/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/160211.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 Thursday, February 11, 2016, Vol. 17, No. 29 Headlines A R G E N T I N A ARGENTINA: Floats $6.5 Billion Deal to End Epic Default Battle B R A Z I L GOL LINHAS: Suspends Service to Venezuela on Currency Dispute C A Y M A N I S L A N D S BAIA INVESTMENT: Placed Under Voluntary Wind-Up BILLUND LEASING: Commences Liquidation Proceedings CENTURION CDO II: Commences Liquidation Proceedings CHEYNE MANAGED: Commences Liquidation Proceedings COMMODORE CDO I: Commences Liquidation Proceedings COMMODORE CDO II: Commences Liquidation Proceedings DELACROIX MANAGED: Commences Liquidation Proceedings DIVE MASTER: Placed Under Voluntary Wind-Up EQUINOX FINANCE: Placed Under Voluntary Wind-Up JECD LIMITED: Placed Under Voluntary Wind-Up OPHIR PARTNERS: Commences Liquidation Proceedings SAMENA ASIA: Placed Under Voluntary Wind-Up SAMENA ASIA MASTER: Placed Under Voluntary Wind-Up VIOLET 2005-1: Commences Liquidation Proceedings ZAMIN HOLDINGS: Commences Liquidation Proceedings ZEPHYR RECOVERY: Commences Liquidation Proceedings C O S T A R I C A BANCO NACIONAL: Moody's Affirms Ba1 Currency Deposit Ratings INSTITUTO COSTARRICENSE: Moody's Affirms Ba1 CFR; Outlook Negative M E X I C O ARENDAL S. DE R.L.: Fitch Lowers Ratings to 'CCC' PETROLEOS MEXICANOS: New CEO Expects to Spare Jobs in Cost Cuts P U E R T O R I C O DF SERVICING: Court Prohibits Use of Bautista Cash Collateral HOSPITAL DAMAS: Medical Malpractice Suit vs. Parent Dismissed PUERTO RICO: Hearing on Feb. 25 as Lawmakers Coalesce Around Bill X X X X X X X X X LATAM: Fitch Sees Constant Downgrades, High Default Risk for Corp. - - - - - ================= A R G E N T I N A ================= ARGENTINA: Floats $6.5 Billion Deal to End Epic Default Battle -------------------------------------------------------------- Jonathan Randles at Law360.com reports that Argentine President Mauricio Macri is floating a $6.5 billion deal to settle a slew of litigation with holdout bondholders over the country's 2001 debt default, a court-appointed mediator said. Two of the six "leading" holdouts have signed agreements in principle with Argentina, mediator Daniel Pollack of McCarter & English LLP said in a statement obtained by Law360.com. The deal, which must first be approved by Argentina's Congress, followed a week of negotiations in New York City between bondholders and members of Macri's administration, the report notes. The report notes that Mr. Pollack said Macri's proposal is "historic," marking a significant step toward finally ending nearly 15 years of litigation. If the settlement does go through, it "will allow Argentina to return to the global financial markets to raise much needed capital," Mr. Pollack added. "It is my strong hope that with continued negotiations, those firms too will be able to resolve their differences and reach agreements in principle with Argentina," the report quoted Mr. Pollack as saying. "All concerned on the 'holdout' bondholders side are working constructively to that end," he added. The report notes that Mr. Pollack said that he spoke with Macri and Argentine Minister of the Economy Alfonso Prat-Gay and that both "stand solidly behind this proposal." The deal is the latest sign that Argentina is making serious inroads toward peace with bondholders and restoring Argentina's standing with international investors, the report relays. Last month, the White House said it will drop its years long opposition to Argentina's obtaining development loans, in recognition of economic reforms being sought by Macri and his administration, the report relays. Mr. Macri had assumed office in December, after promising voters that he would reform Argentina's economy and break from the policies of his predecessor, Cristina Fernandez de Kirchner, the report discloses. Mr. Pollack did not disclose which holdouts had agreed to terms. Mr. Pollack was appointed in 2014 as a special master in ongoing debt litigation between NML Capital Ltd., Aurelius Capital Partners LP and Argentina for the purpose of facilitating settlement talks. The firms had sued the country in various jurisdictions over unpaid judgments tied to Argentina's 2001 default. At the time, it was the largest sovereign debt default in history, and Argentina has sought to restructure more than $100 billion owed to domestic and foreign creditors, the report notes. U.S. lawmakers have criticized Argentina for failing to satisfy billions of dollars in creditor payments and legal judgments, the report says. The United Nations, meanwhile, has criticized the U.S. for siding with the hedge funds, the report relays. "The events . . . were an important step in resolving Argentina's debt crisis; more remains to be done," the report quoted Mr. Pollack as saying. Aurelius is represented by Friedman Kaplan Seiler & Adelman LLP. NML is represented by Dechert LLP. Argentina is represented by Cleary Gottlieb Steen & Hamilton LLP. The lead case is NML Capital Ltd. v. The Republic of Argentina, case number 1:08-cv-06978, in the U.S. District Court for the Southern District of New York. Class Action Atty. Attacks $6.5BB Deal Jonathan Randles at Law360.com reports that Argentina's proposed $6.5 billion settlement with holdout bondholders was attacked in New York court by plaintiffs' counsel overseeing a series of separate class action lawsuits over the country's 2001 default, saying the deal would undermine injunctions intended to make sure parties are treated equally. Plaintiffs attorney Marta Colomar-Garcia of Diaz Reus & Targ LLP sent a letter criticizing the proposed settlement to U.S. District Judge Thomas Griesa, according to Law360.com. The deal would resolve litigation brought against the hedge funds and other parties but not class action litigation, the report notes. * * * The Troubled Company Reporter-Latin America reported in Nov. 27, 2015, that Moody's Investors Service has changed the outlook on Argentina's Caa1 issuer rating to positive from stable. The outlook on Argentina's (P)Caa2 foreign