items of the Company's Plant arrives at the port in Brazil; c. issuance of restricted shares of the Company's common equivalent to $1,000,000 when conditions b. and c. above are met by certain deadlines and RTEK formally delivers to the Company a properly reviewed version of the Plant's manuals and instructions prepared by an engineering company; d. issuance of up restricted shares of the Company's common equivalent to up to $2,500,000 when the Company receives pre-payments for its lithium products in the amount of $40,000,000; and e. issuance of restricted shares of the Company's common stock with a value equivalent to the lesser of: i) $2,500,000 or ii) 6.25% of any amounts actually received from other pre-payments for production, provided that: a) RTEK made such introduction(s), and worked towards completion of any such agreement(s), and b) any such agreements are not from excepted sources. Any such incentive compensation to RTEK is only in the form of restricted shares of the Company's common stock, and with respect to items (a) through (e) above under no circumstances such 27 compensation shall exceed $5,000,000 in aggregate value. Resignation of Director and Chief Operating Officer On August 16, 2024, Brian Talbot resigned as a director and Chief Operating Officer of the Company. Mr. Talbot is a principal of RTEK and his departure is related to the adoption of the Amended RTEK Agreement and his need to dedicate more time to the business of RTEK on lithium projects outside of Brazil for which being a director and officer of the Company presented a conflict of interest. Under the terms of the Amended RTEK Agreement, Mr. Talbot will be a member of the Operations Committee established under the terms of the Amended RTEK Agreement. As disclosed in the Company's Current Report on Form 8-K filed March 25, 2024, in connection with his appointment as director of the Company, Mr. Talbot received 10,000 time-based restricted stock units subject to vesting monthly in six equal installments. As of the date of his resignation, Mr. Talbot had vested on 7,500 RSU shares and in connection with his resignation, 500 RSU shares have been accelerated, for a total number of 8,000 RSU shares. In connection with Mr. Talbot's resignation, the Company's board of Directors approved the appointment of Rodrigo Nazareth Menck, age 49, as a Director, to fill the vacancy created by the resignation of Mr. Talbot. Mr. Menck's appointment is effective on August 16, 2024. From September 2023 until now, Mr. Menck has been an advisor to the Company covering a range of topics including operational readiness and interface with institutional investors. Previously, from January 2023 to July 2023, Mr. Menck was the Chief Financial Officer of Sigma Lithium Corporation, a Canadian publicly listed company with lithium projects in Brazil in the same mineral district as those of Atlas Lithium. During his tenure at Sigma Lithium, he successfully contributed to listing its BDR (Brazilian Depository Receipts) at B3, the local Brazilian stock exchange. He also worked in structuring the financial area to its first PCAOB audit review. Between February 2019 and July 2022, Mr. Menck held the position of Senior Vice President of Finance & Group CFO at Nexa Resources SA, a NYSE & TSX listed company, controller by traditional Brazilian group Votorantim. Prior to that, he was the Global Treasurer at Nexa Resources from April 2016 to January 2019, responsible for the debt restructuring of the company, as well as acting as PMO for its IPO process, which was successfully concluded in October 2017. From January 2011 to March 2016, Mr. Menck was an Investment Director at the Odebrecht group in Brazil, responsible for the structuring of project finance transactions of road concessions throughout Latin American, especially in Peru, Colombia and Panama. He was also responsible for the structuring of MLA (Multilateral Agencies) financing for landmark public constructions in countries such as Argentina, Paraguay and the Dominican Republic. 28 From May 2008 to January 2011 Mr. Menck held positions at Braskem SA, a large Brazilian petrochemical company, initially as Debt Manager, from May 2008 to May 2010, and then as Corporate Finance & Shared Services Director, during which was responsible for several capital market transactions, such as bond issuances, local securitization funds structuring and day-to-day debt restructuring. Prior to that, from January 1996 to May 2008, Mr. Menck had a 12-year career in several Brazilian and international banks based in Brazil, such as BankBoston, Banco Francês e Brasileiro, WestLB, Citibank and BNP Paribas, holding several different positions such as Trader, Trade Finance Manager, Securitization Officer, Product Manager, DCM & Export Finance Structurer and Relationship Manager, while covering a variety of clients in a diverse range of segments in Brazil. He has a degree in Business Administration, and a MBA in Economics of the Financial