/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/241119.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, November 19, 2024, Vol. 25, No. 232 Headlines A R G E N T I N A PROVINCE OF JUJUY: S&P Affirms 'CCC' Long-Term ICR, Outlook Stable B A H A M A S FTX GROUP: Alameda Research Sues to Recoup $11M in Crypto Assets FTX GROUP: Files Suit to Recover $1.8B from Binance, Ex-CEO Zhao FTX GROUP: Scaramucci, PACs, Law Firm Named in Wave of Lawsuits B R A Z I L AUREN ENERGIA: Fitch Affirms 'BB+' LongTerm IDR INTERCEMENT BRASIL: Creditors File $200M Suit Over Sweetheart Deal E L S A L V A D O R EL SALVADOR: S&P Affirms 'B-/B' Sovereign Credit Ratings P E R U CAMPOSOL HOLDING: Fitch Affirms 'B' IDR, Alters Outlook to Positive P U E R T O R I C O CONVENTION CENTER: Seeks to Tap Alexis Hernandez as Counsel FULL HOUSE: Seeks to Tap Alexis Fuentes-Hernandez as Legal Counsel - - - - - ================= A R G E N T I N A ================= PROVINCE OF JUJUY: S&P Affirms 'CCC' Long-Term ICR, Outlook Stable ------------------------------------------------------------------ On Nov. 15, 2024, S&P Global Ratings affirmed its 'CCC' foreign and local currency long-term issuer credit ratings on the Province of Jujuy. The outlook remains stable. Outlook The stable outlook on S&P's ratings on Jujuy mirrors that on the sovereign. Despite some improvement, external vulnerabilities and macroeconomic challenges at the sovereign continue to pressure all local government ratings. This includes access to foreign currency to make debt service payments. Downside scenario S&P said, "We could lower the long-term ratings on Jujuy if the central government tightens access to foreign currency, impairing the province's ability to service foreign currency debt in the next six to 12 months. In addition, we would likely consider a debt exchange or restructuring by Jujuy as distressed and tantamount to a default at such low rating levels." Upside scenario S&P said, "We could raise the ratings in the next 12 months if we see additional improvement in external liquidity and conditions for nonsovereign access to foreign currency to service debt. Our long-term ratings trajectory for Argentina will depend on the ability of the administration to advance its stabilization plan." Further progress with economic adjustments, along with better access to liquidity, would augur well for the sovereign rating over the long term and would be positive for Jujuy. Rationale The 'CCC' ratings on Jujuy are capped by S&P's 'CCC' transfer and convertibility assessment on Argentina that reflects persistent pressures on the foreign currency markets, as seen in the low levels of international reserves. This translates into risks for Jujuy in servicing its foreign currency denominated debt. Supporting the stand-alone credit profile (SACP) at 'b-' are Jujuy's careful budgetary execution and stable revenue generation from the Cauchari solar park. Both have supported increased liquidity buffers, particularly over the past year. However, macroeconomic pressure on the provincial governments' revenue and expenditure is substantial. Overall transfers are about 70% of the province's revenue base, and there are risks of additional erosion through cuts in nonautomatic transfers. S&P expects fiscal results to weaken somewhat but sustain liquidity buffers In S&P's base-case scenario, Jujuy's operating surpluses are 16% of operating revenue, on average, in 2024-2027, down from 25%, on average, during 2022-2023. Inflation dynamics will remain the main pressure on the provincial accounts. Balancing revenues and expenditures may be more difficult as prices start to stabilize, as the province have been benefiting from payroll spending lagging behind revenues growth. In 2023, fiscal accounts benefited from extraordinary revenues from financial assets (9% of operating revenues), counterbalancing payroll growth above inflation. Nonetheless, S&P assumes such revenues are volatile and will moderate over the coming years. Meanwhile, the economic contraction and the national government's change in income taxes in 2023--which have been only partially reinstated this year--have hurt revenue. Overall transfers from the national government represent around 70% of provincial total revenue, although this percentage has been declining. Of total revenue, about 8% is nonautomatic transfers, and these transfers could further erode if the national government pursues additional cuts as it tries to strengthen its own fiscal adjustment. S&P expects near balanced results after capital accounts, with capital accounts averaging 1% of total revenue in 2024-2027. This incorporates public works expenditure remaining around 18% of total spending. Jujuy will likely continue to finance capital expenditures with