legislation and restructured local legislation foreign currency obligations is also changed to positive from stable. The outlook change is based on Moody's view that the accession of president-elect Mauricio Macri of the Cambiemos ("Let's Change") coalition will raise the probability of credit positive policies being implemented, including arriving at a resolution with holdout creditors, one of Argentina's key credit constraints. On Aug. 1, 2014, reported that Argentina defaulted on some of its debt late July 30 after expiration of a 30-day grace period on a US$539 million interest payment. Earlier that day, talks with a court- appointed mediator ended without resolving a standoff between the country and a group of hedge funds seeking full payment on bonds that the country had defaulted on in 2001. A U.S. judge had ruled that the interest payment couldn't be made unless the hedge funds led by Elliott Management Corp., got the US$1.5 billion they claimed. The country hasn't been able to access international credit markets since its US$95 billion default 13 years ago. As a result, reported the TCR-LA on Aug. 1, Standard & Poor's Ratings Services lowered its unsolicited long-and short-term foreign currency sovereign credit ratings on the Republic of Argentina to selective default ('SD') from 'CCC-/C'. The TCR-LA, on Aug. 4, 2014, also reported that Fitch Ratings downgraded Argentina's Foreign Currency Issuer Default Rating (IDR) to 'RD' from 'CC', and its Short-Term Foreign Currency Issuer Default Rating to 'RD' from 'C'. Meanwhile, Moody's Investors Service affirmed Argentina's Caa1 issuer rating, which also applies to domestic law bonds, confirmed the (P)Caa2 rating for its foreign law bonds, and affirmed the Ca rating on the original defaulted bonds. The long-term issuer rating was placed on negative outlook, reported the TCR-LA on Aug. 5, 2014. On Aug. 8, 2014, the TCR-LA reported that Moody's Latin America Agente de Calificacion de Riesgo affirmed the deposit, debt, issuer and corporate family ratings on Argentina's banks and financial institutions, both on the global and national scales. The outlook on these ratings has been changed to negative from stable. At the same time, the rating agency has affirmed the banks' Caa2 foreign-currency deposit ratings and Not- Prime short-term ratings. The banks' standalone E financial strength ratings corresponding to caa1 baseline credit assessments (BCA) have also been affirmed. The TCR-LA, On Aug. 6, 2014, also reported that DBRS Inc. has downgraded Argentina's long-term foreign currency issuer rating from CC to Selective Default (SD). The short-term foreign currency rating has been downgraded to Default (D), from R-5. The long-term and short-term local currency issuer ratings have been confirmed at B (low) and R-5, respectively. The trend on the long-term local currency rating is Negative, and the trend on the short-term local currency rating is Stable. On Nov. 3, 2014, the TCR-LA reported that Fitch Ratings downgraded Argentina's rating on Par Bonds issued under Foreign Law to 'D' from 'C' as Argentina has not been able to cure the missed coupon payments on its par bonds issued under foreign law after the expiration of the 30-day grace period on Oct. 30. According to Fitch's criteria, this constitutes an event of default and Fitch has downgraded the affected securities to 'D'. In addition, Fitch has affirmed: -- Foreign Currency Issuer Default Rating (IDR) at 'RD'; -- Local Currency IDR at 'CCC'; -- Short-term Foreign Currency IDR at 'RD'; -- Country Ceiling at 'CCC'. -- Performing Foreign Law Exchanged Securities (Global 17) at 'C'; -- Local Currency exchanged bonds under Argentine Law at 'CCC'; -- Foreign and Local Currency non-exchanged securities under Argentine Law at 'CCC'; -- Discount Bonds issued under Foreign Law at 'D'. On April 22, 2015, Moody's Investors Service expanded the portion of Argentina's debt that is rated (P)Caa2. The (P)Caa2 rating reflects the higher risk of default for both Argentina's restructured foreign legislation debt (as before) and, additionally now, its restructured local legislation foreign currency obligations, as compared with the risk of default on other debt instruments issued by Argentina. Argentina's local currency debt and its non-restructured foreign currency debt are rated Caa1. The debt that remains in default since Argentina's 2001 default is rated Ca. =========== B R A Z I L =========== GOL LINHAS: Suspends Service to Venezuela on Currency Dispute ------------------------------------------------------------- Reuters reports that Brazilian airline Gol Linhas Aereas Intelegentes SA, suspended operations to Venezuela's capital Caracas until it can settle a dispute over the transfer of money out of the country and back to Brazil, the company said in a statement. The money is being held in Venezuela under the country's strict currency controls, a system that has led other airlines to take writedowns on Venezuelan operations or suspend ticket sales and service to the country, according to Reuters. Airlines have $3.9 billion of resources trapped in Venezuela, according to the International Air Transport Association, or IATA, the report notes. The government requires all tickets to be sold in local currency but makes it difficult for the airlines to convert that local revenue into dollars, the report relays. The Venezuelan Bolivar though has been shrinking, reducing the foreign currency value of the local ticket sales, the report says. "Gol temporarily suspended its operations in Caracas, Venezuela until the issue of repatriation of company resources in the country is resolved," the statement said, the report discloses. "Clients affected are being re-booked on other airlines and receiving all necessary assistance," the statement added. Gol gave no estimate as to how long negotiations with the government over the transfers or how long the suspension will last, the report notes. Financially strapped Gol has BRL351 million ($90 million) trapped in the country according to Exame, a Brazilian newsweekly magazine, the report relays. It has suffered four years of deep losses exacerbated by falling demand and a strong dollar that has driven up the Brazilian currency cost of dollar-denominated fuel, debt and lease payments, the report notes. Gol is 9.5 percent owned by U.S.