/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/160122.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, January 22, 2016, Vol. 17, No. 15 Headlines B R A Z I L OGX PETROLEO: Chided For Trying to Slip Out Of Arbitration C A Y M A N I S L A N D S BINEC LIMITED: Placed Under Voluntary Wind-Up CANCALE INVESTMENTS: Placed Under Voluntary Wind-Up CARNAC LIMITED: Placed Under Voluntary Wind-Up CHAUSEY LIMITED: Placed Under Voluntary Wind-Up CHI WAVE: Placed Under Voluntary Wind-Up ESKE CAPITAL: Placed Under Voluntary Wind-Up IRONGATE ABSOLUTE: Placed Under Voluntary Wind-Up MARTINEAU INVESTMENTS: Placed Under Voluntary Wind-Up OCTIS ASSET: Commences Liquidation Proceedings PD STAR: Commences Liquidation Proceedings PRIVATE EQUITY: Placed Under Voluntary Wind-Up R OVERSEAS: Placed Under Voluntary Wind-Up SIDERA CAPITAL: Placed Under Voluntary Wind-Up SNOW PETREL: Placed Under Voluntary Wind-Up TFO POOLING I: Commences Liquidation Proceedings C O L O M B I A PACIFIC EXPLORATION: S&P Lowers LT Corporate Credit Rating to 'D' C O S T A R I C A COSTA RICA: Fitch Affirms 'BB+' IDR; Outlook Negative D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Shippers Debunk Exporters' Gripe of High Costs J A M A I C A JAMAICA: Government Calculating Cost of Possible Job Cuts P U E R T O R I C O AMERICAN AGENCIES: Has Until April 15 to Assume Joviri Leases PUERTO RICO: Financial Situation is Worsening PUERTO RICO: Ambac Pays Out $10.3 Million on Default PUERTO RICO ELECTRIC: Says Not Enough Cash for Debt Payments PUERTO RICO ELECTRIC: Says Ch. 9 Option Would Avert Litigation - - - - - =========== B R A Z I L =========== OGX PETROLEO: Chided For Trying to Slip Out Of Arbitration ---------------------------------------------------------- Hannah Sheehan at Law360.com reports that a British High Court judge upbraided OGX Petroleo e Gas Participacoes S.A., now known as Oleo e Gas, for omitting evidence in an attempt to escape a London arbitration proceeding brought by two foreign firms. Justice Richard Snowden expressed dismay that OGX Petroleo never revealed that the dispute in arbitration over $78.73 million in unpaid ship charter fees was not subject to the company's reorganization plan, which the Fourth Corporate Court of Rio de Janeiro approved after OGX filed for bankruptcy in Brazil, according to Law360.com. The report notes that OGX had applied for and received an order for recognition in England of the Brazilian plan as a foreign main proceeding, court documents show. That recognition meant an automatic stay of all other legal actions, including the arbitration, the report relays. Because an amended charter agreement between OGX and the leasing company called for the fee dispute to go to arbitration, the companies that were seeking the charter fees were temporarily stuck, the report notes. "When seeking recognition, full and frank disclosure must be made to the court in relation to the consequences that recognition of the foreign proceeding may have upon third parties who are not before the court," the report quoted Justice Snowden as saying. According to court documents, OGX filed for bankruptcy in Brazil in October 2013 and asked the Netherlands-based leasing unit of Brazilian shipbuilding giant OSX Brasil SA to agree to a reduction in daily charter rates for a production, storage and offloading vessel, which Norway's Nordic Trustee A.S.A had partially financed through a $500 million bond, the report notes. OSX 3 Leasing B.V. reduced the daily rate for the tanker from $410,837 to $250,000. In December 2014, OGX obtained an injunction from the Brazilian bankruptcy court further reducing the charter rate from $250,000 to $130,000 without providing notice to Nordic or OSX 3 Leasing, the report recalls. Nordic and OSX 3 Leasing submitted a request for arbitration in London on June 22, 2015, alleging unpaid fees, the report notes. OGX applied for the London order for recognition of the Brazilian plan as the foreign main proceeding, which the court granted, the report relates. The firms immediately appealed the decision and asked the court to set the order aside to allow the arbitration to proceed, saying OGX had misled Justice George Mann, the report notes. Unbeknownst to the London court, OGX's reorganization plan explicitly stated that the fee dispute between OGX and OSX 3 Leasing was not subject to the Brazilian reorganization effort, the report discloses. In fact, the September 2014 Charter Amendment Agreement contained an arbitration provision stipulating that all disputes between the companies should be resolved in the London Court of Arbitration, the report says. The Brazilian Supreme Court subsequently threw out OGX's push to unilaterally reduce its daily charter rate, and the company agreed to allow arbitration of its dispute with Nordic and OSX 3 Leasing over $78.73 million in unpaid charter fees per the terms of their amended agreement, the report notes. Justice Snowden reprimanded OGX for not informing the court of the potential effects