its own resources, although the province also has projects funded by borrowings from multilateral lending institutions. Key projects include improvements in education, health, and connectivity. The province also plans to expand the solar farm through a new loan from the Export-Import Bank of China, still pending ratification from the central government. Improvement in the province's fiscal performance in recent years led to accumulation of liquidity. Cash flows from the Cauchari solar farm, at $48 million annually, should continue to support debt service. Cauchari's contract with local energy distributor CAMMESA is in U.S. dollars. Payments by CAMMESA are made in Argentine pesos at the official exchange rate, which is currently also the rate at which the province acquires U.S. dollars to pay debt, thus limiting currency risk on these flows. Given that Argentine provinces can't save in foreign currency, maintaining the value of its savings has been challenging. Jujuy has been investing mostly in national and provincial government notes linked to foreign exchange or inflation, and common investment funds. Nonetheless, volatility risks could rapidly strain liquidity coverage in a currency depreciation scenario, as 97% of debt is in U.S. dollars. S&P partially discounts Jujuy's holdings of central and provincial governments bonds, according to the stressed scenarios in our methodology. Annual debt service totals $140 million in 2024 and $130 million in 2025. Most of this is a green bond issued in global capital markets and a loan from the Export-Import Bank of China. The remainder is loans from multilateral lending institutions (MLIs) and financial institutions like BBVA Hong Kong. Loans from the Export-Import Bank of China and MLIs were contracted through the national government, so payments are deducted from automatic transfers, but the province still needs access to the central bank's reserves for servicing its green bond. The risks of deeper depreciation of the Argentine peso could significantly increase Jujuy's debt burden. For example, debt rose to 89% of operating revenue in 2023 from 61% in 2022 given a weaker peso. However, real appreciation of the official exchange rate over the next years, along with negative net lending due to limited financing options, points to lower debt, at 51% of operating revenue by 2026. S&P incorporates the planned new debt for the solar park's expansion of an estimated $210 million from the Export-Import Bank of China. Fiscal planning is constrained by weak institutional framework and macroeconomic imbalances S&P said, "We expect strained macroeconomic conditions in Argentina and Jujuy. Economic growth in Argentina has been below that of peers with a similar level of development for many years, with expected contraction in 2024. Meanwhile, inflation in 2024 is forecasted to average 235% and will continue to stress the country's socioeconomic indicators. We expect the economic contraction and exchange-rate depreciation to result in Jujuy's GDP per capita at $7,800 in 2024, below the estimated national level of $13,600 (calculated at the official exchange rate)." Jujuy has a broad green agenda that includes energy transition activities in solar and lithium. Located in the so-called "lithium triangle," the province's mineral industry has significant potential. Lithium could help boost the economy in the next few years, but we don't expect any immediate impact on the budget. Royalties are very small--only 3%--and the tax rate on lithium miners is low due to tax benefits that are part of the mining law. Governor Carlos Sadir, former finance minister, assumed office in December 2023. S&P expects the province's fiscal management to remain cautious. Amid strained financial conditions, including very limited access to external funding, the province restructured its one international bond in 2021 along with other provinces in Argentina. This weighs on our assessment of Jujuy's financial management. S&P said, "Moreover, we believe Argentine local and regional governments (LRGs) operate in a weak institutional framework, and stressed sovereign conditions often lead to swings in policies. In our view, the sovereign has very weak institutional predictability and a volatile intergovernmental system." It has been inconsistent and subject to modifications of fiscal regulations over the years, partly due to persistent unstable macroeconomic conditions. This jeopardizes the LRGs' financial planning and, consequently, their credit quality. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List Ratings Affirmed Jujuy (Province of) Issuer Credit Rating CCC/Stable/-- Jujuy (Province of) Senior Unsecured CCC ============= B A H A M A S ============= FTX GROUP: Alameda Research Sues to Recoup $11M in Crypto Assets ---------------------------------------------------------------- Yun Park at law360.com reports that Alameda Research, an investment arm of the now-bankrupt FTX digital asset empire, has filed a lawsuit against cryptocurrency exchange Crypto.com in Delaware bankruptcy court, seeking the return of $11.4 million in assets still held on the platform despite multiple requests from the debtor. 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. SBF 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. FTX GROUP: Files Suit to Recover $1.8B from Binance, Ex-CEO Zhao ---------------------------------------------------------------- Alex Wittenberg at law360.com reports that the estate of fallen cryptocurrency exchange FTX has sued Binance and its former CEO Changpeng Zhao to recover $1.76 billion it says the defunct company illegally transferred prior to its collapse two years ago, alleging FTX used customer money to complete a share repurchase that it couldn't otherwise afford. 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. SBF 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. FTX GROUP: Scaramucci, PACs, Law Firm Named in Wave of Lawsuits --------------------------------------------------------------- Aislinn Keely at law360.com reports that bankrupt cryptocurrency exchange FTX filed roughly 30 suits in a bid to recoup millions of dollars donated to political and charitable causes, losses caused by alleged market manipulation, and funds spent on business partnerships, including with Skybridge Capital's Anthony Scaramucci and a boutique Florida law firm. 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. SBF 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. =========== B R A Z I L =========== AUREN ENERGIA: Fitch Affirms 'BB+' LongTerm IDR ----------------------------------------------- Fitch Ratings has removed from Rating Watch Negative and affirmed Auren Energia S.A.'s (Auren) Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs). Fitch has also affirmed the following ratings: For Auren: - National Scale Rating at 'AAA(bra)', Outlook Stable; - National Scale Rating of its 3rd and 4th debentures issuances at 'AAA(bra)'. For Companhia Energetica de Sao Paulo (CESP): - National Scale Rating at 'AAA(bra)', Outlook Stable; - National Scale Rating of its 12th debentures issuance at 'AAA(bra)'. Fitch simultaneously removed from Rating Watch Positive and upgraded to 'AAA(bra)' the ratings of the following subsidiaries of AES Brasil Energia S.A. (AES Brasil) and their debentures issuances: Potengi Holdings S.A. (Potengi), Veleiros Holdings S.A. (Veleiros), AES Tucano Holding II S.A. (Tucano II), and Ventos de Santa Tereza 07 Energias Renováveis S.A. (Santa Tereza). A complete list of the rating actions is presented below. The rating actions follow the closing of AES Brasil Energia S.A.'s (AES Brasil) acquisition by Auren. The affirmation of Auren's ratings reflects Fitch's expectation that Votorantim S.A. (VSA, LC and FC IDRs BBB/Stable), one of its controlling shareholders, would likely support Auren if necessary based on the size and strategic importance of the company to VSA. Fitch also expects that Auren will gradually improve its weaker financial profile that resulted from the acquisition of AES Brasil group. Auren's Foreign Currency IDR remains constrained by Brazil's 'BB+' country ceiling. The ratings of CESP and AES Brasil's subsidiaries reflect Auren's consolidated credit profile as per Fitch's "Parent and Subsidiary Linkage Criteria." Key Rating Drivers Support from VSA: Fitch has incorporated into Auren's ratings the expectation that VSA would support the company if necessary, either from equity injection, dividend flexibility or other means. Auren adds predictability to VSA's dividend stream and has become more relevant to the group following the acquisition of AES Brasil, and offers significant growth opportunities. The anticipated support helps offset the company's high financial leverage resulting from the acquisition. Highly Leveraged Acquisition: Following the payment of BRL6.4 billion to AES Brasil's shareholders with no equity injection, Fitch projects Auren's consolidated net leverage to grow to 6.2x by the end of 2024 on a pro forma basis, from 1.7x in June 2024, with a gradual reduction to around 5.0x by 2026. High interest rates in Brazil contribute to low interest coverage by EBITDA, estimated at around 1.9x over 2024-2026. Projections assume that Auren will maintain relevant dividend distribution, with flexibility for reduction if necessary. Stronger Business Profile: The acquisition improves Auren's business scale and asset diversification, with assured energy increasing to 4.0 aGW (+2.3 aGW) based on P-90 certificates and including interests