-based Delta Airlines Inc., a stake made up entirely of non-voting preferred shares. Venezuela's currency controls currently disburse dollars for VEB6.3 to the dollar for preferential goods such as food and medicine, but also use less advantageous rates including 12 and 200 to the dollar for less important products, the report notes. On the black market, U.S. dollars fetch VEB1,016 -- an 81 percent depreciation from a year ago when dollars sold for VEB187. As reported in the Troubled Company Reporter-Latin America on Feb. 9, 2016, Standard & Poor's Ratings Services placed its 'B-' global scale corporate credit and issue-level ratings on Gol Linhas Aereas Inteligentes S.A. (GOL) on CreditWatch with negative implications. At the same time, S&P lowered its national scale corporate credit rating on the company to 'brB-' from 'brB' and placed them on CreditWatch negative. ========================== C A Y M A N I S L A N D S ========================== BAIA INVESTMENT: Placed Under Voluntary Wind-Up ----------------------------------------------- On Dec. 10, 2015, the sole shareholder of BAIA Investment Ltd. resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Jan. 19, 2016, will be included in the company's dividend distribution. The company's liquidator is: Morval Bank & Trust Cayman Ltd. P.O. Box 30622 Grand Cayman KY1-1203 Cayman Islands Telephone: +1 (345) 949-9808 BILLUND LEASING: Commences Liquidation Proceedings -------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Billund Leasing III 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands CENTURION CDO II: Commences Liquidation Proceedings --------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Centurion CDO II, 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands CHEYNE MANAGED: Commences Liquidation Proceedings ------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Cheyne Managed CSO Fund 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands COMMODORE CDO I: Commences Liquidation Proceedings -------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Commodore CDO 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands COMMODORE CDO II: Commences Liquidation Proceedings --------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Commodore CDO II 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands DELACROIX MANAGED: Commences Liquidation Proceedings ---------------------------------------------------- At an extraordinary meeting held on Dec. 10, 2015, the shareholders of Delacroix Managed Credit Fund 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: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands DIVE MASTER: Placed Under Voluntary Wind-Up ------------------------------------------- On Dec. 7, 2015, the shareholder of Dive Master Inc 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 EQUINOX FINANCE: Placed Under Voluntary Wind-Up ----------------------------------------------- At an extraordinary general meeting held on Dec. 8, 2015, the shareholder of Equinox Finance International 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 JECD LIMITED: Placed Under Voluntary Wind-Up -------------------------------------------- At an extraordinary general meeting held on Dec. 7, 2015, the shareholder of JECD 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: Commerce Corporate Services Limited P.O. Box 694 Grand Cayman Cayman Islands Telephone: 949 8666 Facsimile: 949 0626 OPHIR PARTNERS: Commences Liquidation Proceedings ------------------------------------------------- On Dec. 9, 2015, the sole shareholder of Ophir Partners 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: Ophir Partners, LLC Michael Bleich 120 West 45th St. Suite 3705 New York, NY 10036 USA Telephone: +1 (345) 914 6365 SAMENA ASIA: Placed Under Voluntary Wind-Up ------------------------------------------- On Dec. 10, 2015, the sole shareholder of Samena Asia Credit Fund 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 SAMENA ASIA MASTER: Placed Under Voluntary Wind-Up -------------------------------------------------- On Dec. 10, 2015, the sole shareholder of Samena Asia Credit Master Fund 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 VIOLET 2005-1: Commences Liquidation Proceedings ------------------------------------------------ On Dec. 3, 2015, the sole shareholder of Violet 2005-1 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: Michael Szymanski 2 Bridge Avenue, Suite 322 Red Bank, New Jersey 07701 ZAMIN HOLDINGS: Commences Liquidation Proceedings ------------------------------------------------- On Dec. 3, 2015, the sole shareholder of Zamin Holdings Limited 2004 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: Hugh Dickson c/o Prudence Pryce 10 Market Street #765, Camana Bay Grand Cayman KY1- 9006 Cayman Islands Telephone: +1 (345) 769 7207 Facsimile: +1 (345) 949 7120 ZEPHYR RECOVERY: Commences Liquidation Proceedings -------------------------------------------------- On Dec. 3, 2015, the sole shareholder of Zephyr Recovery (Cayman) 2004 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: Michael Szymanski 2 Bridge Avenue, Suite 322 Red Bank, New Jersey 07701 =================== C O S T A R I C A =================== BANCO NACIONAL: Moody's Affirms Ba1 Currency Deposit Ratings ------------------------------------------------------------ Moody's Investors Service has changed the outlook on the long-term local currency deposit and foreign currency deposit and senior unsecured debt ratings of Banco Nacional de Costa Rica and Banco de Costa Rica (BCR) to negative from stable. At the same time, Moody's affirmed the banks' long and short-term local currency deposit ratings at Ba1/Not Prime, as well as the foreign currency deposit ratings at Ba2/Not Prime and the foreign currency senior debt ratings at Ba1. The rating action follows Moody's outlook