to Nordic and Leasing from an automatic stay of proceedings, saying the Brazilian firm abused the arbitration process and caused the firms to incur a "very substantial amount of costs," the report relays. "For my part, had the parties not themselves agreed a modification of the order that permitted the arbitration to continue and included a provision that OGX would pay Nordic and Leasing's costs (including a significant sum on account), I would have been inclined to make an indemnity costs order against OGX," Justice Snowden said, the report says. Nordic Trustee A.S.A., OSX 3 Leasing B.V. is represented by Andreas Gledhill QC and Andrew Scott (instructed by Akin Gump LLP). OGX Petroleo E Gas S.A. (EM Recuperacao Judicial), Pedro Morales Borba, Paulo Narcelio Amaral and Julio Alfredo Klein Jr are represented by Martin Pascoe QC -- martinpascoe@southsquare.com -- and Richard Fisher -- richardfisher@southsquare.com (instructed by SC Andrews LLP). The case is In The Matter of OGX Petroleo E Gas S.A. and In The Matter of The Cross-Border Insolvency Regulations 2006, case number 5091 of 2015, in the High Court of Justice, Chancery Division. About OGX Petroleo Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participacoes S.A., now known as Oleo e Gas, is an independent exploration and production company with operations in Latin America. OGX filed for bankruptcy in a business tribunal in Rio de Janeiro on Oct. 30, 2013, case number 0377620-56.2013.8.19.0001. The bankruptcy filing puts US$3.6 billion of dollar bonds into default in the largest corporate debt debacle on record in Latin America. The filing by the oil company that transformed Eike Batista into Brazil's richest man followed a 16-month decline that wiped out more than US$30 billion of his personal fortune. The filing, which in Brazil is called a judicial recovery, follows months of negotiations to restructure the dollar bonds, in which OGX sought to convert debt to equity and secure as much as US$500 million in new funds. OGX said Oct. 29, 2013 that the talks concluded without an agreement. ========================== C A Y M A N I S L A N D S ========================== BINEC LIMITED: Placed Under Voluntary Wind-Up --------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Binec Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 CANCALE INVESTMENTS: Placed Under Voluntary Wind-Up --------------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Cancale Investments Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 CARNAC LIMITED: Placed Under Voluntary Wind-Up ---------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Carnac Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 CHAUSEY LIMITED: Placed Under Voluntary Wind-Up ----------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Chausey Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 CHI WAVE: Placed Under Voluntary Wind-Up ---------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Chi Wave Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 ESKE CAPITAL: Placed Under Voluntary Wind-Up -------------------------------------------- On Nov. 24, 2015, the sole shareholder of Eske Capital Ltd 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: Avalon Ltd. Reference: GL Landmark Square, 1st Floor, 64 Earth Close P.O. Box 715, Grand Cayman KY1-1107 Cayman Islands Telephone: (+1) 345 769 4422 Facsimile: (+1) 345 769 9351 IRONGATE ABSOLUTE: Placed Under Voluntary Wind-Up ------------------------------------------------- On Nov. 25, 2015, the sole shareholder of Irongate Absolute Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 28, 2015, will be included in the company's dividend distribution. The company's liquidator is: E. Andrew Hersant Christopher Humphries Stuarts Walker Hersant Humphries Telephone: (345) 949 3344 Facsimile: (345) 949 2888 P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands MARTINEAU INVESTMENTS: Placed Under Voluntary Wind-Up ----------------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Martineau Investments Company Ltd 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: Commerce Corporate Services Limited P.O. Box 694 Grand Cayman Cayman Islands Telephone: 949 8666 Facsimile: 949 0626 OCTIS ASSET: Commences Liquidation Proceedings ---------------------------------------------- On Nov. 17, 2015, the sole member of Octis Asset Management Cayman Limited resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by Dec. 28, 2015, will be included in the company's dividend distribution. The company's liquidator is: Richard Fear c/o Ryan Charles P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Telephone: (345) 814 7364 Facsimile: (345) 945 3902 PD STAR: Commences Liquidation Proceedings ------------------------------------------ On Nov. 17, 2015, the members of PD Star Fund resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by Dec. 30, 2015, will be included in the company's dividend distribution. The company's liquidator is: Appleby Trust (Cayman) Ltd. c/o Richard Gordon Telephone: +1 (345) 949 4900 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands PRIVATE EQUITY: Placed Under Voluntary Wind-Up ---------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Private Equity Holding Cayman 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 R OVERSEAS: Placed Under Voluntary Wind-Up ------------------------------------------ On Nov. 24, 2015, the sole shareholder of R Overseas Ltd. 