/raid1/www/Hosts/bankrupt/TCRLA_Public/151113.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
Friday, November 13, 2015, Vol. 16, No. 225
Headlines
A R G E N T I N A
YPF SA: Argentina Slams Court for Ordering Disclosure of Deal
B R A Z I L
GOL LINHAS: Delays New Jets as Plunging Real Crimps Air Travel
SAMARCO MINERACAO: Moody's Lowers Rating on Sr. Notes to Ba1
C A Y M A N I S L A N D S
ACADIA LIQUIDITY: Commences Liquidation Proceedings
ACADIA LIQUIDITY MASTER: Commences Liquidation Proceedings
ACADIA MASTER: Commences Liquidation Proceedings
BRAMSHOTT GENERAL: Creditors' Proofs of Debt Due Nov. 23
CERULEAN PARTNERS: Commences Liquidation Proceedings
CURRENSEE INTERNATIONAL: Commences Liquidation Proceedings
IC1 INVESTMENTS: Commences Liquidation Proceedings
NORTHWAY PROPERTIES: Commences Liquidation Proceedings
OPTIMUM INVESTMENTS: Commences Liquidation Proceedings
SAVANA HOLDINGS: Creditors' Proofs of Debt Due Nov. 16
SIENA G.P.: Placed Under Voluntary Wind-Up
TIME SEASON: Creditors' Proofs of Debt Due Nov. 16
YOMBERAJA LTD: Creditors' Proofs of Debt Due Dec. 8
D O M I N I C A N R E P U B L I C
BAGRICOLA: To Lose RD$272.8MM Yearly on 12% to 10% Rate Drop
DOMINICAN REP: Tax Dodgers Bloom as Rum-Makers' Profits Wither
J A M A I C A
* JAMAICA: Customs Report a Decline in Illegal Cigarette Imports
M E X I C O
SIXSIGMA NETWORKS: Moody's Lowers CFR to B2; Outlook Negative
P U E R T O R I C O
INSITE CORPORATION: Walsh's Motion For Summary Judgment Granted
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A R G E N T I N A
=================
YPF SA: Argentina Slams Court for Ordering Disclosure of Deal
-------------------------------------------------------------
EFE News reports that Argentina's government criticized a Supreme
Court ruling requiring state-controlled oil company YPF to fully
disclose the agreement it signed with U.S.-based supermajor
Chevron Corp. for the development of the giant Vaca Muerta shale
formation.
"What the court has said in this case is madness. What it does is
it lays bare information from confidential agreements like those
seen in any industrial situation in the world," Cabinet chief
Anibal Fernandez told reporters, according to EFE News.
The ruling undermines "legal certainty" in Argentina, Fernandez
said, predicting that the country will be in a very difficult
legal bind when "information is requested from companies that have
signed confidentiality agreements and it has to be disclosed," the
report notes.
Mr. Fernandez also said there was "clear political intent" in
handing down the decision shortly before the Nov. 22 presidential
runoff, in which ruling party candidate Daniel Scioli will face
off against center-right challenger Mauricio Macri, the mayor of
Buenos Aires, the report relays.
The high court ruled that YPF SA must disclose the terms of its
2013 deal with Chevron to develop two areas of Vaca Muerta located
in the southwestern province of Neuquen, notes EFE News.
"The imprecise and generic affirmations formulated by YPF SA were
not sufficient to hold as proven that the release of the content
of the accord might compromise industrial, technical and
scientific secrets," the court concluded in its 3-1 decision, the
report notes.
The report discloses that the ruling came in response to a motion
filed by opposition Sen. Hector Ruben Giustiniani after YPF
refused to answer his questions about the contract with Chevron,
particularly in regard to the potential environmental impact of
the project.
Freedom of information is "a fundamental human right" that implies
the protection of "access to information under the control of the
state," the judges said, the report relays.
YPF, which announced in 2011 the discovery of non-conventional oil
and natural gas reserves in Vaca Muerta, said that it would comply
with the Supreme Court ruling, says EFE News.