on non-consolidated assets. The contribution from wind assets increases to 35% from 29%, while solar assets' contribution declines to 5% from 9%. This new mix favors the expansion of solar energy, which offers better growth prospects. Auren now has the challenge of replacing almost a third of its portfolio by 2032, when AES Brasil's hydroelectric concessions totaling 1.2aGW will expire. The further growth of the trading business over the long term may pressure margins and add some volatility to cash flows. Resilience Against Low Prices: Auren's portfolio will remain highly contracted, which will protect cash flows if energy prices remain structurally low, although it could expose the company to high priced purchases in the unlikely scenario of extremely poor hydrology. Projections consider that Auren has already sold 87% of its resources for 2025-2027, including the trading business, internal losses and an estimated 5% haircut on wind and solar generation due to curtailment. About one-third of Auren's energy to be generated by 2025 was sold in the regulated market, which offers higher prices and longer terms compared to bilateral contracts, low counterparty risk and some protection against hydrological risk. Strong FCFs After 2025: Fitch expects Auren to generate robust free cash flows (FCFs) as of 2026. Adjusted EBITDA should approach BRL3.2 billion in 2024 on a pro forma basis and BRL3.6 billion in 2025, from BRL1.6 billion in 2023, including dividends from non-consolidated companies. Projections incorporate operating synergies averaging around BRL200 million per year, mostly from cost cuts and efficiency improvements in the acquired wind farms. Fitch expects EBITDA margin to improve to around 30% as of 2027, from the average 24% estimated for 2024-2025, reflecting lower volumes of energy purchase in the trading business. High interest cost, preferred dividends, payments related to CESP's litigations and pension deficits, and the settlement of wind generation deficits should weaken the company's cash flow from operations (CFFO) to levels below 30% of EBITDA until 2026. Fitch projects total investments of BRL2.5 billion through 2026, with more concentrated in 2024. Subsidiaries Equalized With Auren: The ratings of CESP, Tucano II, Santa Tereza, Potengi and Veleiros reflect Auren's consolidated credit profile, based on the strong incentives that Auren has to support them if necessary. Auren's latest debentures contemplate CESP and AES Brasil in cross-default clauses and AES Brasil guarantees most of the debts issued by Tucano II, Santa Tereza, Potengi and Veleiros. Fitch also considers the strong operational incentives for all subsidiaries, reflecting the high integration of management and treasury decisions within the group. Strategic incentives vary according to the size of each subsidiary, but each one contributes to optimizing Auren's portfolio, with hydro and wind generation having complementary seasonality patterns. Derivation Summary The support from VSA justifies Auren having the same Local Currency IDR as Engie Brasil Energia S.A.'s (Engie BR; LC IDR BBB-), which benefits from stronger business profile and lower financial leverage. Engie BR has similar scale, with 8.2 GW and 4.5 aGW in operation, compared to 8.2 GW and 3.8 aGW for Auren, but distributed across a more diversified asset base. Around 15% of Engie BR's adjusted EBITDA projected for 2025 (BRL6.7 billion) should also come from transmission and gas midstream assets, which add predictability to cash flows. Auren's EBITDA margin is lower than Engie BR's (23% and 66% projected for 2025, respectively) due to the greater importance of the trading business in Auren's consolidated results. Fitch expects Engie BR to reduce investments as of 2025 and forecasts its net leverage around 3.3x and EBITDA interest coverage around 5.0x in 2025-2026. These levels are much stronger than the averages of 5.0x and 2.0x, respectively, estimated for Auren. Recontracting risk is similar for both companies, having both contracted around 85% of their total resources for 2025-2028, on average. Auren is slightly more exposed to hydrology risk, considering regulatory insurance and energy volumes sold through quotas regime, even though hydro plants contribute around 72% of Engie BR's assured energy and 61% of Auren's. Auren's LC IDR is the same as AES Andes', which operates a large portfolio of 5.6 GW across Chile (69%), Colombia (20%) and Argentina (11%), including coal plants in Chile and Argentina (40%) - to be mostly decommissioned by 2025 - and hydro plants in Chile and Colombia (37%), as well as wind and solar plants and batteries mainly in Chile (16%). AES Andes operates with higher EBITDA margin, above 40%, and presents financial profile stronger than