change on Costa Rica's Ba1 government bond rating to negative from stable. BNCR's and BCR's ba2 baseline credit assessments (BCA) and adjusted BCAs are unaffected by this action, as are their Ba1(cr) and Not Prime(cr) long and short term counterparty risk assessments. These ratings were affirmed, with the outlook changed to negative from stable: Banco Nacional de Costa Rica and Banco de Costa Rica: Long term local currency deposit rating of Ba1 Long term foreign currency deposit rating of Ba2 Long term foreign currency senior debt rating of Ba1 These ratings were affirmed: Banco Nacional de Costa Rica and Banco de Costa Rica: Short term local currency deposit rating of Not Prime Short term foreign currency deposit rating of Not Prime RATINGS RATIONALE Moody's outlook change on Banco Nacional de Costa Rica's and Banco de Costa Rica's long-term deposit and debt ratings to negative from stable is in line with the action taken on the outlook for Costa Rica's Ba1 government bond rating on Feb. 8. The negative outlook on the sovereign rating reflects Moody's expectation that Costa Rica's high fiscal deficits will continue, leading to a continued increase in government debt. Both banks' local currency deposit and foreign currency debt ratings benefit from one notch of uplift from their ba2 BCAs, incorporating Moody's assumption of full support from the government. This assumption is based on the government's 100% ownership, its guarantee of the banks' senior obligations under Article 4 of the Banking Law, the banks' public policy mandate, and the importance of their deposit and loan franchise within the Costa Rican financial system. The banks' Ba2 foreign currency deposit ratings are constrained by Costa Rica's sovereign ceiling for foreign currency deposits. Should Costa Rica's government bond rating be downgraded and its foreign currency deposit ceiling, which is one notch below the sovereign bond rating, be lowered, BNCR's and BCR's deposit and debt ratings would also face downward pressure. The ba2 BCAs for both issuers capture their modest consolidated capitalization. The BCAs are also limited by their weak profitability, owing to high operating costs and mandatory transfers to government related entities. Earnings generation will be further challenged by declining interest rates and rising credit costs. Asset quality at both banks remains relatively strong, though pressures may arise from increases in unemployment, notwithstanding Moody's expectation of higher economic growth during 2016. In addition, "the government's deteriorating finances may cause it to rely more heavily on both BCR and BNCR to help finance public sector deficits and lend to public infrastructure programs, which could further compress profit margins, as these loans are usually relatively low yield" according to Moody's analyst Georges Hatcherian. While project financings are also generally relatively high risk and are often large tickets, these types of projects typically carry either explicit or implicit government backing. While the colon has been much more stable than many other currencies in the region, a significant depreciation would increase risks to asset quality further given the significant amount of foreign currency lending to local currency earners. WHAT COULD CAUSE THE RATINGS TO MOVE DOWN Should Costa Rica's government bond rating be downgraded, BNCR's and BCR's deposit and debt ratings would also face downward pressure. WHAT COULD CAUSE THE RATINGS TO MOVE UP Upward pressures on the banks' ratings is limited given the negative outlook on the two issuers and on the sovereign ratings of the Government of Costa Rica. However, the outlook on the banks' ratings could stabilize if the sovereign outlook stabilizes. The last rating action on Banco de Costa Rica and on Banco Nacional de Costa Rica was on June 3, 2015 when Moody's lowered both banks' BCAs to ba2 from ba1 and affirmed their deposit and debt ratings. The principal methodology used in these ratings was Banks published in January 2016. Based in San Jose, Costa Rica, Banco Nacional de Costa Rica reported total consolidated assets of about US$11 billion (CRC 5.8 trillion) and shareholders' equity of US$1 billion (CRC 535 billion), as of September 2015. Based in San Jose, Costa Rica, Banco de Costa Rica reported total consolidated assets of around US$9 billion (CRC 4.8 trillion) and shareholders' equity of US$850 million (CRC 455 billion), as of September 2015. INSTITUTO COSTARRICENSE: Moody's Affirms Ba1 CFR; Outlook Negative ------------------------------------------------------------------ Moody's Investors Service affirmed the Ba1 Corporate Family Rating as well as the senior unsecured ratings of Instituto Costarricense de Electricidad (ICE) and the senior secured ratings of Reventazon Finance Trust. Concurrently, Moody's changed the rating outlook of both issuers to negative from stable. The rating action was prompted by the Feb. 8, 2016 announcement that Moody's had changed the rating outlook of the Government of Costa Rica (Ba1) to negative from stable. RATINGS RATIONALE Given that ICE is fully owned by the Costa Rican government, it falls under the scope of Moody's rating methodology for government-related issuers (GRIs). The Costa Rican government guarantees certain loans executed by ICE (around 10% of its outstanding indebtedness) but does not guarantee ICE's debt obligations rated by Moody's (around US$1 billion of notes). However, Moody's believes that there is a "high" likelihood of government extraordinary support in the case of financial distress for several reasons including reputational given the company's status as a major government-owned entity and its strategic importance to the country's economy overall. Furthermore, Moody's views that the government of Costa Rica and ICE are exposed to common risk factors as capture by the "high" default dependence assigned to ICE. ICE's Baseline Credit Assessment (BCA), which is a representation of the group's intrinsic creditworthiness before taking into account possible extraordinary support from the sovereign