The agreement between YPF and Chevron called for $1.24 billion in
investment in an initial pilot phase and $1.6 billion in the
second phase, which is currently under way, according to the
report.
EFE says the plans call for spending a total of $16 billion to
develop 3 percent of Vaca Muerta.
Argentina holds the world's second-largest shale gas reserves,
according to the U.S. Energy Information Administration, which
says Vaca Muerta is the South American country's largest shale gas
play, reports EFE.
YPF has been effectively controlled by the Argentine government
since May 2012, when Congress approved its expropriation of
Spanish oil major Repsol's 51 percent stake in the energy company,
the report discloses.
The firm's shares are publicly traded, however, and attorneys for
the company argued that it was not subject to the same
transparency requirements as a government agency, adds the report.
* * *
As reported in the Troubled Company Reporter-Latin America on Nov.
6, 2015, Moody's Affirms YPF S.A Caa1 global scale and Baa1.ar in
the national scale ratings. At the same time, Moody's Investors
Service has affirmed the rating of its senior unsecured notes at
Caa1 in the global scale, and the rating of its medium-term note
program at (P)Caa1 in the global scale. The outlook was changed to
stable from negative.
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B R A Z I L
===========
GOL LINHAS: Delays New Jets as Plunging Real Crimps Air Travel
--------------------------------------------------------------
Fabiola Moura at Bloomberg News reports that Gol Linhas Aereas
Inteligentes SA postponed the addition of some new jets, froze
hiring and trimmed its forecast for operating profit margin after
the real's plunge sent Brazil's biggest airline to a record loss.
Deliveries of Boeing Co. 737s will drop to just four in 2016-2017,
about one-fourth of its initial plan, Gol said on Nov. 12,
according to Bloomberg News. The airline also will more than
double the number of planes it subleases to other carriers during
off-peak months and won't replace employees who leave, Chief
Executive Officer Paulo Sergio Kakinoff said, adds the report.
Gol's third-quarter loss of 2.13 billion reais ($567 million) and
its rush to cut costs highlighted the pain from the recession
gripping Latin America's biggest economy, Bloomberg News relays.
Unemployment in Brazil hit a 5 1/2-year high in October, and the
real's 21 percent decline against the dollar during the June-
September quarter was the most among 22 major currencies,
according to data compiled by Bloomberg.
While Gol has been hurt, "the worst is over," Kakinoff said on a
conference call, the report relays. "It is our perception that
the volatility of 2015 won't happen again in 2016."
Abrupt Changes
Brazil's economy deteriorated so quickly from the second to third
quarter that Gol couldn't react fast enough, Kakinoff said,
reports Bloomberg News. "The adaption of a company often happens
at a slower velocity than the abrupt changes" that Brazil has
suffered, he said.
Gol fell 2 percent to 3.44 reais at 1:05 p.m. in Sao Paulo,
according to the Nov. 12 Bloomberg News report. The stock plunged
77 percent this year through Wednesday (Nov.11), outstripping the
5.9 percent drop in the benchmark Ibovespa index.
Gol is vulnerable to foreign-exchange swings because more than
half its costs are denominated in dollars and only a small portion
of that exposure has been hedged, according to a Nov. 4 report by
Moody's Investors Service. Sao Paulo-based Gol said it generated
14 percent of its revenue in the U.S. currency in the third
quarter.
Empty Seats
Brazil's economic weakness also means airlines are struggling to
fill seats -- domestic air travel fell in August and September --
and prop up ticket prices, the report relates. Gol's net
passenger revenue for each seat flown a kilometer, a measure of
profitability, dropped 1.3 percent in the quarter. Net yield, or
the average fare per kilometer flown, fell 2.6 percent, says
Bloomberg News.