Auren's. Fitch projects its net leverage around 3.0x in 2025-2026 and EBITDA interest coverage around 3.3x during the same period. Key Assumptions - Generation scaling factor (GSF) of 0.87 in 2024, 0.89 in 2025 and 0.91 in 2026; - Wind generation at 95% of P-90 certificates; - Effective assured energy of 3.7 aGW in October 2024 and 3.8 aGW as of 2025, proportional to equity interests in the assets; - Contracted annual sales from 2024 to 2027, including trading (aGW): 6.7 (pro forma), 5.4, 4.5, and 3.6, respectively; - Contracted average prices from 2024 to 2027, including trading (BRL/MWh): 175 (pro forma), 196, 199, and 203, respectively; - Prices for new sales contracts of renewable energy in 2024-2027 (BRL/MWh): 179, 232, 201, and 189, respectively; - Average short-term prices in 2024-2027 (BRL/MWh): 167, 179, 77, and 137, respectively; - Total capex of BRL2.5 billion in 2024-2026, more concentrated in 2024. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade For Auren: - An improvement in Brazil's country ceiling could trigger a positive rating action for the FC IDR; - Positive rating action for Auren's LC IDR is unlikely in the short term, given Brazil's operating environment. For Auren's subsidiaries: - Upgrades are not possible because the ratings of Auren's subsidiaries are at the top of the national scale. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade For Auren: - Weaker incentives of support from VSA; - Downgrade of VSA's IDRs; - Inability to gradually reduce the consolidated net leverage could trigger a negative rating action on Auren's Local Currency IDR; -A downgrade of Brazil's sovereign rating could result in a similar rating action on Auren's FC IDR. For Auren's subsidiaries: - A downgrade of Auren's National Scale rating; - Weaker support incentives from Auren. Liquidity and Debt Structure Comfortable Liquidity: Fitch expects Auren to maintain comfortable liquidity levels and ample access to several sources of funding despite its high financial leverage. Considering the consolidation of AES Brasil, the BRL7.9 billion raised by Auren in October 2024 and deducting the BRL6.4 billion paid to AES Brasil's shareholders, the pro forma cash balance was BRL9.1 billion at Sept. 30, 2024. This amount covers all debt maturities through 2027 on a pro forma basis. The consolidated debt of BRL29.1 billion was composed of debentures (69%), long-term financing from Brazilian development banks (21%), loans from local banks (8%) and preferred shares partially treated as debt (2%). Issuer Profile Auren is a large-sized, publicly traded power generation company in Brazil, with 3.7 aGW of assured energy in operation after the acquisition of AES Brasil. Its co-controlling shareholders are Votorantim Group (38.7%) and the Canadian fund CPP Investments (30.5%). Summary of Financial Adjustments - Cash collateral and debt-related derivatives treated as debt. - Non-controlling interests partially treated as debt. 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 Prior ----------- ------ ----- Potengi Holdings S.A. Natl LT AAA(bra) Upgrade AA-(bra) senior unsecured Natl LT AAA(bra) Upgrade AA(bra) CESP - Companhia Energetica de Sao Paulo Natl LT AAA(bra) Affirmed AAA(bra) senior unsecured Natl LT AAA(bra) Affirmed AAA(bra) AES Tucano Holding II S.A. Natl LT AAA(bra) Upgrade AA-(bra) senior unsecured Natl LT AAA(bra) Upgrade AA-(bra) Auren Energia S.A. LT IDR BB+ Affirmed BB+ LC LT IDR BBB- Affirmed BBB- Natl LT AAA(bra) Affirmed AAA(bra) senior unsecured Natl LT AAA(bra) Affirmed AAA(bra) Ventos de Santa Tereza 07 Energias Renovaveis S.A. Natl LT AAA(bra) Upgrade AA-(bra) senior secured Natl LT AAA(bra) Upgrade AA-(bra) Veleiros Holdings S.A. Natl LT AAA(bra) Upgrade AA-(bra) senior unsecured Natl LT AAA(bra) Upgrade AA-(bra) INTERCEMENT BRASIL: Creditors File $200M Suit Over Sweetheart Deal ------------------------------------------------------------------ Emlyn Cameron at law360.com reports that bondholders for bankrupt Brazilian cement supplier InterCement filed a $200 million suit in New York state court, saying Banco Bradesco Bbi SA, a shareholder and bank to the debtors' parent, failed to reveal a sweetheart deal under which it could strong arm the debtor into giving it priority repayment. About Intercement Brasil Intercement Brasil is a producer of cement and concrete based in Brazil. Overall, the Company has 34 production units, with an active capacity of more than 33 million tons of cement per year, employing more than 6,000 professionals. Intercement Brasil and affiliates sought relief under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 24-11226) on July 15, 2024. The firm's foreign representative: Antonio Reinaldo Rabelo Filho Rua Barao da Torre, 550, Apt. 201, Ipanema Rio de