Sector, both from the University of São Paulo in Brazil. Mr. Menck is fluent in Portuguese, English and Spanish and is a Certified CFO by the Brazilian Institute of Financial Executives in Brazil. In connection with Mr. Menck's appointment as Director, the Compensation Committee of the Board recommended, and the Board subsequently approved, compensation to Mr. Menck consisting of 10,000 time-based restricted stock units, which shall vest monthly in six equal installments, beginning September 1, 2024, which will be granted pursuant to the Company's 2023 Stock Incentive Plan. Mr. Menck shall continue to receive $15,000 monthly compensation in his current role as an Advisor to the Company. About Atlas Lithium Headquartered in Minas Gerais, Brazil, Atlas Lithium Corporation -- http://www.atlas-lithium.com-- is a mineral exploration and development company with lithium projects and multiple lithium exploration properties. In addition, the Company owns exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Its current focus is the development from exploration to active mining of its hard-rock lithium project located in the state of Minas Gerais in Brazil at a well-known lithium-bearing pegmatitic district, which has been denominated by the government of Minas Gerais as "Lithium Valley." Atlas Lithium reported a net loss of $42.63 million for the 12 months ended Dec. 31, 2023, compared to a net loss of $5.66 million for the 12 months ended Dec. 31, 2022. As of March 31, 2024, the Company had $37.70 million in total assets, $35.10 million in total liabilities, and $2.60 million in total stockholders' equity. Atlas Lithium has historically incurred net operating losses and has not yet generated material revenues from the sale of products or services, according to the Company's Quarterly Report for the three months ended June 30, 2024. As a result, the Company's primary sources of liquidity have been derived through proceeds 29 from the (i) sales of its equity and the equity of one of its subsidiaries, and (ii) issuance of convertible debt. As of June 30, 2024, the Company had cash and cash equivalents of $32,267,730 and working capital of $27,303,255, compared to cash and cash equivalents $29,549,927 and a working capital of $24,044,931 as of December 31, 2023. The Company believes its cash and cash and equivalents will be sufficient to meet its working capital and capital expenditure requirements for a period of at least 12 months from the date of these financial statements. However, the Company's future short- and long-term capital requirements will depend on several factors. To the extent its current resources are insufficient to satisfy its cash requirements, the Company may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than it expects, the Company may be forced to scale back its existing operations and growth plans, which could have an adverse impact on its business and financial prospects and could raise substantial doubt about its ability to continue as a going concern. ATLAS LITHIUM: Director Rodrigo Menck Holds 1,450 Common Shares --------------------------------------------------------------- Rodrigo Menck, a director at Atlas Lithium Corp., filed a Form 3 Report with the U.S. Securities and Exchange Commission, disclosing direct beneficial ownership of 1,450 shares of the company's common stock. A full-text copy of Mr. Menck's SEC Report is available at: https://tinyurl.com/42sywfhr About Atlas Lithium Headquartered in Minas Gerais, Brazil, Atlas Lithium Corporation -- http://www.atlas-lithium.com-- is a mineral exploration and development company with lithium projects and multiple lithium exploration properties. In addition, the Company owns exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Its current focus is the development from exploration to active mining of its hard-rock lithium project located in the state of Minas Gerais in Brazil at a well-known lithium-bearing pegmatitic district, which has been denominated by the government of Minas Gerais as "Lithium Valley." Atlas Lithium reported a net loss of $42.63 million for the 12 months ended Dec. 31, 2023, compared to a net loss of $5.66 million for the 12 months ended Dec. 31, 2022. As of March 31, 2024, the Company had $37.70 million in total assets, $35.10 million in total liabilities, and $2.60 million in total stockholders' equity. AZUL SA: Not Weighing Chapter 11, CEO Says ------------------------------------------ Azul SA is not planning on filing for Chapter 11 bankruptcy protection, the Brazilian airline's CEO told Reuters, contradicting reports which caused the carrier's shares to nosedive. Bloomberg News previously reported that Azul was considering options ranging from an equity offering to filing for Chapter 11 in the United States in order to address its debt obligations, according to the report. The report was "misinterpreted," the company responded in a filing, as its Brazil-listed shares sank 24%, Reuters relays. CEO John Rodgerson