Operating margins for 2015 will be minus 2 percent to zero,
compared with a previous forecast of as much as 5 percent, Gol
said, notes the report. The third-quarter loss was its 15th in a
row and was wider than the 1.74 billion reais deficit projected by
GBM.
The belt-tightening isn't over, adds Bloomberg News. Fourth-
quarter domestic seating capacity will drop by 5 percent to 7
percent. Moody's has projected that Gol may have to cut capacity
by at least 8 percent next year to mitigate the impact from
currency weakness and the country's economic slowdown.
There probably will be a reduction in flights for the whole
industry, the report cited Mr. Kakinoff as saying.
According to the report, Gol said flights to Miami and Orlando,
Florida, will be operated only on a seasonal basis starting next
month, and it's studying whether it should continue flying to
Caracas, says the report . The airline said it plans to add new
Latin American destinations such as Havana and is considering new
direct flights to Buenos Aires.
Aircraft subleases will rise to 12 in 2016, up from seven this
year, Gol added, notes the report. The all-Boeing 737 fleet now
numbers 139 planes, according to Gol's website. The airline had
16,702 employees as of the end of last quarter, according to data
compiled by Bloomberg.
* * *
As reported in the Troubled Company Reporter-Latin America on
Sept. 30, 2015, Moody's Investors Service affirmed the B3 ratings
assigned to Gol Linhas Aereas Inteligentes S.A. (Gol) and Gol
Finance's perpetual notes and senior notes due in 2017 that are
guaranteed by Gol. The outlook for all ratings was changed to
negative from positive.
Ratings affirmed:
Issuer: Gol Linhas Aereas Inteligentes S.A. (Gol)
-- Corporate Family Rating: B3 in the global scale
Issuer: Gol Finance LLP (Gol Finance)
-- 7.5% USD 225 million guaranteed senior unsecured notes due
2017: B3 in the global scale
-- 8.75% USD 200 million guaranteed senior unsecured perpetual
notes: B3 in the global scale
SAMARCO MINERACAO: Moody's Lowers Rating on Sr. Notes to Ba1
------------------------------------------------------------
Moody's Investors Service has downgraded to Ba1 from Baa3 the
ratings for Samarco's senior unsecured notes due 2022, 2023 and
2024. At the same time, Moody's has withdrawn Samarco's issuer
rating and assigned a Ba1 corporate family rating (CFR) to Samarco
on the global scale. The ratings were placed on review for
further downgrade.
Ratings Downgraded:
Issuer: Samarco Mineracao S.A.
$1,000 million Senior Unsecured Notes due 2022: Ba1 (from Baa3)
$700 million Senior Unsecured Notes due 2023: Ba1 (from Baa3)
$500 million Senior Unsecured Notes due 2024: Ba1 (from Baa3)
Ratings withdrawn:
Issuer: Samarco Mineracao S.A.
Issuer Rating: Baa3
Ratings Assigned:
Issuer: Samarco Mineracao S.A.
Corporate Family Rating: Ba1
The ratings are on review for further downgrade.
RATINGS RATIONALE
The downgrade to Ba1 was driven by the accident with Samarco's
dams next to its mining and beneficiation areas in the state of
Minas Gerais. While the extent of the damage is still unclear,
the accident will have a material impact on the company's
operations. Samarco has suspended activities in the affected area
and will continue operating its pelletizing units only while
inventories last. The accident brings a number of uncertainties
regarding Samarco's ability to resume its mining operations, which
are an essential part of the company's integrated process that
also includes the pelletizing plants and port terminal in the
state of Esp¡rito Santo. It is also difficult to measure the
potential environmental and civil liabilities that the company
could face, as well as how its reputation could be affected.
Samarco's ratings remain on review for possible downgrade,
reflecting continued concern about the loss of production during
the period that operations are suspended, the costs that will be
incurred and potential liquidity pressures that could arise as a
consequence of the disaster. Depending on the extent of the
damage to operations and to the company's ability to generate cash
flows, a multiple notch downgrade may occur.