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: Avalon Ltd. Reference: GL Landmark Square, 1st Floor, 64 Earth Close P.O. Box 715, Grand Cayman KY1-1107 Cayman Islands Telephone: (+1) 345 769 4422 Facsimile: (+1) 345 769 9351 SIDERA CAPITAL: Placed Under Voluntary Wind-Up ---------------------------------------------- On Nov. 24, 2015, the sole shareholder of Sidera Capital LLC 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: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor, 64 Earth Close P.O. Box 715 Grand Cayman KY1-1107 Cayman Islands SNOW PETREL: Placed Under Voluntary Wind-Up ------------------------------------------- At an extraordinary general meeting held on Nov. 20, 2015, the shareholders of Snow Petrel Limited resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Dec. 29, 2015, will be included in the company's dividend distribution. The company's liquidator is: Helier Pirouet Ross Collins c/o Citron 2004 Limited 23-25 Broad Street St Helier Jersey JE4 8ND Telephone: + 44 1534 282276/ 01534 282345 Facsimile: + 44 1534 282400 TFO POOLING I: Commences Liquidation Proceedings ------------------------------------------------ On Nov. 24, 2015, the sole shareholder of TFO Pooling I, Ltd. resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by Dec. 28, 2015, will be included in the company's dividend distribution. The company's liquidator is: Mourant Ozannes TFO Manager Limited Jo-Anne Maher Telephone: (345) 814-9255 Facsimile: (345) 949-4647 c/o Mourant Ozannes, Attorneys-at-law 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands =============== C O L O M B I A =============== PACIFIC EXPLORATION: S&P Lowers LT Corporate Credit Rating to 'D' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and issue-level ratings on Pacific Exploration and Production Corp (Pacific) to 'D' from 'CC'. The downgrade reflects Pacific's failure to make the $31.3 million interest payment on its 5.625% notes on Jan. 19, 2016. A payment default hasn't occurred according to the legal provisions of the notes because of the 30-day grace period in which to cure interest payment defaults. However, S&P considers a default to have occurred because it don't believe the payment will be made within the stated grace period, given Pacific's announcement that it has elected to use the 30 day grace period rather than make the interest payments due Jan. 19, 2016, and Jan. 26, 2016, of about $65 million. Therefore, S&P expects Pacific to enter into a general default and that it will fail to pay all or substantially all of its obligations as they come due. Pacific Exploration & Production Corporation engages in the exploration, development, and production of natural gas and crude oil in Colombia, Peru, Guatemala, Brazil, Guyana, Belize, and Papua New Guinea. =================== C O S T A R I C A =================== COSTA RICA: Fitch Affirms 'BB+' IDR; Outlook Negative ----------------------------------------------------- Fitch Ratings has affirmed Costa Rica's Long-term foreign- and local-currency IDRs at 'BB+'. The Rating Outlook is Negative. The issue ratings on Costa Rica's senior unsecured foreign- and local-currency bonds have been affirmed at 'BB+'. The Short-term foreign-currency IDR has been affirmed at 'B' and the Country Ceiling at 'BBB-'. KEY RATING DRIVERS Costa Rica's ratings are underpinned by its strong structural features relative to peers in terms of high per-capita income, social development indicators and governance, as well as the continued success of its economic model centered around high value-added service and manufacturing activities, which are boosted by strong foreign direct investment inflows. Costa Rica also benefits from favorable U.S. demand growth and low oil prices. The Negative Outlook reflects adverse public debt dynamics, driven by large fiscal deficits, and legislative gridlock preventing progress on reforms to correct fiscal imbalances in a timely manner. The central government deficit inched upward to an estimated 5.9% of GDP in 2015, driven by higher interest costs as efforts to improve tax collections and contain salaries and discretionary spending helped arrest growth in the primary deficit. The 2016 budget envisions a higher deficit of 6.9% of GDP, although budget under-execution could bring it closer to 6%. A growing interest bill and rigid spending commitments on salaries and legally- protected social transfers will maintain pressure on public finances. The administration has outlined a series of fiscal reforms to produce 3pp of GDP in savings over a three-year period, but progress on