is ba3, based on a scale of aaa to ca which aaa indicates the highest credit quality. ICE's BCA captures its key role as an autonomous government entity established to develop the infrastructure to provide electricity and telecommunication services in Costa Rica, and is especially driven by its dominant position as the largest vertically integrated utility in the country. It also considers the fully regulated nature of these electric operations. Moody's believes these are carried out under an overall credit supportive framework. That said, Moody's opinion is moderated by some inconsistencies in the implementation of the cost recovery mechanisms along with the less credit positive outcome of the utility's recent electric tariff review to set the 2016 rates which ICE is currently appealing. The BCA is tempered by the modest size of ICE's operations and its service territory. Moody's acknowledges the diversification benefits associated with the telecommunications operations but there is limited upside potential to the BCA given the strong challenges faced by ICE in this sector. The BCA is capped by certain corporate governance weaknesses along with the issuer's exposure to foreign exchange risk and its dependence on the capital markets to refinance its maturing debt and fund its capital expenditure program. The BCA reflects Moody's expectation that, despite the increase leverage to finance the Reventazon hydro-project, ICE's key credit metrics will remain commensurate with the Ba-rating category according to the guidelines provided for standard business risk under the Regulated Electric and Gas Utility Methodology, published in December 2013. Specifically, that ICE will be able to record 3-year Retained Cash flow (RCF) to debt and Cash flow (CFO pre-W/C) interest coverage in excess of 9% and 3.0x, respectively. That said, this along with ICE's ability to further comply with its financial covenants will depend on the outcome of its ongoing tariff appeal and/or its ability to offset any final negative decision by the regulator with material cost saving initiatives. Reventazon Finance Trust's ratings reflect the ratings of ICE as this hydro-electric project is highly dependent on the utility's financial performance given the obligations that ICE has assumed under contractual arrangements as Sponsor, EPC contractor, lessee, and operator. The negative rating outlook of ICE and Reventazon Finance Trust reflects the negative outlook of the Ba1 Costa Rican government rating and Moody's expectation that the high implied extraordinary support and dependence levels from the sovereign will not change. WHAT COULD CHANGE THE RATING UP/DOWN In light of the current negative outlook of the ratings of ICE and the Costa Rican government, limited prospects exist for the rating to be upgraded over the near to medium term. ICE's ratings are likely to come under pressure following a downgrade in the sovereign rating or in the case of lower than anticipated implied sovereign support or if ICE's BCA is also reviewed downward. Negative rating pressure on the BCA could surface from a deterioration in the credit supportiveness of the Costa Rican regulatory framework or if ICE's expansion plan is poorly executed and/or indebtedness increases significantly above anticipated levels such that the credit metrics deteriorate and cash flow interest coverage falls below 2.0x or RCF to debt declines below 6% for an extended period. In addition, ratings could be downgraded if the issuer is not able to comply with its covenant-package under its loan agreements. A downgrade of ICE's ratings would also likely result in an downgrade of Reventazon Finance Trust's ratings. Moody's recognizes the benefits to Noteholders of investing through a Participation Agreement in a IDB B-loan given their preferred creditor status including the historical performance of IDB-loans to distressed borrowers. However, the Ba1 ratings assigned to ICE and to the Notes, presume a very low probability of default under the Notes and a corresponding low probability that ICE would become a distressed borrower whereby the benefits of having preferred creditor status would be a factor in assessing default and recovery risks for bondholders. For these reasons, we believe there is no reason to distinguish the rating and outlook of this security which benefits from the involvement from the IDB, and the rating and outlook for ICE's other debt securities. To the extent that severe credit deterioration occurred at both the sovereign level of Costa Rica and ICE such that they would experience a multi-notch downgrade to deep non-investment grade, we would consider distinguishing between the rating and outlook of the Reventazon Finance Trust Notes and ICE's other indebtedness. The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in December 2013. Other methodologies used include Government-Related Issuers published in October 2014. Headquartered in San Jose, Costa Rica, ICE is a government-owned vertically integrated electric utility as well as an integrated telecommunications service provider. ICE is the largest electric utility in Costa Rica accounting for the vast majority of the country's transmission assets as well as over 75% of the installed capacity and electricity generation. The group's market share in the distribution of power also exceeds 75% after considering ICE's 98.6% ownership stake in Compania Nacional Fuerza y Luz that serves the capital. At the end of September 2015, ICE reported consolidated assets of almost US$11 billion and funds from operations (FFO) for the last twelve month period ended in September 2015 of around US$930 million. =========== M E X I C O =========== ARENDAL S. DE R.L.: Fitch Lowers Ratings to 'CCC' ------------------------------------------------- Fitch Ratings has downgraded Arendal, S. de R.L. de C.V.'s ratings to 'CCC' from 'B'. The downgrade reflects the lack of progress the company has made toward refinancing its short term debt, including its USD100 million notes due during May 2016. The current low oil price scenario has caused Arendal's major customer, Pemex, to reduce capex and extend its supplier payment terms. This has resulted in significant lengthening of the company's working capital cycles as its receivables with Pemex have grown. Positively, Arendal's reputation and overall business profile continue to move forward as evidenced by its increasing project backlog. This implies, however, that the company will need additional debt to fund the working capital needed to support these new projects, adding one more challenge to its current financial situation. The expected Recovery Ratings of 'RR4' reflect average recovery prospects given default. 