Moody's review will consider the expected time frame to restore
Samarco's operations in the state of Minas Gerais, as well as its
flexibility to find alternatives to continue to its pellets
production in an economically viable way. Moody's will also
consider potential liabilities arising from the accident, and
Samarco's ability to meet them without jeopardizing its liquidity
position.
The principal methodology used in this rating was Global Mining
Industry published in August 2014.
Samarco Mineracao S.A. is one of the largest exporters of seaborne
iron ore pellets worldwide with operations located in Espirito
Santo and Minas Gerais, in the Southeast region of Brazil. The
company has a fully integrated business model with an installed
capacity to produce 30.5 million pellets annually. As of June
2015, Samarco had BRL 7.3 billion (USD 2.7 billion) in revenues
spread across clients in North America, Middle East, North Africa,
Asia and Europe, with a 21% global market share.
==========================
C A Y M A N I S L A N D S
==========================
ACADIA LIQUIDITY: Commences Liquidation Proceedings
---------------------------------------------------
On Sept. 29, 2015, the shareholders of Acadia Liquidity Fund, Ltd
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1, Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
ACADIA LIQUIDITY MASTER: Commences Liquidation Proceedings
----------------------------------------------------------
On Sept. 29, 2015, the shareholders of Acadia Liquidity Master
Fund, Ltd resolved to voluntarily liquidate the company's
business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1, Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
ACADIA MASTER: Commences Liquidation Proceedings
------------------------------------------------
On Sept. 29, 2015, the shareholders of Acadia Master Fund I Ltd.
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1, Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
BRAMSHOTT GENERAL: Creditors' Proofs of Debt Due Nov. 23
--------------------------------------------------------
The creditors of Bramshott General Partner Inc. are required to
file their proofs of debt by Nov. 23, 2015, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on Sept. 25, 2015.
The company's liquidator is:
Krys Global VL Services Limited
KRyS Global, Governors Square
Building 6, 2nd Floor
23 Lime Tree Bay Avenue
P.O. Box 31237 Grand Cayman KY1-1205
c/o Christopher Smith
Telephone: (345) 947 4700
CERULEAN PARTNERS: Commences Liquidation Proceedings
----------------------------------------------------
On Sept. 29, 2015, the shareholders of Cerulean Partners, Ltd.
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1, Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
CURRENSEE INTERNATIONAL: Commences Liquidation Proceedings
----------------------------------------------------------
On Oct. 6, 2015, the shareholders of Currensee International
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Kevin Ryan
c/o Maples and Calder, Attorneys-at-law
P.O. Box 309, Ugland House
Grand Cayman KY1-1104
Cayman Islands
IC1 INVESTMENTS: Commences Liquidation Proceedings
--------------------------------------------------
On Sept. 21, 2015, the shareholders of IC1 Investments Ltd.
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Pedro Paulo Magalhaes
c/o Maples and Calder, Attorneys-at-law
P.O. Box 309, Ugland House
Grand Cayman KY1-1104
Cayman Islands
NORTHWAY PROPERTIES: Commences Liquidation Proceedings
------------------------------------------------------
On Oct. 2, 2015, the sole shareholder of Northway Properties
Limited resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Hadley J. Chilton
c/o Leanne Kerley
Telephone: +1 (284) 494 5800
Tropic Isle Building
Nibbs Street Road Town
P.O. Box 650 Tortola VG 1110
British Virgin Islands
OPTIMUM INVESTMENTS: Commences Liquidation Proceedings
------------------------------------------------------
On Oct. 8, 2015, the sole shareholder of Optimum Investments SPC
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Doran + Minehane
Telephone: 00353 61 430000
Facsimile: 00353 61 408613
59/60 O' Connell Street
Limerick
Ireland
SAVANA HOLDINGS: Creditors' Proofs of Debt Due Nov. 16
------------------------------------------------------
The creditors of Savana Holdings Limited are required to file
their proofs of debt by Nov. 16, 2015, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on Oct. 8, 2015.