Janeiro, RJ Brazil The Foreign Representative's counsel: John K. Cunningham, Esq. WHITE & CASE LLP 1221 Avenue of the Americas New York NY 10020 Tel: (212) 819-8200 Email: jcunningham@whitecase.com ===================== E L S A L V A D O R ===================== EL SALVADOR: S&P Affirms 'B-/B' Sovereign Credit Ratings -------------------------------------------------------- S&P Global Ratings affirmed its 'B-' long-term and 'B' short-term foreign and local currency sovereign credit ratings on El Salvador. The outlook on the long-term ratings remains stable. S&P also assigned a 'B-' issue rating to the country's $1 billion external debt. S&P's transfer and convertibility assessment remains 'AAA'. Outlook The stable outlook balances El Salvador's fiscal relief from the broad debt reprofiling since 2022 against the high debt burden with hefty interest payments. Downside scenario S&P said, "We could lower the ratings in the next six to 12 months if we see a weakening in the government's ability to undertake and implement fiscal adjustment measures to stabilize its debt burden. We could also downgrade El Salvador if its funding sources become more limited or if there are signs that it's becoming less willing to service its debt." Upside scenario S&P could raise the ratings in the next six to 12 months if the government is able to implement comprehensive reforms to consistently narrow its fiscal deficits and continue to reduce its financing needs, leading to a faster-than-expected stabilization of its debt level. Stronger-than-expected economic growth could also facilitate fiscal consolidation and result in an upgrade. Rationale S&P said, "Our affirmation follows the government's announcement on Nov. 12 of a debt repurchase offer to partially buy back its sovereign bonds due between 2027 and 2034. We consider this transaction an opportunistic liability management operation, rather than a distressed exchange, notwithstanding the 'B-' long-term rating. In our opinion, El Salvador could have met its debt obligations in the foreseeable future without this transaction." The invitation for offers to tender for cash consists of five bonds with a total outstanding value of $2.64 billion. The principal amounts outstanding for each bond and purchase prices--all of them slightly above market prices--are the following: -- $387.4 million due 2027 (99.5 cents on the dollar), -- $500 million due 2029 (100.8 cents on the dollar), -- $1 billion due 2030 (102.6 cents on the dollar), -- $500 million due 2032 (95.2 cents on the dollar), and -- $248.2 million due 2034 (87.2 cents on the dollar). To finance this repurchase, the government issued external debt for $1 billion, due 2054 at a 9.65% interest rate. El Salvador's government has ensured that investors who do not accept the offer will maintain the right to receive the full payment amount at each bond's maturity date. According to the announcement, the government reserves the right, at its sole discretion, to accept only a portion of the notes tendered and prorate them. The recently announced tender offer is another step in the broad debt reprofiling process that began in 2022, with two external debt repurchases in late 2022, a pension debt exchange in the first half of 2023, a short-term debt refinancing strategy started in October 2023, and another two external debt repurchases in April and October 2024. This transaction follows the debt repurchase performed one month ago, in which the government repurchased $1.03 billion of its outstanding bonds maturing between 2027 and 2052. The savings of that transaction, which S&P also considered an opportunistic liability management operation, will be applied over time to support conservation, water security, and an ecosystem restoration in the Lempa River watershed. Despite the fiscal relief coming from these measures, the country's public finances remain fragile, reflecting long-term structural vulnerabilities. As a first step to correct them, the government has presented its 2025 budget, which aims for fiscal consolidation. That said, the rating on El Salvador incorporates its institutional weaknesses, as indicated by difficulties in predicting policy responses amid poor checks and balances, modest per capita GDP at $5,350, and moderate GDP growth prospects due to persistently low investment and productivity. In addition, the sovereign has a high debt burden at about 77% of GDP (including debt owed to pension funds). It also lacks monetary flexibility because of full dollarization. S&P will analyze the rating implications of any potential future debt buybacks or exchanges on a case-by-case basis, considering the respective terms and conditions, as well as the prevailing macroeconomic context and interim policy developments. ======= P E R U ======= CAMPOSOL HOLDING: Fitch Affirms 'B' IDR, Alters Outlook to Positive ------------------------------------------------------------------- Fitch Ratings has affirmed Camposol Holding PLC (Camposol) and Camposol S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B'. The Rating Outlook was revised to Positive from Negative. Fitch has also affirmed Camposol S.A.'s senior unsecured notes at 'B' with a Recovery Rating of 'RR4'. The revision of the Outlook to Positive reflects a stronger than expected performance in 2024 and a quicker deleveraging of the company to below 3.5x on sustained basis going forward according to Fitch's projections. The Positive Outlook incorporates Camposol's ability to maintain access to its relationship banks for working capital and committed credit lines with better credit metrics. However, further progress is needed for an upgrade. Camposol S.A.'s ratings are the same as the holding company, Camposol Holding PLC. Camposol S.A. is fully-owned by Camposol, and is the main cash generator of the group. The holding company has no debt, and Camposol Holding Plc guarantees the bond issued by Camposol S.A. Key Rating Drivers Peru's Competitive Advantage in Blueberries: Peru is the leading exporter of blueberries, being very competitive in terms of quality of their fruits and production costs. Camposol is a vertically integrated producer of blueberries, and its profitability is enhanced by its control of the value chain, which consist of research and product development, growing fields, processing facilities, and sales and distribution channels. Exports to U.S. and Europe: As it produces fresh fruits, the company is also positioned well in the worldwide trend toward consuming healthy and more convenient products. Blueberries, avocados, and other products represented 69%, 14%, and 17% of total revenue, respectively, in 2023. Revenues came 50% from the U.S., 32% from Europe and 11% and from Asia in 2023, markets that have a more resilient demand and the company has established strong distribution channels. Exposure to Price and Climatic Risks: Rating constraints include Camposol's exposure to price and production yield fluctuations. External factors such as the El Nino/La Nina weather phenomena, geopolitical conflicts which could cause logistical issues, also are negatively factored into the company's ratings. This is very relevant in special for the blueberries, as it represents around 70% of revenues of the company. Operating Cash Flow to Recover: Fitch expects EBITDA of BRL132 million and cash flow from operations (CFFO) of BRL99 million in FYE 2024. This marks a significant recovery from the weak EBITDA of BRL51 million and negative CFFO of BRL23 million in FYE 2022. Higher prices and lower production costs should restore the EBITDA margin to around 25% in FYE 2024, the best one over the last three years. Fitch projects positive FCF from FYE 2025 onward, as the company has no major investments to be done. The base case assumes dividends of USD21 million in FYE 2024 and of BRL25 million in FYE 2025. Net Leverage Around 3.0x in FYE 2024: Fitch projects that net leverage will significantly decrease to about 3.0x in fiscal 2024 and 2025, driven by increased EBITDA margins due to better blueberries production yields, lower costs and SG&A. This improvement is very significant, after the peak of 10.7x in fiscal 2022 and 5.2x in fiscal 2023. During fiscal 2022, net debt increased by USD 140 million, reaching USD550 million in December 2022. In its projections this should reduce to about USD400 million by December 2025. Camposol Holding PLC has an ESG Relevance Score of '4' for Governance Structure due to ownership concentration, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Camposol S.A. has an ESG Relevance Score of '4' for Governance Structure due to ownership concentration, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Derivation Summary Camposol's IDR's are two notches lower than of Ingenio Magdalena (IMSA, BB-/Stable). While IMSA enjoys a more stable cash flow profile, Camposol faces greater exposure to price fluctuations as blueberries does not have the same hedging instruments of sugar. Camposol's IDR's are two notches lower than FS Industria de Biocombustiveis Ltda's (FS; BB-/Stable). FS is a corn ethanol player that faces high volatility of margins due to the variation of prices of ethanol and of corn. However, FS has larger scale and stronger financial flexibility with higher liquidity and longer debt profile. Key Assumptions - Volume produced of 111 million tons in 2024 and of 121 million tons in 2025; - Capex around USD35 million in 2024 and in 2025; - Dividends of USD21 million in 2024 and of USD25 million in 2025. Recovery Analysis Fitch believes that