these initiatives has been slow in a highly fragmented congress. Some less controversial tax administration bills have advanced, but the outlook is less certain for two key reforms to hike direct and indirect taxes. There is greater willingness among political actors to address fiscal imbalances, but consensus over the sequencing and relative weight of tax-enhancing versus spending-side reforms could be difficult to achieve. Political and procedural obstacles could block or delay reforms, or dilute their yields, as evidenced by multiple unsuccessful fiscal reform attempts under past administrations. Fitch's baseline forecast assumes some progress on revenue- enhancing measures to narrow the deficit, but fiscal consolidation will be insufficient to stabilize the debt-to-GDP ratio. General government debt-to-GDP has risen nearly 15pp since 2010 to nearly 40% of GDP in 2015, and officials estimate a fiscal adjustment of 3.8% of GDP is necessary to stabilize debt by 2018. The ratio of interest payments to fiscal revenues is high relative to 'BB' peers. A captive local investor base dominated by publicly-administered funds has supported fiscal financing flexibility. However, financing challenges could increase in 2016 given the absence of congressional authorization for Eurobond issuance or an alternative external financing source. Additional sovereign reliance on the local debt market could put upward pressure on borrowing costs. While recent policy rate cuts have helped hold down borrowing costs, the trend could revert as favorable inflation dynamics unwind. Fitch estimates that growth slowed to 2.8% in 2015 from an average of 4.3% during 2010-14 as the country absorbed the effects of two shocks to the export sector (closure of a microchip plant and the impact of El Nino on agricultural output), while domestic demand has been strong. Fitch expects growth will recover to 3.6% in 2016 and 4% in 2017, supported by diversified investment in high value-added service and manufacturing activities, lower oil prices, and firm US economic activity. Lower oil prices have represented a favorable external shock for Costa Rica, bringing the current account deficit below 4% of GDP in 2015 compared to 5% on average during 2011 - 2013, and supporting the accumulation of official reserves. A well- diversified export base and strong foreign direct investment inflows support the economy's capacity to absorb external shocks in the context of limited exchange rate flexibility given financial dollarization. Inflation fell sharply in 2015 due to the impact of lower energy prices and the relative strength of the local currency, while inflation expectations have moderated to the official target. This has prompted substantial cuts in the policy rate by the central bank, as well as a reduction in the inflation target from 4% to 3% (+/-1pp) in early 2016. The impact on deposit and lending rates has been somewhat muted, however, and the authorities have unveiled changes in the calculation of a key interest rate benchmark aimed at improving monetary transmission channels. High fiscal deficits, limited exchange rate flexibility, financial dollarization and quasi-fiscal losses at the central bank continue to constrain monetary policy. The dollarization of credit remains an important source of risk in the financial system, and growth in foreign-currency borrowing gained speed in 2015 on an attractive interest rate differential and the perceived stability in the exchange rate. Banks maintain a long FX position, but are exposed to credit risk from the high shares of foreign-currency loans that are extended to borrowers without foreign-currency earnings and with variable rates linked to US benchmarks. RATING SENSITIVITIES These risk factors individually, or collectively, could trigger a negative rating action: -- Inadequate progress on fiscal reforms that support a reduction in the primary deficit consistent with improvement in the debt trajectory; -- Evidence of sovereign financing constraints; -- A deterioration in prospects for foreign investment and growth. The Outlook is Negative. Consequently, Fitch's sensitivity analysis does not currently anticipate developments with a high likelihood of leading to a positive rating change. Future developments that could individually, or collectively, result in a stabilization of the Outlook include: -- Progress on a fiscal consolidation strategy that improves the prospects for debt stabilization; -- Higher growth that improves fiscal and government debt dynamics. KEY ASSUMPTIONS Fitch assumes that in the absence of authorization for a Eurobond issuance, Costa Rica will be able to meet high deficit financing needs in 2016 - 2017 through alternative external financing sources and/or reliance on the local market. Fitch forecasts that US growth and persistence of lower fuel prices will be supportive of economic growth in Costa Rica in 2016 - 2017. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Shippers Debunk Exporters' Gripe of High Costs ------------------------------------------------------------------ Dominican Today reports that Dominican Republic's shipping companies grouped in the ANRD said the cost to ship Dominican products to the US and other countries by sea have dropped up to 30%. The shippers' statement responds to a complaint voiced by the exporters grouped in Adoexpo, who say Dominican shipping companies fail to cut freight costs to the main export destinations, despite that international maritime freight fees from China to the Caribbean have fallen 70%, according to Dominican Today. The shippers said lower freight rates for containers from China and the East to the US and mainly Europe over the last year, and therefore the rest of the world, stem from the current global glut in transport capacity, the report notes. "The Chinese economy hasn't grown at double-digit percentages as expected, but international shipping companies had ships built with that growth in mind, creating an overcapacity estimated at 30%," the ARD said in a statement obtained by the news agency. It adds that for these routes the shipping companies ordered oversized ships capable of carrying up to 20,000, 20-foot containers taking into account that those boats consume considerably less fuel per transport unit than the current ones, the report relays. As reported in the Troubled Company Reporter-Latin America on Dec. 3, 2015, Fitch Ratings affirmed the Dominican Republic's long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlooks on the long-term IDRs are revised to Positive from Stable. The issue ratings on the Dominican Republic's senior unsecured foreign and local currency bonds are affirmed at 'B+'. The Country Ceiling is affirmed at 'BB-' and the short-term foreign currency IDR at 'B'. ============= J A M A I C A ============= JAMAICA: Government Calculating Cost of Possible Job Cuts --------------------------------------------------------- RJR News reports that Richard Byles, Co-Chairman of Jamaica's Economic Program Oversight Committee (EPOC) has revealed that the Government is now trying to assess the cost of possible public sector job cuts. Mr. Byles disclosed that the Government will be offering voluntary separation and early retirement to employees, to reduce the wage bill which reached J$168 billion this year, according to RJR News. Acknowledging that "there are costs that are associated with (job) separation," Mr. Byles said Administration was now paying attention to all those cost implications, the report notes. "So, I believe they are exploring ways to fund that, and they have to do that in association with the IMF team," he explained, the report relays. Mr. Byles observed that if nothing is done to reduce the size of the public sector, the wage-to-GDP ratio will soon reach 9.6%, the report notes. The Government, in keeping with a commitment to the IMF, is targeting a wage-to-GDP rate of nine per cent next year, the report discloses. Mr. Byles stressed, however, that this was not a mandatory target, but one that he believed the Government should seek to achieve it, 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. ====================== P U E R T O R I C O ====================== AMERICAN AGENCIES: Has Until April 15 to Assume Joviri Leases ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico has given American Agencies Co. Inc. until April 15, 2016, to assume its two nonresidential leases with Joviri Inc. The company needs additional time in order to finalize its negotiations with the landlord of the terms governing the assumption of the leases, according to its lawyer, Luisa Valle Castro, Esq., at C. Conde & Assoc., in Old San Juan, Puerto Rico. About American Agencies Puerto Rico-based American Agencies Co., Inc., founded in 1956 by Eng. Jorge A. Rivera Cardona sells and installs steel fabricated structures, along with the sale of doors and hardware. American Agencies operates from leased facilities in Rio Piedras, Puerto Rico. New Steel, Inc., fabricates steel structures that American Agencies sells and installs. American Agencies and New Steel filed Chapter 11 bankruptcy petitions (Bankr. D.P.R. Case Nos. 15-07088 and 15-07090, respectively) on Sept. 15, 2015. The petitions were signed by Omir Mendez, the president. The Debtors cases are substantive consolidated under Lead Case 15-07088. American Agencies disclosed $6,810,695 in assets and $9,738,804 in debt in its schedules. New Steel disclosed $8,429,855 in assets and $12,182,464 in debt in its schedules. Banco Popular de Puerto Rico is the largest secured creditor. The Debtors tapped C. Conde & Associates as counsel; Doris Barroso Vicens, CPA, at RSM ROC & Company, as accountant; Xavier A. Curret from Landa Umpierre, P.S., as external auditor; Moises Avila-Sanchez, Esq., from Avila, Martinez & Hernandez, P.S.C., as special counsel relating to collective bargaining agreements; Jose Julian Alvarez-Maldonado Esq., from the firm Fiddler, Gonzalez & Rodriguez, P.S.C., as special counsel to provide special services