The company's liquidator is:
Barclays Wealth Corporate Nominees Limited
c/o Barclays Trust Company (Cayman) Limited
P.O. Box 587 Grand Cayman KY1-1106
Cayman Islands
Telephone: + 65 6308 0200
Facsimile: + 65 6308 3289
SIENA G.P.: Placed Under Voluntary Wind-Up
------------------------------------------
On Oct. 26, 2015, the shareholders of Siena G.P. (Cayman) Limited
resolved to voluntarily wind up the company's operations.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Trident Liquidators (Cayman) Ltd
c/o Lisa Thoppil
Telephone: (345) 949 0880
Facsimile: (345) 949 0881
One Capital Place, 4th Floor
P.O. Box 847, George Town
Grand Cayman KY1-1103
Cayman Islands
TIME SEASON: Creditors' Proofs of Debt Due Nov. 16
--------------------------------------------------
The creditors of Time Season Ventures Limited are required to file
their proofs of debt by Nov. 16, 2015, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on Oct. 8, 2015.
The company's liquidator is:
Barclays Wealth Corporate Nominees Limited
c/o Barclays Trust Company (Cayman) Limited
P.O. Box 587 Grand Cayman KY1-1106
Cayman Islands
Telephone: + 65 6308 0200
Facsimile: + 65 6308 3289
YOMBERAJA LTD: Creditors' Proofs of Debt Due Dec. 8
---------------------------------------------------
The creditors of Yomberaja Ltd. are required to file their proofs
of debt by Dec. 8, 2015, to be included in the company's dividend
distribution.
The company commenced liquidation proceedings on Oct. 6, 2015.
The company's liquidator is:
Lion International Management Limited
Craigmuir Chambers
Road Town, Tortola VG 1110
British Virgin Islands
c/o Mr. Philip C Pedro
HSBC International Trustee Limited
Compass Point 9 Bermudiana Road
Hamilton HM 11
Bermuda
Telephone: (441) 299-6482
Facsimile: (441) 299-6526
===================================
D O M I N I C A N R E P U B L I C
===================================
BAGRICOLA: To Lose RD$272.8MM Yearly on 12% to 10% Rate Drop
------------------------------------------------------------
Dominican Today reports that the State-owned agro bank Bagricola
will lose out on RD$272.8 million annually with a rate ratcheted
back from 12 to 10% for the farm sector, as president Danilo
Medina instructed.
Bagricola administrator Carlos Segura said the reduction will
lower production costs in the agro sector and allocate more funds
to invest in new crop-improvement technologies, according to
Dominican Today.
The report notes that Mr. Segura said the measure paves the way to
achieve the goal of one tourist per Dominican in the near future
and also provides the school breakfast to 1.8 million students
starting next year.
In that regard, Agriculture minister Angel Estevez said Government
has allocated around RD$4.5 billion to Bagricola to improve farm
production, the report relays.
President Danilo Medina in one of his surprise visits ordered the
rate reduction on farm loans, from 12 to 10%, the report
discloses.
The report says that Mr. Estevez added that rates on agro sector
loans were as high as 24% when Medina took office in 2012.
* * *
As reported in Troubled Company Reporter-Latin America on May 22,
2015, Standard & Poor's Ratings Services raised its long-term
sovereign credit ratings on the Dominican Republic (DR) to 'BB-'
from 'B+'.
The outlook is stable. At the same time, S&P affirmed the 'B'
short-term rating. S&P also raised its transfer and
convertibility (T&C) assessment to 'BB+' from 'BB'.
DOMINICAN REP: Tax Dodgers Bloom as Rum-Makers' Profits Wither
-------------------------------------------------------------
Dominican Today reports that rum distillers complain that
alcoholic beverage-makers which evade taxes have raised their
market share by more than 200% in just two years, causing major
revenue losses, dwindling sales of those which pay all taxes, and
harm the image of Dominican rums abroad.