a debt restructuring would like occur under a stress economic conditions and external shocks such as climatic events or lack of access to certain exports markets. Therefore, Fitch has performed a going concern recovery analysis for Camposol that assumes that the company would be reorganized rather than liquidated. Camposol would have a going concern EBITDA of about USD100 million and a distressed multiple of 5x due to the exposure to the agri-business sector and factors such as climatic events, logistic issues, potential strikes or a shut-down of exports markets. The recovery performed under this scenario resulted in a recovery level of 'RR1' and 'RR2' for unsecured creditors. Because of Fitch's 'RR4' soft cap for Peru, which is outlined in criteria, Camposol's Recovery Rating has been capped at 'RR4' reflecting average recovery prospects. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Reduction in short-term debt; - Strong positive FCF; - Net leverage below 3.5x on a sustained basis. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Net leverage above 4.5x by 2025 and going forwards; - EBITDA coverage below 2x; - The company not being able to rollover its short-term debt; - Negative FCF and weak liquidity. Liquidity and Debt Structure Weak Liquidity: Camposol's liquidity is weak, as of September, 2024 cash position is of USD25 million and high short-term debt of USD166 million. Debt was mainly comprised of working capital lines of USD166 million and the company's USD318 million unsecured notes due in 2027. The company has access to banks to finance and roll-over working capital credit lines and has access to USD60 million in committed credit lines with strong banks. Issuer Profile Camposol is the leading agro-industrial company in Peru. It is involved in the harvesting, processing and marketing of high-quality agricultural products such as avocados, blueberries and others (tangerines, mangoes, grapes), which are exported to Europe, the U.S. and Asia. 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 Camposol Holding PLC has an ESG Relevance Score of '4' for Governance Structure due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Camposol S.A. has an ESG Relevance Score of '4' for Governance Structure due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Camposol Holding PLC LT IDR B Affirmed B LC LT IDR B Affirmed B Camposol S.A. LT IDR B Affirmed B LC LT IDR B Affirmed B senior unsecured LT B Affirmed RR4 B ===================== P U E R T O R I C O ===================== CONVENTION CENTER: Seeks to Tap Alexis Hernandez as Counsel ----------------------------------------------------------- Convention Center Parking, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Alexis Fuentes-Hernandez, Esq., an attorney practicing in San Juan, Puerto, to handle its Chapter 11 case. The attorney will be paid at his hourly rate of $250 plus reimbursement for expenses incurred. The attorney also received a retainer of $15,000. Mr. Fuentes-Hernandez disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Alexis Fuentes-Hernandez, Esq. P.O. Box 9022726 San Juan, PR 00901 Telephone: (787) 722 5216 Facsimile: (787) 722 5206 Email: fuenteslaw@icloud.com About Convention Center Parking Convention Center Parking, Inc. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-04516) on Oct. 21, 2024. In the petition signed by David Santiago Martinez, president, the Debtor disclosed $1 million in assets and $45,229,691 in liabilities. Judge Maria De Los Angeles Gonzalez oversees the case. Alexis Fuentes-Hernandez, Esq., represents the Debtor as counsel. FULL HOUSE: Seeks to Tap Alexis Fuentes-Hernandez as Legal Counsel ------------------------------------------------------------------ Full House Development, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Alexis Fuentes-Hernandez, Esq., an attorney practicing in San Juan, Puerto, to handle its Chapter 11 case. The attorney will be paid at his hourly rate of $250 plus reimbursement for expenses incurred. The attorney also received a retainer of $15,000. Mr. Fuentes-Hernandez disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Alexis Fuentes-Hernandez, Esq. P.O. Box 9022726 San Juan, PR 00901 Telephone: (787) 722 5216 Facsimile: (787) 722 5206 Email: fuenteslaw@icloud.com About Full House Development Full House Development, Inc. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-04515) on Oct. 21, 2024. In the petition signed by David Santiago Martinez, president, the Debtor disclosed $700,000 in assets and $45,229,691 in liabilities. Judge Edward A. Godoy oversees the case. Alexis Fuentes-Hernandez, Esq., represents the Debtor as counsel. ********* 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. 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