said in an interview that Azul was financially healthy and in "friendly negotiations" with its partners, including aircraft lessors, due to the depreciation of Brazil's real, notes the report. Azul said on Thursday, Aug. 29, it was in "active talks" with stakeholders as part of a previously announced plan to overhaul its equity structure, recalls Reuters. It added that options included a structure to use its cargo business as collateral for up to $800 million, which had already been set up, the report says. Azul could also tap into credit links from the national development bank, it said, adds the report. As reported in the Troubled Company Reporter-Latin America on July 22, 2024, Fitch Ratings has affirmed Azul S.A.'s (Azul) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B-' and its Long-Term National Scale rating at 'BB(bra)'. Fitch has also affirmed Azul Investments LLP's unsecured bonds at 'CCC+'/'RR5', as well as Azul Secured Finance LLP's senior secured notes at 'B-'/'RR4'. The Rating Outlook of Azul's IDRs has been revised to Negative from Stable. Fitch has assigned a Negative Outlook to Azul's Long-Term National Scale Rating. BRAZIL: Sees Historic Unemployment Low of 6.8% in July 2024 ----------------------------------------------------------- Rio Times Online reports that the Brazilian Institute of Geography and Statistics (IBGE) recently reported a notable decrease in unemployment. As of July 2024, the unemployment rate dropped to 6.8%, according to Rio Times Online. This rate represents about 7.4 million people and is the lowest since January 2015, the report relays. Compared to the previous quarter, unemployment fell by 0.7 percentage points. It also dropped by 1.1 percentage points, or approximately 1.1 million people, from the same period last year, the report notes. The employment scene has also improved significantly, the report discloses. A record 102 million people were employed during this quarter, the report says. This figure is up by 1.2 million from the last quarter and 2.7 million from the previous year, the report relays. The employment rate rose to 57.9%, the report notes. This is an increase of 0.6 percentage points from the previous quarter, the report relays. It also marks the highest employment level for this quarter since 2014, signaling a strengthening job market, the report discloses. Average earnings have shown positive growth, the report relays. They averaged 3,206 reais (about $565), up by 4.8% from last year, the report notes. This increase in earnings has boosted household consumption, the report says. As a result, there is higher demand for goods and services, the report discloses. This, in turn, creates more jobs, the report relays. The rate of informal employment stood at 38.7%, the report notes. This equates to 39.4 million people and has remained steady compared to both the previous quarter and last year, the report relays. Success Comes at a Price As of July 2024, Brazil confronts a severe fiscal dilemma with a public accounts deficit that reached 10.02% of its Gross Domestic Product (GDP) in the 12 months through July, the report discloses. This alarming figure, released by the Central Bank, overshadows the financial prudence seen in many nations and casts significant concerns over Brazil's economic stability and growth prospects, the report relays. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. As reported in the TCR-LA on May 6, 2024, Moody's Ratings affirmed the Government of Brazil's long-term issuer and senior unsecured bond ratings at Ba2, senior unsecured shelf rating at (P)Ba2 and changed the outlook to positive from stable. Moody's assesses thatBrazil's real GDP growth prospects are more robust than in the pre-pandemic years, supported by the implementation of structural reforms over multiple administrations, as well as the presence of institutional guardrails that reduce uncertainty around future policy direction. The outlook change to positive is underpinned by Moody's assessment that more robust growth combined with continued, albeit gradual, progress towards fiscal consolidation, may allow Brazil's debt burden to stabilize. However, there are risks to the government's execution of continued fiscal consolidation. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed Brazil's global scale short-term ratings at 'B' and its national scale long-term rating at 'brAAA'. S&P also raised the transfer and convertibility assessment on the country to 'BBB-' from 'BB+'. S&P said, "The stable outlook reflects our expectation that Brazil will maintain a strong external position, thanks to strong commodity output and limited external financing needs. We also believe Brazil's institutional framework can sustain stable and pragmatic policymaking based on extensive checks and balances across the executive, legislative, and judicial branches of government. We expect a very gradual fiscal correction but anticipate fiscal deficits will remain large." Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-TermForeign-Currency Issuer Default Rating (IDR) at 'BB' with a StableOutlook. Fitch said Brazil's ratings are supported by its large and diverse economy, high per-capita income, and deep domestic markets and a large cash cushion that support the sovereign's financing flexibility and its high local-currency debt share. Strong external finances support resilience to shocks, underpinned by a flexible exchange rate, robust international reserves and a sovereign net external creditor position. The ratings are constrained by weak economic growth potential, relatively low governance scores, high and rising government debt/GDP, and budgetary rigidities. A new fiscal framework introduced this year aims to anchor a gradual consolidation process and address these fiscal weaknesses, but its effectiveness is increasingly unclear. DBRS Inc., on August 15, 2023, upgraded Brazil's Long-TermForeign and Local Currency - Issuer Ratings to BB from BB (low).At the same time, DBRS Morningstar confirmed Brazil'sShort-term Foreign and Local Currency - Issuer Ratings at R-4.The trend on all ratings is Stable (March 2018). =============== C O L O M B I A =============== TERMOCANDELARIA POWER: Fitch Rates New Sr. Unsec. Notes 'BB' ------------------------------------------------------------ Fitch Ratings has assigned a 'BB' rating to TermoCandelaria Power S.A.'s (TPL) proposed notes due 2034 for up to USD425 million. Net proceeds will fund the refinancing of the remaining outstanding amount of the USD596 million senior unsecured note due 2029. Fitch currently rates TPL's Long-Term Foreign and Local Currency Issuer Default Rating (IDR) 'BB'. The Rating Outlook is Positive. Key Rating Drivers Improved Leverage Profile: The Positive Outlook reflects TPL's improved leverage profile. Fitch's base case assumes EBITDA leverage below 2.8x in the medium term as debt falls due to lower capex needs and dividend payments are based on contingent excess cash surplus. This is coupled with TECAN's conversion of its open-cycle gas power plant to a combined-cycle power plant, which raised installed capacity to 555 megawatts (MW), from 314MW, and boosted efficiency to a net heat rate of 6,500 British thermal units per kilowatt hour, from 10,190 British thermal units per kilowatt hour. In addition, the expected USD425 million issuance will improve TPL's debt maturity profile. Strategic Asset for the Atlantic Region: TPL provides critical electricity capacity amid strong demand and periods of energy volatility within the Atlantic coast of Colombia. TPL's assets support electricity demand peaks, particularly during shortfalls from the country's hydroelectric plants, as well as mitigate transmission constraints to maintain consistent energy supply. TPL constitutes a natural hedge for the intermittency of non-conventional renewable projects, which are slated to come online in the short to medium term. TPL Assets Mitigate Volatility: Dryer and hotter conditions due to the El Niño phenomenon, that extended past 1Q24, together with the completion of TPL's Tecan combined cycle units, has resulted in increased In-Merit generation. Fitch expects Tecan's total generation to rise by close to 30% in 2024, boosting revenue. As the dry conditions recede, Fitch expects In-Merit generation to fall with a consequent decrease in EBITDA, in line with normalized hydrology conditions. In 2023 EBITDA closed at USD387 million. TPL benefits from the country's transmission bottleneck in the northern coast. This results in persistent out-of-merit generation (dispatch due to system inefficiencies remunerated at their declared variable and production cost) by Termobarranquilla (TEBSA), one of its two electricity generation companies, in order to meet demand. This is necessary despite the company's comparative higher variable costs relative to renewable power generation plants. Demand characteristics of the Caribbean coast supports the potential for TEBSA's energy to be continuously dispatched, as long as current transmission bottlenecks and capacity dynamics continue. Weak Contracted Position: TPL does not contract through long-term power purchase agreements (PPAs) but instead provides critical energy amid demand peaks through opportunistic spot sales. Risk is offset by the company's cost competitiveness amid transmission network inefficiencies as it provides predictable out of-merit generation at predictable prices. TPL sources gas domestically and has access to a liquified natural gas (LNG) terminal in the Caribbean coast of Colombia through a contract maturing in 2031. Limited Operational Diversification: TPL's credit profile is constrained by the limited diversification of its operations. The company is exposed to a higher degree of event risk than local and regional peers from unexpected outages or disaster disruptions. TPL's take-or-pay regasification contracts would put additional pressure on its subsidiaries' cost structure in the event of business interruption. TPL combines the operations of 1,529MW of thermal electric assets, which represented around 6.9% of the Colombian electricity generation matrix and around 25% of the country's thermal installed capacity as of YE 2023. Structure Mitigates Market Risks: In the long term, new investments in the transmission network or the completion of nonconventional renewable energy projects in Colombia's coastal region could displace TEBSA within the dispatch curve, resulting in lower out-of-merit generation and lower EBITDA. These risks are partially mitigated by TPL's amortizing structure and a more robust capital structure. Increased EBITDA generation in 2023 resulted in lower leverage levels, closing at 2.4x. Credit Profile Linked to OpCos: TPL is a holding company that combines operations of two electricity generation companies, TEBSA and Termocandelaria (TECAN), located on Colombia's Caribbean coast. TPL fully owns and controls TECAN and has a 57.38% stake in TEBSA. TPL's ratings are mostly related to TEBSA's credit profile as TEBSA accounts for approximately 80% of TPL's consolidated EBITDA. With TECANS's completed combined cycle expansion, Fitch estimates TECAN will account to close to 30% of EBITDA moving forward. Derivation Summary TPL's capital structure compares positively with Orazul Energy Peru S.A. (BB/Stable). Orazul's high medium-term leverage of 5.0x under Fitch's forecast places it at the high end of its rating level. TPL's financial policy and amortization profile are more conservative, with expected 2024 gross leverage levels post-expansion of 2.5x. TPL's debt is mainly comprised of a syndicated loan at TEBSA, and the debt incurred to cover working capital. TPL's business risk is higher than multi-asset energy regional investment-grade peers such as AES Panama Generation Holdings, S.R.L. (BB+/Stable), Kallpa Generacion S.A. (BBB-/Stable) and AES Andes S.A. (BBB-/Stable). These companies benefit from a strong contractual position in their respective markets. Their PPAs support cash flow stability through USD-linked payments and, in Kallpa's case, pass-through clauses related to potential increases in fuel costs. This contributes to higher EBITDA visibility in the long term compared to TPL, which remains exposed and exogenous supply/demand dynamics. Although TPL's key subsidiary TEBSA maintains relative cost efficiency that places it within the coastal base load, future additions to the local renewable energy matrix or expansion of the national transmission network could potentially displace the company from its strong competitive position in the coastal region in the long term. TPL ratings are two notches below Fenix Power Peru S.A. (BBB-/Stable). As a single-asset generator with a high proportion of take-or-pay costs and including its deleveraging trajectory of reaching an average of 3.5x, Fitch views Fenix's standalone credit quality in line with a 'BB+' rating. Nevertheless, Fenix's ratings are buoyed by its strong support from its parent Colbun S.A. (BBB+/Stable). Key Assumptions - The company's reliability charge increases at an average U.S. CPI rate of inflation of 2.0%; - Natural gas Title Transfer Facility (TTF) at USD10.00 per thousand cubic feet (mcf) in 2024-2025, and USD8.00 per mcf in 2026; - Leverage metrics excluding current intercompany loan for USD136 million and eventual USD304 million in 2024; - Refinance of the USD596 million senior unsecured note in 2024; - Total capex of USD57 million in 2024, and below USD32 million during 2025-2026; - TPL's combined annual generation over the medium term of will average 3,100GWh per year; - TEBSA's and TECAN's availability factors at 90%; - Dividend payments in excess of cash surplus. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Reduced debt levels that result in sustained total debt/EBITDA below 3.3x, and a debt service coverage ratio above 1.8x; - An improved contractual position Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Consolidated leverage levels above 4.8x on a sustained basis; - EBITDA to interest coverage of 2.0x or below on a sustained basis or a debt service coverage ratio below 1.2x; - Adverse regulatory changes in Colombia that weaken the company's commercial policy; - A weakening of the company's out-of-merit generation profile that affects revenue visibility. Liquidity and Debt Structure Adequate Liquidity: As of June 30, 2024, consolidated cash on hand ended up at USD148 million to attend around USD125 million in short-term debt. Fitch expects CFO generation to average around USD150 million over the rating and the ratio of available cash to short-term debt to be over 1.0x, as the company reduces its debt levels. TPL has lending relationships with both local and international banks for its working capital needs which gives the company additional flexibility if needed. Issuer Profile TPL is a holding company that owns and operates 1,529MW of thermal power capacity in the Atlantic region of Colombia, through Termobarranquilla (TEBSA) and Termocandelaria (TECAN), making up around 6.9% of the Colombian electricity generation matrix and around 25% of the country's thermal installed capacity as of YE 2023. Date of Relevant Committee 15 April 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ TermoCandelaria Power, S.A. senior unsecured LT BB New Rating =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Cost of Family Basket Rose in All Quintiles --------------------------------------------------------------- Dominican Today, citing the Ministry of Economy, Planning and Development's Macroeconomic Situation Report, reports that the cost of the family food basket rose in all quintiles last July. Still, the most significant variation was in quintile 1, with an increase of 0.74%, equivalent to RD$200.3. From June to July of this year, the cost of the family basket of quintile 1, made up of those with the lowest income, went from RD$27,044.03 to RD$27,244.32, according to Dominican Today. Quintile 1 represents 20% of the households with the lowest level of expenditure, while quintile 5 consists of 20% of the households with the highest level of expenditure, the report notes. In quintile 2, the cost of the family basket increased by 0.65% (RD$227.9), going from RD$35,189.60 to RD$35,417.52, the report relays. Quintile 3 varied by 0.61%, increasing RD$252.9, going from RD$41,562.33 to RD$41,815.21, the report relays. According to the Ministry of Economy, the increases in the first three quintiles are mainly due to the higher incidence of food products, the report discloses. In quintile 4, the basket cost rose RD$230, equivalent to a 0.48% increase, the report relays. Between June and July, it went from RD$48,183.67 to RD$48,413.67, the report says. The average cost of the national family basket is RD$45,494.6, for an increase of 0.53% over June, the report notes. In July, all regions registered increases in annual inflation rates, the report relays. The South region registered the highest increase, with a variation of 0.73%, due to the significant impact of the area's food and non-alcoholic beverages group, the report discloses. The North and East regions followed, with variations of 0.60% and 0.59%, respectively, the report notes. The Ozama region had the smallest increase, with a variation of 0.40%, the report relays. In inter-annual inflation, the Southern region led with a rate of 4.11%, followed by the Ozama region with 3.48% and the Eastern region with 3.62%, the report says. The Northern region registered the lowest inflation rate for the eighth month, 3.36%, the report relays. In September 2020, the cost of the family basket was RD$15,109.69 for the first quintile and RD$66,097.90 for the highest quintile, the report discloses. The country's family basket includes goods and services, such as food, clothing, housing, medicines, medical consultations, transportation, household appliances and education, the report says. In July, tradable goods increased by 0.69% compared to June, the report notes. This increase was mainly due to increases in food items with a high basket weighting, such as fresh chicken and rice, as well as in housing rent, meals prepared outside the home, and personal care services, the report says. Prices of tradable goods rose 0.37% in July, 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. ============= J A M A I C A ============= JAMAICA: Transport Costs up 11.5% for Year Ended July ----------------------------------------------------- RJR News reports that Jamaicans faced higher transport costs for the year ended July. STATIN says the point-to-point inflation rate for this category was 11.5 per cent, according to RJR News. Looking at the 'Transport' division's performance for the month of July alone, prices went up by an average 0.4 per cent, the report notes. The main factors that impacted this were higher petrol prices, along with increased toll rates for the East-West leg of Highway 2000, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. The upgrade of Jamaica's rating to B1 reflects the government's sustained commitment to fiscal consolidation and debt reduction. The positive outlook reflects Moody's assessment that a continuation of the favorable fiscal trajectory will further increase Jamaica's credit resilience. S&P Global Ratings raised on September 13, 2023, its long-term foreign and local currency sovereign credit ratings on Jamaica to 'BB-' from 'B+', and affirmed its short-term foreign and local currency sovereign credit ratings at 'B'. The stable outlook reflects S&P's expectation that the government will remain committed to prudent fiscal policies and reducing debt, as well as supportive economic policies including a flexible exchange rate regime and effective monetary policy. In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. ********* 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. 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 * * *