in corporate and contractual matters; and Ismael Isern Suarez from I.S. Appraiser Group, P.S.C., as appraiser. PUERTO RICO: Financial Situation is Worsening --------------------------------------------- Michelle Kaske at Bloomberg News reports that Puerto Rico said the island's financial situation is worsening and it increased estimates of how much the commonwealth will fall short of being able to make debt payments over the next decade to $23.9 billion. Revenue will fall short of covering principal and interest payments each year through 2025, according to an updated fiscal and economic growth plan released by Governor Alejandro Garcia Padilla's administration, Bloomberg News notes. The payment deficit over the next five years has widened to an estimated $16.06 billion, up from a $14 billion forecast in September, according to Bloomberg News. Creditors asked Puerto Rico to extend the plan to 10 from five years, the administration said. Bloomberg News discloses that the swelling gap is based in part on lower than anticipated revenue collections for this fiscal year, the report said. The update was made as Puerto Rico engages in talks with bondholders to reduce the island's $70 billion debt burden, Bloomberg News relays. Without a debt restructuring, there will be widespread defaults throughout the commonwealth's debt stack, a senior Puerto Rico official reiterated in a phone call with reporters. "The information contained in the updated plan makes all the more clear that actions must be taken before the commonwealth runs out of options to pay its debt and provide essential services to the people of Puerto Rico," Melba Acosta, president of the Government Development Bank, said in an e-mailed statement obtained by Bloomberg News. The revenue estimates were revised before U.S. Treasury Secretary Jacob J. Lew travels to San Juan on Jan. 20 to discuss Puerto Rico's financial challenges with Garcia Padilla and other island lawmakers. A commonwealth agency defaulted on a $35.9 million interest payment Jan. 4 after the administration redirected revenue that's normally used to repay agency debt to instead cover general-obligation payments, Bloomberg News relays. As reported in the Troubled Company Reporter-Latin America on Dec. 28, 2015, Moody's Investors Service has downgraded $1.09 billion of Puerto Rico appropriation bonds issued by the Public Finance Corporation (PFC) to C from Ca, while maintaining other ratings assigned to the US territory's debt. PUERTO RICO: Ambac Pays Out $10.3 Million on Default ---------------------------------------------------- Nick Brown at Reuters reports that Puerto Rico's latest default meant a $10.3 million hit for Ambac Financial, which insures some of the debt the island's infrastructure authority PRIFA failed to pay on Jan. 4. Ambac had exposure to $10.3 million of PRIFA debt due on Jan. 4, according to a Nov. 30 company report, Reuters notes. An Ambac spokeswoman confirmed the insurer paid the full amount. PRIFA owed a roughly $36 million payment Jan. 4 but, according to a public filing by the trustee for the PRIFA bonds, failed to transfer funds to make the payment, Reuters relates. Reuters says that the move was expected after Puerto Rico's Governor Alejandro Garcia Padilla announced that PRIFA would miss the payment. The strategic defaults are meant to help Puerto Rico combat an ongoing $70 billion debt crisis, Reuters discloses. The trustee paid bondholders through a combination of cash on hand and payouts from Ambac, the filing said, the report relays. Standard & Poor's Ratings Services downgraded the PRIFA bonds to 'D', signifying default, from 'CC'. Ambac insures a face value of more than $500 million of PRIFA debt, according to public filings, the report relays. In December, Garcia Padilla said he would redirect revenues earmarked to pay debt at PRIFA and other agencies, in order to pay Puerto Rico's public debt, backed by its constitution, says Reuters. Garcia Padilla said he had clawed back $163 million from those agencies to pay about $329 million of public debt, Reuters notes. While some of those agencies still had reserves to pay their own debt, PRIFA did not, leading to its default, the report relays. The report notes that Puerto Rico's Public Finance Corp is also expected to default on a $1.4 million debt payment that was due. In December, Ambac and Financial Guaranty Insurance Co penned a letter to Garcia Padilla challenging the legality of the clawbacks, and some analysts expect litigation to follow, the report recalls. "I think within a week of Ambac having to make that payment, they will file a lawsuit," said Ed Groshans, an analyst with Height Securities, following Puerto Rico, notes Reuters. The $10.3 million payment on its own is small for Ambac, but with more than $2 billion total par exposure to Puerto Rico debt, the company could be in trouble if defaults continue, the report discloses. A key issue for Ambac, Groshans said, is its $809 million par exposure to Puerto Rico's so-called