'RR4' rated securities have characteristics consistent with securities historically recovering 31%-50% of current principal and related interest. KEY RATING DRIVERS Customer and Project Concentration Arendal has gained increasingly larger projects which have helped the company grow rapidly, but this growth has come with large- project concentration risks. A single large project can at times represent 40% of revenues or more. Additionally, the company's revenue mix is significantly oriented toward the public sector. During 2015, Arendal generated about 80% of its revenues from contracts with Pemex. Considering the available backlog, revenues from Pemex as the ultimate client will likely continue to represent a large portion of the company's revenue source. Recovery Prospects In Fitch's opinion, under a stress scenario recovery of debt instruments associated with pledged contracts would have access to the existing accounts receivable to cover outstanding debt; the remaining balances would form part of the mass of unsecured creditors with average prospects of recovery between 31%-50%. KEY ASSUMPTIONS -- Flat to low single digit revenue growth for 2016; revenue growth accelerates in 2017 as the company executes the bulk of its DUBA-Salina Cruz project. -- MXN1.5 billion in working capital flows for 2016 and subsequent recovery of MXN1.2 billion in 2017. -- No dividend payments. RATING SENSITIVITIES Absent a successful refinancing, Fitch could downgrade the ratings to CC within a month of the 2016 notes maturity. Successful debt refinancing and funding of operations through a combination of internal and external sources could result in the rating being upgraded to B-. LIQUIDITY Arendal's cash balance at year-end 2015 was MXN889 million, compared to MXN3.9 billion of short-term debt maturities. The company's cash flow from operations was negative MXN893 million. Free cash flow was negative MXN1.1 billion underperforming Fitch's prior expectations, largely due to higher working capital requirements. Accounts receivable with Pemex including costs incurred not yet billed total about MXN1.8 billion FULL LIST OF RATING ACTIONS Fitch has downgraded Arendal's ratings: -- Long-term Foreign Currency Issuer Default Rating (IDR( to 'CCC' from 'B'; -- Long-term Local Currency IDR to 'CCC' from 'B'; -- Unsecured notes due 2016 to 'CCC/RR4' from 'B/RR4'. PETROLEOS MEXICANOS: New CEO Expects to Spare Jobs in Cost Cuts --------------------------------------------------------------- EFE News reports that New Petroleos Mexicanos (Pemex) Chief Executive Officer Jose Antonio Gonzalez said that the state-owned oil company must adjust its cost structure, but "not necessarily" by cutting jobs. "The main priority is to determine exactly how to implement these cost cuts, which are necessary given the circumstances," Mr. Gonzalez told Radio Formula, a day after Finance Secretary Luis Videgaray revealed plans for budget cuts in 2017, the report notes. Mr. Videgaray did not provide specific figures, but he said the public sector payroll would have to be trimmed, with employees receiving the severance pay due to them under the law, according to EFE News. "I still have to look at all the options and what we have to look for is the best way to make" cuts, Gonzalez, who succeeded Emilio Lozoya as Pemex's CEO, said, the report relays. The new Pemex chief said he planned to sit down with union leaders to discuss the various options for slashing costs, the report relays. Pemex has been struggling in the wake of the collapse of oil prices on the world market, the report relays. The state-owned oil giant posted a net loss of nearly $20.75 billion in the first nine months of 2015, up 138.4 percent from the same period in the previous year, the report says. ====================== P U E R T O R I C O ====================== DF SERVICING: Court Prohibits Use of Bautista Cash Collateral ------------------------------------------------------------- Judge Enrique S. Lamoutte Inclan of the United States Bankruptcy Court for the District of Puerto Rico entered an order prohibiting Debtors DF Servicing LLC, DF Investments LLC, DF Holdings LLC, and DF Tier I LLC, from using any cash collateral of Bautista Cayman Asset Company. The Debtors are directed to show cause in writing why a further order should not be entered: (a) Ordering the Debtors to account for all the cash collateral received by or for the benefit of the Debtors since the petition date, without prejudice to Debtor's compliance with other reporting obligations under the Bankruptcy Code and Rules. (b) Requiring that any cash collateral of Bautista Cayman Asset Company that is in the possession, custody or control of the Debtor or any of the Insiders of the Debtor be turned over to Bautista Cayman Asset Company. (c) Allowing Bautista Cayman Asset Company immediate access to the Debtor's books and records, including, all annual and quarterly financial statements for the period subsequent to December 31, 2013, the Debtor's investment and bank accounts, and all electronic records on any company computers, to make electronic copies, photocopies or abstracts of the business records of the debtor. As previously reported by The Troubled Company Reporter, Bautista Cayman Asset Company, as the prepetition secured lender to the Debtors, asked the Bankruptcy Court to prohibit the Debtors' use of cash collateral until they provide adequate protection against the diminution in value of the