The warning is from Mario Pujols, executive director of Dominican
Republic's rum distillers grouped in Adopron, who blamed the
situation mostly on higher excise taxes. He said after six reforms
in 10 years, taxes continue to rise and already top 60% in the
case of rum, according to Dominican Today.
In a statement the distiller also blamed the impunity he says
benefits tax dodgers, whom he affirms sell as much as six times
what they declare to the Internal Taxes Agency (DGII), the report
notes.
"The non-compliance on the part of unscrupulous companies, coupled
with the failure to observe certain provisions in free trade
agreements signed by the country, has drawn the attention of
authorities in some markets, particularly in Europe, which has
placed Dominican rum exports in a situation of risk," the report
quoted Mr. Pujols as saying.
The report relays that Mr. Pujols, speaking in the American
Chamber of Commerce forum "Illicit trade in DR: Causes,
Consequences and proposals for its eradication," said he regrets
that revenue the government should obtain becomes profit for tax
dodgers, whom he stressed also compete unfairly against companies
that do pay taxes and whose products meet industry standards.
"The illegality in the case of rum resulted in a decline of 8%
during the period from January to August." Mr. Pujos said, adding
that the reduction was 14% in the same period in 2014, the report
notes.
* * *
As reported in Troubled Company Reporter-Latin America on May 22,
2015, Standard & Poor's Ratings Services raised its long-term
sovereign credit ratings on the Dominican Republic (DR) to 'BB-'
from 'B+'.
The outlook is stable. At the same time, S&P affirmed the 'B'
short-term rating. S&P also raised its transfer and
convertibility (T&C) assessment to 'BB+' from 'BB'.
=============
J A M A I C A
=============
* JAMAICA: Customs Report a Decline in Illegal Cigarette Imports
----------------------------------------------------------------
RJR News reports that Jamaica Customs is reporting a decline in
the importation of illegal cigarettes into the island.
Commissioner of Customs, Major Richard Reese said intelligence
driven operations involving the police helped in the clampdown on
the trade this year, according to RJR News. However, illegal
importers have been finding creative ways to smuggle cigarettes.
Major Reese explained that Customs continue to conduct
intelligence driven investigations into areas where the illegal
trade is conducted, the report relays.
Cigarette distributor Carreras has been urging the Government to
implement legislative measures to disrupt and stem the illicit
trade in cigarettes, the report discloses. It says the measures
would ensure that port monitoring, border control systems and
processes are tightened, and harsher penalties instituted for
persons found dealing in the trade, the report adds.
* * *
As reported in Troubled Company Reporter-Latin America on July 29,
2015, Standard & Poor's Ratings Services assigned its 'B' issue
rating on Jamaica's up to US$2 billion in bonds issued in two
tranches. The first tranche is for up to US$1,350 million due in
2028. The second tranche is for up to US$650 million due in 2045.
The government will use the proceeds to purchase debt that Jamaica
owes to Venezuela as well as to finance the government's 2015/2016
budget.
===========
M E X I C O
===========
SIXSIGMA NETWORKS: Moody's Lowers CFR to B2; Outlook Negative
-------------------------------------------------------------
Moody's Investors Service has downgraded SixSigma Networks Mexico,
S.A. de C.V. ("KIO")'s corporate family and senior unsecured debt
ratings to B2 from B1. Moody's also changed the outlook on KIO's
ratings to negative from stable.
RATINGS RATIONALE
The downgrade was prompted by KIO's weaker than expected operating
performance and liquidity, which have been affected by the loss of
revenue from a major project that concluded in July 2014 and
expected to be bid out by the government during the 4Q of 2015.
Also affecting KIO's credit profile is the depreciation of the
Mexican peso and delays in collections of accounts receivables.
Moreover, the negative outlook reflects our view that the
operating environment will continue to be challenged by cuts in
the federal budget and strong competition.
KIO's ratings continue to reflect its position as the leading
regional independent data center operator in Mexico, offering a
wide range of mission critical IT solutions for corporate,
government and SMB customers. The rating also incorporates the
company's contracted recurring revenues and the favorable long-
term fundamentals for data center services in the region in which
it operates. These positive factors are offset by its exposure to
government clients; by industry risks, such as intensifying
competition; and by its relatively high capital intensity which
will likely result in negative free cash flow over the next years
if the company maintains its organic growth. KIO's small size and
weaker Funds from Operations (FFO) margins relative to its rated
peers also constrain the rating.
For the first six months ended in 2015 (IH15), KIO's revenue base
has declined 11.6% when compared to the same period of the last
year, pro forma for the acquisition of Red IT in October 2014.
The decline is mainly related with the loss of the Viva project, a
five year contract signed in 2009 with Mexico's tax authorities to
provide video surveillance services for all custom points in the
country. The company was expecting to renew the contract in early
2015, but as of now it has not yet been renewed. Given the
relevance of the contract (it represented approximately 20% of
KIO's annual revenues in 2014), KIO was not able to offset its
loss despite revenue growth in all of its other lines of business.
Accordingly, the recent deterioration in operating performance due
to the loss in Viva contact, coupled with the Mexican peso
depreciation, has affected KIO's ability to de-lever. The company
issued USD 500 million in global notes due in 2021 in November
2014. Since then, the Mexican peso has depreciated more than 20%
against the USD. KIO has only a partial hedge to the depreciation
of the peso as it generates around 50% of its EBITDA in US dollars
and currently does not have hedging instruments. For 2015,
Moody's now expects KIO's gross debt to EBITDA ratio, including
Moody's standard adjustments, to be at around 5.0 times by the end
of 2015, versus prior expectations of leverage at below 4.0 times
levels.
Additionally, KIO has seen delays in its receivables' collection
process in which the government is the counterparty. After the
acquisition of Red IT, KIO was able to reduce its reliance on the
public sector, however, its exposure is still very high, estimated
at around 50% of total revenues. Since the beginning of this
year, the government reduced its budget for 2015 in around MXN 124
billion and it has already announced an additional MXN 133 billion
cut for 2016 budget. Therefore Moody's anticipate that
challenging operating conditions will prevail for KIO.
Currently, liquidity is weak driven by high working capital needs
related with delays in collections and short term maturities under
finance leases. The majority of KIO's capital expenditures are
related to signed contracts that require equipment and
infrastructure. Most of these purchases are made under financial
leases with vendors. Normally, payments under leases are matched
with payments from customers, with periods ranging from 12 to 48
months. However, recent delays in the collection process have
resulted in a mismatch between the cash received from customers
and obligations under finance leases. As of June 30, 2015, KIO
had MXN 720 million in short term debt maturing in 2015, where
around MXN 562 million were related with finance leases. For 2016
maturities under finance leases amount to MXN 750 million. This
negatively compares with cash on hand of MXN484 million.
KIO does not have committed lines but instead relies on
uncommitted bank facilities to fund working capital needs along
the year. An incurrence test under the global notes indenture
limits KIO's ability to increase debt and the company would only
be able to get additional USD 200 million under the debt carve-
outs provisions. Moody's incorporates in the ratings expectations
of support from its main shareholder, Tresalia Capital. Although
there is no explicit support, Tresalia has provided the company in
the past with a USD 100 million equity injection and a USD 500
million bridge loan, both related with the acquisition of RedIT.
Tresalia is a private equity fund owned by the Aramburuzabala
family, co-founders of the Mexican brewery Grupo Modelo. In 2013,
the family cashed its stake in the brewer when Anheuser-Busch
InBev completed its acquisition. Therefore, Moody's considers
that Tresalia has ample availability of funds to support KIO in
case of need.
KIO's ratings could be downgraded if the company's liquidity
position worsens, if Moody's believes that revenue or margins
during the next 12 to 18 months will be weaker than expected, if
debt leverage increases further, or if it becomes difficult for
the company to renew its revolver credit lines, which today fund
its working capital needs.
An outlook stabilization would require improvements in operating
performance, as well as the resumption of a gradual deleveraging
trend. Quantitatively, the outlook could be stabilized if
Moody's-adjusted leverage is below 6.0 times. Additionally,
liquidity would need to improve, eliminating the short term
pressures currently posed by maturities under finance leases.
Headquartered in Mexico City, Mexico, KIO provides managed IT
infrastructure services to government and corporate customers.
The company was founded in 2002 and since then has been engaged in
projects managed IT infrastructure solutions, cloud services,
critical connectivity, corporate and homeland security services,
SAP services, disaster recovery and business continuity plans,
application management, security services, among others. In 2014,
the company acquired redIT, an IT infrastructure company attending
mainly private corporate customers in Mexico and the US. Pro
forma for the acquisition, KIO will operate 13 technological
campuses in Mexico, Panama, Guatemala, the Dominican Republic, San
Diego, California and, by end of 2014, Spain. KIO's nearly 2,000
km fiber network also supports its critical connectivity solutions
offer. The company is privately owned, controlled by Tresalia
Capital a private equity fund owned by the Aramburuzabala family.
For the first six months of 2015, revenues were MXN 2.3 billion.
======================
P U E R T O R I C O
======================
INSITE CORPORATION: Walsh's Motion For Summary Judgment Granted
---------------------------------------------------------------
In an Opinion and Order dated October 29, 2015, available at
http://is.gd/K3HyBmfrom Leagle.com, Judge Mildred Caban Flores of
the United States Bankruptcy Court for the District of Puerto Rico
granted Walsh Construction Company Puerto Rico's motion for
summary judgment, finding that Walsh did not violate the automatic
stay by withholding payments of contract funds to Debtor Insite
Corporation since these are not property of the estate and thus,
not covered by the protections of the automatic stay.
However, the granting of summary judgment in favor of Walsh does
not dispose of the adversary case. The complaint alleges that
Walsh seized tools and materials belonging to Debtor. Both parties
have failed to address the matter nor put the Court in a position
to decide on the pending issue. The parties are ordered within 30
days to file an amended pre-trial report limited to this singular
remaining issue.
Insomuch as Walsh has explicitly withheld its consent that the
Bankruptcy Court enter judgment on this matter and in the event
that an appellate court concludes that the bankruptcy judge could
not have entered a final order or judgment consistent with Article
III of the United States Constitution, this decision may be deemed
to be this Court's Proposed Findings of Fact and Conclusions of
Law, subject to the procedures set forth in Fed. R. Bankr. P.
9033.
The adversary proceeding is INSITE CORPORATION, Plaintiff, v.
WALSH CONSTRUCTION COMPANY PUERTO RICO, Defendant, ADVERSARY CASE
NO. 12-00281 (Bankr. D.P.R.).
The bankruptcy case is IN RE: INSITE CORPORATION, Chapter 11,
Debtor, CASE NO. 11-11209 (MCF)(Bankr. D.P.R.).
INSITE CORPORATION, Plaintiff, is represented by:
David A. Carrion Baralt
Post Office Box 364463
San Juan, PR 00936
Phones: (787) 758-5050
WALSH COSNTRUCTION COMPANY, PUERTO RICO, Defendant, is represented
by:
Paul T. Devlieger
DeVLIEGER HILSER, PC
1518 Walnut Street, 16th Floor
Philadelphia, PA 19102
Phone: 215 735-9181
Email: pdevlieger@dvhlaw.com
***********
Monday's edition of the TCR-LA delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-LA editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Monday
Bond Pricing table is compiled on the Friday prior to publication.
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for actual trades are probably different. Our objective is to
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issuers' public debt and equity securities about which we report.
Tuesday's edition of the TCR-LA features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
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***********
S U B S C R I P T I O N I N F O R M A T I O N
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