COFINA debt, backed by sales tax revenue whose structure could be attacked in court as Puerto Rico's creditors battle for slices of a limited pie, the report adds. As reported in the Troubled Company Reporter-Latin America on Dec. 28, 2015, Moody's Investors Service has downgraded $1.09 billion of Puerto Rico appropriation bonds issued by the Public Finance Corporation (PFC) to C from Ca, while maintaining other ratings assigned to the US territory's debt. PUERTO RICO ELECTRIC: Says Not Enough Cash for Debt Payments ------------------------------------------------------------ Romy Varghese and Kasia Klimasinska at Bloomberg News report that Puerto Rico's main electricity provider can't pay $1.13 billion due to creditors between now and July 1 without approval of an unprecedented debt-restructuring agreement that was reached at the end of December, Lisa Donahue, the agency's chief restructuring officer, told a committee of U.S. lawmakers. The obligations are more than twice the amount of cash that the Puerto Rico Electric Power Authority, known as Prepa, has on hand, she said in testimony to a panel of the House Natural Resources Committee, according to Bloomberg News. "Prepa will not be able to make up the difference with revenue from operations during this period," said Ms. Donahue, who is a managing director with restructuring adviser AlixPartners, Bloomberg News relays. The committee examined the electricity system of the U.S. territory, whose government defaulted on $37 million of bond payments this month, Bloomberg News notes. It didn't delve into the broader fiscal crisis gripping the Caribbean Island that's struggling to repay $70 billion of debt left from years of borrowing to pay bills, Bloomberg News says. The utility last month struck a deal with insurance companies and bondholders to restructure its $8.2 billion of debt, Bloomberg News discloses. Puerto Rico lawmakers must approve it this month. Bloomberg News says that Ms. Donahue said U.S. legislation giving Puerto Rico legal ability to restructure its debts would help persuade investors with about $2.7 billion of Prepa debt to sign on to the deal cut with other creditors. Prepa needs additional investors with at least $2 billion to opt in for it to be concluded, she said, Bloomberg News notes. The hearing wasn't called to consider any specific legislation and lawmakers didn't take any action, Bloomberg News relays. The committee doesn't have authority over whether to extend municipal bankruptcy protection to the island, which is one of Puerto Rico's top legislative priorities, Bloomberg News notes. Rep. Raul Grijalva, the highest-ranking Democrat on the panel, said the island needs such legal tools to cut its debt before it can address its energy issues, Bloomberg News says. "They can't repair their economy until they deal with the debt problem," Bloomberg News quoted Mr. Grijalva as saying. "They can't provide cost-effective energy until they raise billions of dollars to upgrade their old and dysfunctional power generation and distribution infrastructure," Mr. Grijalva added. Bankruptcy Push The Obama administration and Congressional Democrats have proposed legislation that would allow Prepa and other agencies to file for bankruptcy in federal court, just like U.S. cities and publicly owned corporations can, Bloomberg News notes. Some Republicans, who control both chambers of Congress, oppose it, saying it would be unfair to investors who bought Puerto Rico bonds with the assurance that it wasn't an option, Bloomberg News says. House Speaker Paul Ryan urged lawmakers to find a way to help the territory by the end of the quarter, Bloomberg News discloses. Rep. Rob Bishop, the Republican who leads the committee, said the hearing was one step toward getting a handle on Puerto Rico's problems so lawmakers can find a way to help, Bloomberg News relays. "It would be totally irresponsible to try to go through this process without looking at the root causes," Rep. Bishop said, relays Bloomberg News. Talking to reporters after the hearing, Rep. Bishop said he sees giving Puerto Rico access to bankruptcy as part of the solution, though his committee doesn't have jurisdiction over the issue, Bloomberg News says. Prepa won't get a possible loan guarantee from U.S. Energy Dept. to finance an offshore natural gas port until Prepa's financial situation is steadied, Ms. Donahue said, Bloomberg News notes. Prepa faces bills of $700 million under fuel lines of credit and $428 million in principal and interest on its bonds between now and July, she said. The restructuring pact gave Prepa temporary relief from its obligations, and without it, the agency "would already have run out of money," Ms. Donahue said, Bloomberg News adds. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2015, Standard & Poor's Ratings Services maintained its 'CC' long-term and underlying ratings (SPURs) on Puerto Rico Electric Power Authority's (PREPA) electric revenue bonds. However, the ratings remain on CreditWatch, where they were originally placed with negative implications on June 18, 2014. As of June 30, 2015, PREPA had about $8.44 billion of long-term debt outstanding, and an additional $730 million due to noteholders. PUERTO RICO ELECTRIC: Says Ch. 9 Option Would Avert Litigation -------------------------------------------------------------- Aaron Pelc at Law360.com reports that giving Puerto Rico's heavily indebted utility the ability to restructure its finances through the U.S. court system would expedite an existing deal with stakeholders to reduce its debt by more than $1 billion and avert potential litigation with holdout creditors, the utility's chief restructuring officer told a congressional panel. The Puerto Rico Electric Power Authority's Lisa Donahue, who has been leading PREPA's turnaround efforts for more than a year, told a House subcommittee that giving Puerto Rico an option to enter bankruptcy would give the energy provider greater leverage in its negotiations with creditors, according to Law360.com. The hearing is the latest Congress has convened over the last several months as lawmakers deliberate what role the federal government should play in addressing Puerto Rico's burgeoning debt crisis, Law360.com notes. Questions over Puerto Rico's political status related to its treatment under U.S. laws emerged throughout the hearing, the report relates. Unlike states and municipalities, Puerto Rico does not have access to Chapter 9 of the U.S. Bankruptcy Code, which has allowed cities like Detroit to restructure debt through the courts, the report says. Meanwhile, the commonwealth's attempts to establish a separate restructuring regime have been blocked by the courts, Law360.com notes. Law360.com relays that Ms. Donahue said a restructuring deal PREPA reached last year with creditors that hold about 70 percent of the utility's $9 billion debt is the key to its financial restructuring regardless of whether Puerto Rico eventually is given a bankruptcy option. However, Ms. Donahue said, Chapter 9 would speed up PREPA's restructuring process and prevent holdout bondholders from obstructing a deal, the report notes. Holistically, the biggest advantage to Chapter 9 is that it would force all of PREPA's stakeholders to the negotiating table and allow a federal judge to enforce a restructuring deal on all of the utility's creditors, Ms. Donahue said, the report relates. Without that legal tool, creditors -- and funds that purchase debt on the secondary market -- could hold out for a better deal and frustrate restructuring efforts, she added. "Where a Chapter 9 would make sense for PREPA is to facilitate the deal very quickly," the report quoted Ms. Donahue as saying. "It would pull in the holdouts, to the extent that there are holdouts, so we don't have an Argentina," Ms. Donahue added. The report relays that Argentina has for years been locked in U.S. litigation with private equity firms that hold billions of dollars in defaulted debt and judgments against the country. Ms. Donahue and representatives from Puerto Rico said at the hearing that without Chapter 9, PREPA will face similar litigation, and more of it, because it is likely to default on its debts early this year, the report notes. PREPA's financial woes are the result of decades of fiscal mismanagement, Ms. Donahue said, the report discloses. When administrations changed, Puerto Rico's political leaders switched out PREPA's leadership, making long-term planning impossible, Ms. Donahue said. Currently, PREPA's infrastructure is badly outdated, having not undergone a substantial update since the 1970s, officials said at the hearing, the report relays. As a result, the electricity delivery systems are inefficient and create environmental problems not present at modern utilities, they said, the report notes. Though Puerto Rico residents on average pay higher electricity rates than in the states, PREPA still operates at a loss of about 8 cents per kilowatt-hour, Ms. Donahue said, the report notes. The financial problems, which have been building for years, have hindered Puerto Rico's economy and pushed the island to the brink of a humanitarian crisis. Congressional Republicans, however, have so far expressed an unwillingness to provide Puerto Rico with a bankruptcy option, expressing concern for bondholders' contractual rights, the report adds. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2015, Standard & Poor's Ratings Services maintained its 'CC' long-term and underlying ratings (SPURs) on Puerto Rico Electric Power Authority's (PREPA) electric revenue bonds. However, the ratings remain on CreditWatch, where they were originally placed with negative implications on June 18, 2014. As of June 30, 2015, PREPA had about $8.44 billion of long-term debt outstanding, and an additional $730 million due to noteholders. *********** 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. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. 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