Secured Lender's cash collateral and condition the Debtors' continued use of cash collateral on such adequate protection. According to the Secured Lender, the Debtors have failed to move for authorization to use its cash collateral and have misrepresented to the Bankruptcy Court that its claims are unsecured. The Debtors, in response to the Secured Lender's opposition, complained that the lender's argument that the Credit Agreement was bifurcated from the APA and the EUFA and sold to it separately by the FDIC is not correct because, "Under New York law, instruments executed at the same time, by the same parties, for the same purpose and in the course of the same transaction will be read and interpreted together." The Debtors asserted that they have a claim against Bautista for its failure to fund the Future Advance in accordance with the Credit Agreement, resulting in the payment due from Bautista of the Trigger Event Fee of $61,936,904 for a Trigger Event that occurred on June 24, 2015. According to the Debtors, Bautista's failure to either dispute or cure the breach during the Initial Cure Period results in the imposition of the Trigger Event Fee, which amount can be properly offsetted against the claims, which, along with other offsets, meets or exceeds the total amounts claimed as due by Bautista under the Credit Agreement. Thus, Bautista may not avoid the consequences of the obligations, breaches and offsets arising from the APA and the EUFA under New York law, the Debtors argued. The Secured Lender replied that the Debtors relied on a flawed argument that has already been rejected by two New York state courts -- namely, that the Debtors are excused from repaying $101 million in loans owned by the Secured Lender because Doral Bank allegedly failed to honor obligations under two separate agreements which were never assigned to or assumed by the Secured Lender, and that the FDIC has repudiated. According to the Secured Lender, the Debtors also grossly overstate the value of their assets in order to suggest that the Secured Lender is somehow over-secured and the Debtors also fail to meet their evidentiary burden to show that the Secured Lender would be adequately protected solely by an equity cushion and cash from operations, but instead, the Debtors make self-serving, unsupported assertions that the Secured Lender is adequately protected because its assets have an "estimated value" of $114,979,296. More than 80% of the claimed value of $114,979,296 is simply the principal amount of non-performing loans sold to the Debtors by Doral Bank -- loans which even the Debtors contend they cannot collect, the lender said. DF Servicing, LLC, et al., are represented by: Charles A. Cuprill-Hernandez, Esq. P.S.C. LAW OFFICES 356 Fortaleza Street - Second Floor San Juan, PR 00901 Telephone: 787-977-0515 Facsimile: 787-977-0518 email: ccuprill@cuprill.com Bautista Cayman Asset Company is represented by: Antonio A. Arias-Larcada, Esq. Lina M. Soler-Rosario, Esq. MCCONNELL VALDES LLC 270 Munoz Rivera Avenue Hato Rey, PR 00918 Telephone: (787) 250-5604 Facsimile: (787) 759-2771 email: aaa@mcvpr.com lms@mcvpr.com -- and -- James M. Wilton, Esq. Patricia I. Chen, Esq. Martha E. Martir, Esq. ROPES & GRAY LLP 800 Boylston Street Boston, Massachusetts 02199-3600 Telephone: (617) 951-7000 Facsimile: (617) 951-7050 email: james.wilton@ropesgray.com patricia.chen@ropesgray.com martha.martir@ropesgray.com About DF Servicing Engaged in the business of purchase and sale of construction projects, DF Servicing, LLC, DF Tier I, LLC, DF Investments, LLC and DF Holdings LLC filed Chapter 11 bankruptcy petitions (Bankr. D.P.R. Case Nos. 15-10253 to 15-10256) on Dec. 24, 2015. The petitions were signed by Mark Mashburn, the president. Charles A Cuprill, PSC Law Office, serves as counsel to the Debtors. HOSPITAL DAMAS: Medical Malpractice Suit vs. Parent Dismissed ------------------------------------------------------------- Lizbeth Vargas Colon in representation of her minor daughter L.C.V. and her sons Jaime Manuel Cedeo Vargas and Jaime Alexander Cedeo Vargas, collectively Plaintiffs, filed an action under diversity jurisdiction against Defendants Fundacion Damas, Inc., Banco Popular de Puerto Rico, and any unknown insurance companies liable for the actions of Fundacion and BPPR for direct and vicarious liability claim of medical malpractice against Fundacion for negligent acts and omissions committed by Hospital Damas, a subsidiary of Fundacion and its agents; a direct action against any of the Defendants' insurers and a negligence action against BPPR, as Trustee of the Hospital Damas Self Insurance Trust Fund. Pending before this Court are Fundacion's motion for summary judgment and BPPR's motion to dismiss. In an Opinion and Order dated January 19, 2016, which is available at http://is.gd/X2DPmZfrom Leagle.com, Judge Gustavo A. Gelpi of the United States District Court for the District of Puerto Rico granted Fundacion's motion for summary judgment and BPPR's motion to dismiss. The case is LIZBETH VARGAS-COLON, et al., Plaintiffs, v. FUNDACION DAMAS, INC., BANCO POPULAR DE PUERTO RICO, et al., Defendants, Civil No. 14-1909 (GAG). Lizbeth Vargas-Colon, Plaintiff, is represented by David Efron, Esq. -- David Efron Law Offices. Fundacion Damas, Inc., Defendant, is represented by Freddie Perez-Gonzalez, Esq. -- Freddie Perez Gonzalez & Assoc. PSC & Jose Julian Blanco-Dalmau, Esq. -- Freddie Prez Gonalez & Asociados. Banco Popular de Puerto Rico, Inc., Defendant, is represented by Luis E. Padron-Rosado, Esq. PUERTO RICO: Hearing on Feb. 25 as Lawmakers Coalesce Around Bill ----------------------------------------------------------------- Jack Casey at The Bond Buyer reports that a House committee will hear Treasury's Antonio Weiss discuss an analysis of Puerto Rico on Feb. 25, as lawmakers coalesce around a bill that would give the territory's authorities bankruptcy access in return for creation of a financial stability council. The exact language of the bill, sponsored by Rep. Sean Duffy, R- Wis., may not be included in final legislation, but lawmakers think the bill could serve as the foundation for legislation that joins the Republican support for a fiscal control or oversight board with the Democrat's call to give the territory's authorities the ability to restructure their debt, according to The Bond Buyer. Mr. Weiss, a counselor to Treasury Secretary Jack Lew who has worked to resolve Puerto Rico's debt crisis, said at a Feb. 5 panel on the commonwealth sponsored by the Bipartisan Policy Center, that he has seen "very positive discussions taking place on both sides of the aisle" in Congress, the report notes. He also pointed out that there now seems to be more agreement that any plan to help the commonwealth should include both restructuring and oversight, the report relays. Treasury unveiled a four-part plan in October that included both of those elements along with improvements to Puerto Rico's treatment under federal healthcare programs and technical assistance to modernize its accounting and disclosure practices. However, the Treasury plan called for all of Puerto Rico's debt to be restructured, not just the debt issued by its public authorities as has been proposed by Democrats arguing for a Chapter 9 solution, the report notes. The Treasury's plan for Puerto Rico has drawn criticism from some insurers of Puerto Rico bonds, which said the department's statements are hurting creditors' consensual negotiations with the commonwealth, the report discloses. The report relays that Mr. Weiss clarified the administration's position at the panel, saying Treasury still believes any solution should look at restructuring all of the debt, but that the restructuring could come through the Constitution's Territorial Clause instead of through an addition to federal bankruptcy code. The Territorial Clause says "Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States," notes the report. He also noted that all debt would not have to "be treated with a broad brush equally" and that restructuring could take into account the many differences between Puerto Rico's various debts, the report relays. "A special legislative act is required, tailored to the territories, consistent with Article 4 of the Constitution and that is neither for cities nor for states," the report quoted Mr. Weiss as saying. "It is on Congress recognizing the severity of this problem to agree in a bipartisan fashion on what those tools should be. It's emergency legislation to deal with an emergency situation," Mr. Weiss added. Natural Resources Committee chair Rob Bishop, R-Utah, said his committee will "continue to work with Treasury as [the committee] moves forward on a responsible path for Puerto Rico," Mr. Weiss said. The Feb. 25 hearing follows two hearings by the Natural Resources Committee's subcommittees, one in January that explored how to reform the commonwealth's energy infrastructure and the other on Feb. 2 that evaluated the need for a federal oversight authority for the territory, the report notes. Lawmakers at the Feb. 2 hearing said they planned to use the discussions that took place to begin crafting legislation to help Puerto Rico, the report says. House committees with jurisdiction over Puerto Rico are working under a March 31 deadline that Speaker Paul Ryan, R-Wis., gave them at the end of last year to produce a responsible legislative package to help Puerto Rico, the report relays. The commonwealth is currently struggling with about $70 billion in debt and has already defaulted on several bond payments, the report notes. Resident Commissioner Pedro Pierluisi, a member of the Natural Resources Committee and Puerto Rico's sole representative in Congress, responded to the hearing announcement by reiterating a concern he and Puerto Rico officials have had that an oversight authority may exert too much control over the local government, the report discloses. Mr. Pierluisi has said he will support an oversight authority as long as it respects Puerto Rico's local governance, something both Republicans and Democrats have agreed is important to a final bill, the report relays. "Congress continues to move in the direction of passing legislation to help Puerto Rico to overcome the crisis it faces," Mr. Pierluisi said, the report notes. "The hearing before the Committee on Natural Resources . . . . is the next step," Mr. Pierluisi added. 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. ================= X X X X X X X X X ================= LATAM: Fitch Sees Constant Downgrades, High Default Risk for Corp. ------------------------------------------------------------------ With 32% of Fitch-rated issuers carrying either a Negative Outlook or on Negative Watch, and 16% rated 'CCC' or below, downgrades and high default risk will be a constant for LatAm high yield corporates, according to a new Fitch Ratings report. "Defaults remain at a level not seen for the past decade, with eight issuers defaulting on USD4.5 billion of debt during 2015," said Joe Bormann, Managing Director at Fitch. "Ten issuers have a high possibility of default during 2016, while default is considered imminent for another four." "Capex and dividends have been slashed by high yield issuers. But the aggressiveness of the cuts means companies may not be able to respond to additional downward pressure in 2016." High-yield issuance in 2015 was mild compared to 2014. Eight issuers raised $8 billion compared with 37 issuers and $26 billion in 2014. Investors continue to shun corporates in the 'B' category due to the small issuance size of the bonds, which limits secondary market activity. Slow growth prospects have left many 'BB' rated corporate bond issuances unattractive. *********** 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. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the 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 assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** 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, Valerie U. Pascual, Julie Anne L. Toledo, and Peter A. Chapman, Editors. Copyright 2016. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *