/raid1/www/Hosts/bankrupt/TCRLA_Public/160324.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, March 24, 2016, Vol. 17, No. 59
Headlines
A R G E N T I N A
ARGENTINA: Names Banks for Bond Offer
ARGENTINA: Fitch Hikes LT LC Issuer Default Rating to 'B'
B R A Z I L
BAHIA: Moody's Assigns Ba2 GS Issuer Rating; Outlook Negative
C A Y M A N I S L A N D S
ACTIVE OWNERS: Commences Liquidation Proceedings
APEX DRAGON: Shareholders Receive Wind-Up Report
CHEW & SONS: Commences Liquidation Proceedings
CIS PRIVATE: Shareholder Receives Wind-Up Report
CITIC CAPITAL: Commences Liquidation Proceedings
CLAIRE LTD: Commences Liquidation Proceedings
DIONISO INVESTMENT: Shareholders Receive Wind-Up Report
DOHA LEASING: Sole Member Receives Wind-Up Report
INTEGRATED SYSTEM: Shareholders Receive Wind-Up Report
KAL-ECA 2001: Sole Member Receives Wind-Up Report
KELUSA OFFSHORE: Placed Under Voluntary Wind-Up
MIL ROBLES: Shareholders Receive Wind-Up Report
PETERSHILL US: Shareholders Receive Wind-Up Report
Q-MARQ SECURITIES: Shareholders Receive Wind-Up Report
SHADOW HOLDINGS: Shareholders Receive Wind-Up Report
STARGATE INVESTMENTS: Shareholders Receive Wind-Up Report
WEST FACE: Commences Liquidation Proceedings
WEST FACE I: Commences Liquidation Proceedings
WILTSHIRE CAPITAL: Shareholders Receive Wind-Up Report
WODOF TIVOLI: Shareholders Receive Wind-Up Report
C H I L E
CAP S.A.: S&P Lowers CCR to 'BB' & Removes from CreditWatch Neg.
M E X I C O
FRONTIER STAR: Chapter 11 Trustee Taps Bryan Cave as Counsel
FRONTIER STAR: Western Alliance Bank Objects to Proposed Sale
FRONTIER STAR: Approval of Western Alliance Settlement Sought
MEXICO: Keeps Rate Steady as Peso Strengthens and Fed Holds
P U E R T O R I C O
PUERTO RICO GENERAL: S&P Affirms 'CC' Rating on Tax-Backed Debt
PUERTO RICO: Fights for Chapter 9 Bankruptcy in Supreme Court
T R I N I D A D & T O B A G O
* TRINIDAD & TOBAGO: Jobs Out There for Retrenched Workers
U R U G U A Y
CONSORCIO DEL URUGUAY: Moody's Assigns B1 Global Scale CFR
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Names Banks for Bond Offer
-------------------------------------
Davide Scigliuzzo and Joy Wiltermuth at Reuters report that
Argentina has hired seven banks to manage its upcoming
international bond sale, its first in over 15 years, sources
familiar with the matter told IFR.
Deutsche Bank, HSBC, JP Morgan and Santander were awarded the top
role of global coordinators for the bond sale, while BBVA,
Citigroup, and UBS will join as bookrunners, one of the sources
said, according to Reuters.
All seven banks participated in a US$5 billion one-year loan in
January to help the government of newly elected President Mauricio
Macri bolster foreign reserves, the report notes.
The timing and currency of the bond offering are not yet certain,
but the deal is expected to come to market before an April 14
deadline set in the agreement between holdouts and the government,
the report relays.
Expectations of a deal have been building since Argentina sealed
an agreement with major holdout creditors three weeks ago, the
report says.
Barring any objections from Congress, the South American country
could try to issue around US$12 billion of bonds in April in an
effort to pay litigant investors and service past due interest on
its restructured bonds, Reuters notes.
"That's the million dollar question," said Sean Newman, a senior
portfolio manager at Invesco Fixed Income who oversees emerging
market and government bonds, the report discloses.
"Ideally they'd like to get US$15 billion," Mr. Newman said, notes
the report. "But while Argentina stands in that bull's eye of
having the right story coming at a better time, it still has
significant risks," Mr. Newman added.
Those include a sizeable budget deficit and worries about
inflation, as well as US$11.68 billion that the government has
said it still needs to settle all outstanding debt payments, the
report relays.
Citigroup's head of emerging markets Guillermo Mondino wrote this
month that an Argentina bond sale could pay yields of 7.25% on a
five-year, 8.4% on a 10-year and 9.7% on a 30-year, the report
notes.
The report adds that Mr. Newman said yields of around 8% for a 10-
year would be realistic.
ARGENTINA: Fitch Hikes LT LC Issuer Default Rating to 'B'
---------------------------------------------------------
Fitch Ratings has upgraded Argentina's Long-term local-currency
Issuer Default Rating (LT LC IDR) to 'B' from 'CCC', with a Stable
Outlook. Fitch has affirmed Argentina's Long-term foreign-currency
(FC) IDR at 'RD' and the short-term FC IDR at 'RD'. In addition,
Fitch has upgraded the Country Ceiling to 'B' from 'CCC'.
KEY RATING DRIVERS
The LT LC IDR upgrade is driven by the improved consistency and
sustainability of Argentina's policy framework, reduced external
vulnerability, and the expected easing of fiscal financing
constraints. These improvements balance risks related to
relatively weak external liquidity, continued macroeconomic
underperformance compared with peers, and deterioration of public
finances in recent years. Argentina's ratings also balance
structural strengths such as GDP per capita and social indicators
against a weak debt repayment record.
Since taking power in December 2015, the Mauricio Macri
administration removed FX controls introduced in 2011, and
increased the flexibility of the Argentine peso, which should
contribute towards improving the capacity of the economy to absorb
external shocks and relieve pressure on international reserves.
Moreover, these policy changes have removed growing exchange rate
distortions, evident by a widening spread between the official and
parallel exchange rates during 2015.
"Monetary policy has been tightened by the new administration and
recovered its focus on fighting inflation and reining in the
growth of monetary aggregates, which has been fuelled in previous
years by monetary financing of the budget deficit. We expect
better coordination with fiscal policy and access to fresh sources
of financing to allow authorities to phase out central bank
financing, a key source of inflationary pressures."
International reserves have strengthened since the end of 2015 to
$US29 billion, driven by the liquidation of agricultural export
proceeds, reduced pressure to intervene in the FX market and
external borrowing by the central bank. Moreover, the immediate
liquidity of international reserves has improved through the $US5
billion loan from foreign banks and the monetization of a portion
of the swap line with China. Nevertheless, Argentina's external
liquidity ratio, estimated by Fitch at 55.7% in 2016, remains low
in relation to 'B' rated peers, especially given the country's
high commodity dependence and recent episodes of balance of
payments pressures.
Inflation has risen above 30% according to private and local
government estimates, reflecting the weaker exchange rate and the
removal of electricity subsidies. While Fitch expects monetary and
fiscal policy objectives to be conducive to disinflation, this
process is likely to be gradual and inflation is likely to remain
above 'B' rated sovereign levels. After marked underperformance
over the last four years, growth could recover through the easing
of macroeconomic distortions, reduced government intervention, and
greater access to external sources of financing.
Federal fiscal spending growth outpaced revenues, leading to a
deficit of 4.1% of GDP in 2015 (6.4% of GDP without taking into
account central bank and social security profit transfers). At the
general government level, Fitch estimates the deficit widened to
4.7% of GDP, up from 2.5% in 2014 and above the 4.1% 'B' category
median. Fitch expects that a gradual fiscal consolidation
involving the phasing out of monetary financing by the central
bank will reduce the general government deficit to 4.2% of GDP in
2016 and 3.4% in 2019.
Fitch estimates gross government debt rose to 59% of GDP in 2015,
from 49% in 2014, and above the 52% 'B' median, driven by the
wider fiscal deficit and the depreciation of the Argentine peso.
Public sector entities (central bank and ANSES) hold approximately
62% of government's debt stock, thus reducing refinancing risks.
Financing needs are likely to remain high in 2016 at 10.2% of GDP,
but intra-public sector debt repayments/roll-overs constitute at
least 56% of total debt repayments.
Potential improved access to market financing, a key constraint to
Argentina's creditworthiness over the past decade, would reduce
pressure on the central bank through the phasing out of both
monetary financing and the use of international reserves to meet
FC debt repayments. The government has indicated that failure to
tap external funding would require a sharper fiscal adjustment.
The affirmation of the LT FC IDR at 'RD' reflects that Argentina
has not cured the July 2014 default on external debt.
Nevertheless, the government has reached an agreement with the
majority of holdout creditors, thus making progress toward
removing the injunction that presently constrains Argentina from
servicing its restructured debt.
Legislation is currently moving through the Argentine congress to
remove the Lock Law and Sovereign Payments Law (two pieces of
legislation that prevented authorities from negotiating with
holdouts), and to authorize external debt issuance to pay for the
settlement, both preconditions to lift the injunction. The
government could reportedly issue close to $US15 billion in order
to pay holdout creditors and meet 2016 financing needs.
RATING SENSITIVITIES
The main risk factors that, individually or collectively, could
trigger a positive rating action for Argentina's LC IDR are:
-- Faster-than-anticipated fiscal consolidation and deepening of
non-public-sector funding sources;
-- Strengthening of external buffers;
-- Consolidation of strengthened policy framework leading to
improvement in macroeconomic performance in relation to peers.
Conversely, the main factors that could lead to a negative rating
action are:
-- Re-emergence of financing pressures due to failure to
consolidate fiscal accounts or to improve funding sources;
-- Erosion of international reserves.
The foreign currency IDR does not have a Rating Outlook.
The resumption of timely debt service on defaulted bonds would
lead to the upgrade of the FC IDR. At such time, Fitch will most
likely upgrade Argentina's LT FC IDR to the level of the LT LC
IDR.
KEY ASSUMPTIONS
-- Fitch assumes that the Argentine government will obtain
congressional ratification of the agreement with holdout
creditors and pay the agreed-upon settlement, which will lead
to the lifting of the injunction preventing Argentina from
servicing its restructured debt.
-- Fitch assumes that Argentina will be able to access external
markets to pay the settlement with holdout creditors.
-- Fitch assumes that China will avoid a hard landing, growing by
6.2% and 6.0% in 2016 and 2017, respectively. In contrast,
Fitch expects Brazil to contract by 3.5% in 2016 and grow by
0.7% in 2017.
===========
B R A Z I L
===========
BAHIA: Moody's Assigns Ba2 GS Issuer Rating; Outlook Negative
-------------------------------------------------------------
Moody's America Latina Ltda. assigned issuer ratings of Ba2 on a
global scale, and Aa2.br on a national scale to the state of
Bahia. The ratings outlook is negative.
RATINGS RATIONALE
The Ba2/Aa2.br issuer ratings for the state of Bahia reflect: (i)
the state's track record of stable operating margins in the range
of 5-10% during 2010-2015 supported by a prudent fiscal management
despite the marked acceleration of personnel expenses in 2015 (ii)
moderate debt levels relative to rated peers, and (iii) little
exposure to contingency costs such as arrears.
The ratings also factor in: (i) the state's relatively modest
economic base illustrated by a GDP per capita broadly half that of
the national average, (ii) a lower proportion of own-source
revenues than most rated peers, although continuously growing in
recent years, and (iii) the state's large pension deficit expected
to absorb a growing portion of the state's budget in coming years.
The negative outlook is in line with the negative outlook of
Brazil's sovereign rating and reflects Moody's view that the state
cannot be rated higher than the sovereign government.
Despite a low but consistently growing portion of own-source
revenues, Bahia has recorded positive operating results averaging
7.9% of operating revenues over the last six years, ranging from
9.5% in 2011 to 5.1% in 2015. On the revenue side, Bahia's past
performance has been supported by its ability to consistently
increase tax revenues even during the downturn year of 2015 when
the state's GDP declined by over 3%. Up until 2014 the state has
also been able to keep operating expenses under control, evidenced
by operating cost growing by 12% on average during 2010 to 2014,
slightly below operating revenues growing at a pace of 12.1% over
the same period. In 2015 however growth in operating expenses
largely outpaced operating revenues (by 9.1% vs 5.8%
respectively), driven by a 15% increase in personnel expenses.
Despite the state's declared intention to control personnel cost,
Moody's expects Bahia's operating margins to continue to
deteriorate driven by the negative pressure that another year of
economic recession is expected to exert on tax revenues.
The state of Bahia has one of the lowest debt levels among its
rated peers. At the end of 2015 the state's total outstanding net
direct and indirect debt stood at around BRL 20 billion
representing 57% of operating revenues, a lower level compared to
Brazilian peers. The state's indebtedness has grown progressively
over the years, from 47% in 2010, driven by the financing of the
state's infrastructure investments mostly through public-private
partnership projects. Moody's would expect the state's debt to
continue to grow going forward, although at a moderate pace.
As for many other Brazilian states Bahia's pension system is
structurally unbalanced, with level of contributions below pension
expenses forcing the state to cover the short fall through its own
funding. The state's pension contribution has increased in recent
years, amounting to 15.5% of total expenses in 2015, from 12.3% in
2010. These relatively high levels for the rating category
represent a growing concern for the state's fiscal balance in the
medium term and a constrains for the ratings on the state.
WHAT COULD CHANGE THE RATING UP/DOWN
Given the expectations of further weakening of the operating
environment, Moody's does not expect any upward pressure in the
near term. Nonetheless, a stabilization of Brazil's sovereign
bond rating and/or a sustained improvement in key financial
metrics could lead to a stabilization of the outlook.
Conversely, a downgrade of Brazil's sovereign bond rating, and/or
a deterioration in the state's key financial metrics could exert
downward pressure on the ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2013.
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa.
With the recent downgrade of the government of Brazil on the
global rating scale and other issuers whose risk profiles are
affected by related credit considerations, the distribution of
national scale ratings (NSRs) among issuers in Brazil has become
compressed, particularly at the Aa2.br level. As a result, the
current mapping of global scale ratings to national scale ratings
may no longer be adequately serving one of its intended purposes,
which is to provide greater credit differentiation among issuers
in Brazil than is possible on the global rating scale. However,
if Moody's NSR methodology is revised as proposed in the Request
for Comment (RFC) entitled "Mapping National Scale Ratings from
Global Scale Ratings" published on January 20, the resulting new
Brazilian scale would likely imply that many Brazil global scale
ratings would be remapped to higher ratings on the national scale.
While the RFC included a new proposed national scale map for
Brazil, given the aforementioned ratings changes, the new map
design for Brazil will likely differ from the specific map
proposal included in the RFC. In addition to the proposed
Brazilian map, the RFC comprised a proposed update to our
methodology for mapping national scale ratings from global scale
ratings, including guidelines for the design of new national scale
maps and changes to existing maps, as well as proposed new
national scale maps for each of the other countries in which
Moody's currently offer NSRs. The comment period for this RFC
closed on Feb. 22.
==========================
C A Y M A N I S L A N D S
==========================
ACTIVE OWNERS: Commences Liquidation Proceedings
------------------------------------------------
On Feb. 4, 2016, the sole member of Active Owners Fund II resolved
to voluntarily liquidate the company's business.
Only creditors who were able to file their proofs of debt by
March 8, 2016, will be included in the company's dividend
distribution.
The company's liquidator is:
Noel Webb
P.O. Box 2677 Grand Cayman KY1-1111
Cayman Islands
Telephone: (345) 936 5222
Facsimile: (345) 936 5222
APEX DRAGON: Shareholders Receive Wind-Up Report
------------------------------------------------
The shareholders of Apex Dragon Fund Series SPC received on
March 8, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
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
CHEW & SONS: Commences Liquidation Proceedings
----------------------------------------------
On Jan. 28, 2016, the shareholders of Chew & Sons Company Ltd.
resolved to voluntarily liquidate the company's business.
Only creditors who were able to file their proofs of debt by
March 9, 2016, will be included in the company's dividend
distribution.
The company's liquidator is:
Delio Jose De Leon Mela
Salduba Building, Third Floor
53rd East Street
Marbella Panama City
Panama
Telephone: (507) 269-2641
Facsimile: (507) 263-8079
CIS PRIVATE: Shareholder Receives Wind-Up Report
------------------------------------------------
The shareholder of CIS Private Equity GP Ltd received on March 8,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Elian Fiduciary Services (Cayman) Limited
c/o Madeleine Welham
89 Nexus Way, Camana Bay
Grand Cayman KY1-9009
Cayman Islands
Telephone: +1 (345) 949 9876
Facsimile: +1 (345) 949 9877
CITIC CAPITAL: Commences Liquidation Proceedings
------------------------------------------------
On Feb. 1, 2016, the members of Citic Capital China Mezzanine Fund
Limited resolved to voluntarily liquidate the company's business.
Only creditors who were able to file their proofs of debt by
March 17, 2016, will be included in the company's dividend
distribution.
The company's liquidator is:
Choon Onn Chin
c/o Kadie-Ann Prospere
P.O. Box 258 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345) 914 8745
Facsimile: (345) 945 4237
CLAIRE LTD: Commences Liquidation Proceedings
---------------------------------------------
On Jan. 28, 2016, the shareholders of Claire Ltd. resolved to
voluntarily liquidate the company's business.
Only creditors who were able to file their proofs of debt by
March 9, 2016, will be included in the company's dividend
distribution.
The company's liquidator is:
Delio Jose De Leon Mela
Salduba Building, Third Floor
53rd East Street
Marbella Panama City
Panama
Telephone: (507) 269-2641
Facsimile: (507) 263-8079
DIONISO INVESTMENT: Shareholders Receive Wind-Up Report
-------------------------------------------------------
The shareholders of Dioniso Investment Ltd. received on March 7,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Morval Bank & Trust Cayman Ltd.
Telephone: +1 (345) 949-9808
P.O. Box 30622
Grand Cayman KY1-1203
Cayman Islands
DOHA LEASING: Sole Member Receives Wind-Up Report
-------------------------------------------------
The sole member of Doha Leasing (A320) Limited received on
March 17, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidators are:
Thomas Mylott
Marguerite Britton
c/o 69 Dr. Roy's Drive
P.O. Box 1043, George Town
Grand Cayman KY1-1102
Cayman Islands
Telephone: 345-640-6600
INTEGRATED SYSTEM: Shareholders Receive Wind-Up Report
------------------------------------------------------
The shareholders of Integrated System Solution Cayman Ltd.
received on March 10, 2016, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
J. Eric Bjornholt
Microchip Technology Inc.
2355 W. Chandler Blvd.
Chandler
Arizona 85224-6199
United States of America
Telephone: +1 (480) 792 7200
KAL-ECA 2001: Sole Member Receives Wind-Up Report
-------------------------------------------------
The sole member of KAL-ECA 2001 Limited received on March 17,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidators are:
Thomas Mylott
Marguerite Britton
c/o 69 Dr. Roy's Drive
P.O. Box 1043, George Town
Grand Cayman KY1-1102
Cayman Islands
Telephone: 345-640-6600
KELUSA OFFSHORE: Placed Under Voluntary Wind-Up
-----------------------------------------------
On Feb. 5, 2016, the sole shareholder of Kelusa Offshore Fund,
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:
Kelusa Asia Focus Pte. Ltd.
c/o Tatiana Collins
Ogier
89 Nexus Way, Camana Bay
Grand Cayman KY1-9009
Cayman Islands
Telephone: +1 (345) 949 9876
Facsimile: +1 (345) 949-9877
MIL ROBLES: Shareholders Receive Wind-Up Report
-----------------------------------------------
The shareholders of Mil Robles Limited received on March 7, 2016,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Morval Bank & Trust Cayman Ltd.
Telephone: +1 (345) 949-9808
P.O. Box 30622 Grand Cayman KY1-1203
Cayman Islands
PETERSHILL US: Shareholders Receive Wind-Up Report
--------------------------------------------------
The shareholders of Petershill US IM (Sisler) Holdings Ltd.
received on March 10, 2016, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
e-mail: CaymanLiquidation@walkersglobal.com
Q-MARQ SECURITIES: Shareholders Receive Wind-Up Report
------------------------------------------------------
The shareholders of Q-Marq Securities Ltd. received on March 18,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Peter Anderson
c/o Omar Grant
Windward 1, Regatta Office Park
Cayman Islands
P.O. Box 897 Grand Cayman KY1-1103
Telephone: (345) 949-7576
Facsimile: (345) 949-8295
SHADOW HOLDINGS: Shareholders Receive Wind-Up Report
----------------------------------------------------
The shareholders of Shadow Holdings Ltd. received on March 7,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Morval Bank & Trust Cayman Ltd.
Telephone: +1 (345) 949-9808
P.O. Box 30622 Grand Cayman KY1-1203
Cayman Islands
STARGATE INVESTMENTS: Shareholders Receive Wind-Up Report
---------------------------------------------------------
The shareholders of Stargate Investments Ltd. received on March 7,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Morval Bank & Trust Cayman Ltd.
Telephone: +1 (345) 949-9808
P.O. Box 30622 Grand Cayman KY1-1203
Cayman Islands
WEST FACE: Commences Liquidation Proceedings
--------------------------------------------
On Feb. 4, 2016, the shareholders of West Face SPV (Cayman)
General Partners Inc. 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:
Anna Yonge
IMS Liquidations Ltd.
Harbour Centre, George Town
P.O. Box 61 Grand Cayman KY1-1102
Cayman Islands
Telephone: (345) 949-4244
Facsimile: (345) 949-8635
WEST FACE I: Commences Liquidation Proceedings
----------------------------------------------
On Feb. 4, 2016, the shareholders of West Face SPV (Cayman) I L.P.
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:
Anna Yonge
IMS Liquidations Ltd.
Harbour Centre, George Town
P.O. Box 61 Grand Cayman KY1-1102
Cayman Islands
Telephone: (345) 949-4244
Facsimile: (345) 949-8635
WILTSHIRE CAPITAL: Shareholders Receive Wind-Up Report
------------------------------------------------------
The shareholders of Wiltshire Capital Management Limited received
on March 10, 2016, the liquidator's report on the company's wind-
up proceedings and property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
WODOF TIVOLI: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of Wodof Tivoli, Ltd. received on March 10, 2016,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Whippoorwill Associates, Incorporated
c/o Daniel Gewanter
11 Martine Avenue, 11th Floor
White Plains
New York 10606
United States of America
Telephone: +1 (914) 683 1002
e-mail: dgewanter@whippoorwillassociates.com
=========
C H I L E
=========
CAP S.A.: S&P Lowers CCR to 'BB' & Removes from CreditWatch Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on CAP S.A. to 'BB' from 'BB+'. S&P has also lowered the
issue level rating on the company's senior unsecured bonds to 'BB'
from 'BB+'. S&P has removed the ratings from CreditWatch
negative. The outlook is now stable.
The ratings on CAP reflect the company's niche market position as
a premium pellet producer and steelmaker in Chile. Its debts are,
on average, low cost, but this only partially mitigates the risks
spawning from its small scale of operations and exposure to the
volatile iron ore and steel markets, which have a significant
global oversupply. Iron ore and steel prices continued to
deteriorate during the last few quarters, and have led S&P to
revise its iron ore price deck to $40 per ton in 2016 and 2017,
and $45 in 2018. As a result, S&P expects CAP's financial metrics
to remain around current levels through 2017, while it generates
minimal free cash flows.
The stable outlook reflects S&P's view that, even though prices
should remain volatile in the near future, CAP's sound cash
position, low capex level, and interest expenses should allow the
company to offset cash flow pressures over the next few quarters.
Despite weak prices--that S&P expects to lead the company to have
debt to EBITDA of about 4.0x and FFO to debt of 20% in 2016--S&P
expects positive free cash generation in 2016.
S&P could downgrade CAP if price pressures on iron ore and steel
continue to offset the company's efforts to reduce costs,
resulting in debt to EBITDA and FFO to debt persistently above
4.0x and below 20%, respectively, and if FOCF turns negative.
S&P could raise CAP's ratings if the company is able to present
stronger than expected profitability, either due to improved
market conditions or more efficient operations, resulting in
consistently improved credit metrics, such as debt to EBITDA of
about 3.0x and FFO to debt above 30%.
===========
M E X I C O
===========
FRONTIER STAR: Chapter 11 Trustee Taps Bryan Cave as Counsel
------------------------------------------------------------
P. Gregg Curry, Chapter 11 trustee for Frontier Star, LLC, et al.,
asks the U.S. Bankruptcy Court for the District of Arizona for
permission to employ Bryan Cave LLP as its counsel.
The hourly rates for professionals based in the United States are:
Partners and Counsel $345 - $995
Associates $230 - $650
Paralegals $120 - $360
Bryce A. Suzuki, a partner in the law firm of Bryan Cave, tells
the Court that as of Nov. 25, 2015, the firm has received no
payment of professional fees and expenses from the trustee. Bryan
Cave has not received any advance retainer from the trustee or any
other source in the cases.
Mr. Suzuki assures the Court that neither Bryan Cave nor any
attorney associated with Bryan Cave hold an interest or represent
an interest adverse to the Debtors' estates.
The firm can be reached at:
Robert J. Miller, Esq.
Bryce A. Suzuki, Esq.
Justin A. Sabin, Esq.
BRYAN CAVE LLP
Two North Central Avenue, Suite 2200
Phoenix, AZ 85004-4406
Tel: (602) 364-7000
Fax: (602) 364-7070
E-mail: rjmiller@bryancave.com
bryce.suzuki@bryancave.com
justin.sabin@bryancave.com
About Frontier Star
Guadalupe, Arizona-based Frontier Star LLC and Frontier Star CJ
LLC are large Carl's Jr. and Hardee's franchisees operated by
three grandchildren of Carl Karcher, who founded the Carl's Jr.
hamburger chain, now owned by parent company CKE Restaurants, Inc.
The grandchildren include the LeVecke siblings Carl, Margaret and
Jason, who is listed as chief executive officer/manager of both
companies. The LeVecke siblings had more than 130 Carl's Jr. and
Hardee's franchises in seven states and Puerto Vallarta, Mexico,
as of late 2013.
Frontier Star, LLC and Frontier Star CJ, LLC filed Chapter 11
bankruptcy petitions (Bankr. D. Ariz. Lead Case No. 15-09383) on
July 27, 2015. The petitions were signed by Jason LeVecke as
CEO/manager. The Cavanagh Law Firm serves as counsel to the
Debtors.
On Nov. 19, 2015, P. Gregg Curry was appointed as the Debtors'
Chapter 11 trustee.
Frontier Star disclosed $71.9 million in assets and $27.3 million
in debt in its schedules.
FRONTIER STAR: Western Alliance Bank Objects to Proposed Sale
-------------------------------------------------------------
Western Alliance Bank objects to the motion filed by P. Gregg
Curry, the Chapter 11 Trustee of the bankruptcy estates of
Frontier Star, LLC, and its affiliates, seeking authority from the
U.S. Bankruptcy Court for the District of Arizona to sell
substantially all of the assets and the motion to approve bidding
procedures for the Sale.
The Bank is a secured lender and DIP lender in the bankruptcy
proceedings.
W. Scott Jenkins, Jr., Esq., at Quarles & Brady LLP, in Avenue
Phoenix, Arizona -- scott.jenkins@quarles.com -- tells the U.S.
Bankruptcy Court for the District of Arizona that the Bank files
this Objection to obtain clarity as to certain material
definitions and terms in the Bidding Procedures Motion and to
expressly reserve all of its rights, including the right to
consent to the sale of any property subject to its liens and
security interests.
Mr. Jenkins says that the Bidding Procedures Motion must be more
specific as to the term "APA purchase price." He contends that
the Trustee has not explained how the Stalking Horse bid is valued
so that there is an amount from which the Initial Overbid Amount
must be added. The Stalking Horse bid currently includes a $40
million cash component, but also will include the assumption by
Starcorp LLC of various claims that are administrative claims of
the estate, claims for cure amounts relating to assumed executory
contracts and unexpired leases, and certain equipment related
secured claims. He adds that before beginning the mathematical
process of evaluating an overbid, the Trustee must use an APA
purchase price that includes both cash and the assumed liabilities
from which the Initial Overbid Amount will be compared.
The Bid Procedures do not adequately protect the interests of the
Estates to the extent there are separate bids for Hardee's and
Carl's Jr. stores, Mr. Jenkins asserts. He notes that the Bid
Procedures, as submitted, permit a sale to separate Successful
Bidders for Hardee's and Carl's Jr. stores without the requirement
that those sales close simultaneously. By failing to include this
requirement, he argues, the Trustee places the Bank and other
creditors at risk of a sale, which does not encompass the entire
going concern and leaves the Estates exposed to a scenario where
one buyer closes and the other does not.
Accordingly, the Bid Procedures must: (i) include a value for the
APA purchase price that includes both cash and assumed liabilities
from which to add the Initial Overbid Amount; and (ii) include
provisions to require a simultaneous closing or other provisions
to ensure that a closing occurs as to all Assets if the Successful
Bid is comprised of multiple bids, Mr. Jenkins asserts. He says
that to the extent that any sale will include separate purchasers,
the right to any purchaser to close must be conditioned on them
closing simultaneously and the risk associated with separate sales
must weigh heavily in the determination of the highest and best
bid.
The Bank asserts that any sale under Section 363(f) of the
Bankruptcy Code will require its consent and the Bank has not
given its consent to any sale at this time. The Bank expressly
reserves all rights to withhold its consent to any sale and to
object to any proposed sale, the sale proceedings, the
qualification of bidders, qualification of overbids, determination
of highest and best bids, including the determination of the
Successful Bidder, and any other matters relating to the Sale
Motion.
Western Alliance is represented by:
W. Scott Jenkins, Jr., Esq.
Alissa A. Brice, Esq.
QUARLES & BRADY LLP
Renaissance One
Two North Central Avenue
Phoenix, AZ 85004-2391
Email: scott.jenkins@quarles.com
alissa.brice@quarles.com
About Frontier Star
Guadalupe, Arizona-based Frontier Star LLC and Frontier Star CJ
LLC are large Carl's Jr. and Hardee's franchisees operated by
three grandchildren of Carl Karcher, who founded the Carl's Jr.
hamburger chain, now owned by parent company CKE Restaurants, Inc.
The grandchildren include the LeVecke siblings Carl, Margaret and
Jason, who is listed as chief executive officer/manager of both
companies. The LeVecke siblings had more than 130 Carl's Jr. and
Hardee's franchises in seven states and Puerto Vallarta, Mexico,
as of late 2013.
Frontier Star, LLC and Frontier Star CJ, LLC filed Chapter 11
bankruptcy petitions (Bankr. D. Ariz. Lead Case No. 15-09383) on
July 27, 2015. The petitions were signed by Jason LeVecke as
CEO/manager. The Cavanagh Law Firm serves as counsel to the
Debtors.
On Nov. 19, 2015, P. Gregg Curry was appointed as the Debtors'
Chapter 11 trustee.
Frontier Star disclosed $71.9 million in assets and $27.3 million
in debt in its schedules.
FRONTIER STAR: Approval of Western Alliance Settlement Sought
-------------------------------------------------------------
P. Gregg Curry, Chapter 11 Trustee, asks the U.S. Bankruptcy Court
for the District of Arizona, to approve the Settlement and
Compromise that he has entered into with Western Alliance Bank.
The Debtors are obligated to Western Alliance under a certain Loan
Agreement and associated documents in the approximate amount of
$25 million. The Chapter 11 Trustee obtained a postpetition
financing facility from Western Alliance in the amount of
$7.9 million, which includes $5 million for the Trustee's
operations. The Chapter 11 Trustee relates that he has been able
to limit draws on the DIP Facility, which had a balance of
approximately $3.4 million as of February 29, 2016.
Western Alliance asserts a lien on substantially all of the
Debtors' assets. The Chapter 11 Trustee tells the Court that he
has investigated the validity, priority, and extent of Western
Alliance's liens, as well as potential avoidance actions that he
could assert against Western Alliance. The Chapter 11 Trustee
further tells the Court that in connection with the proposed sale
of substantially all of the Debtors' assets to Starcorp LLC, he
has negotiated with Western Alliance to reach a compromise
regarding Western Alliance's liens and the disposition of the
proceeds of the sale.
The Settlement contains, among others, these principal terms:
(a) Private Sale of Assets: Because the parties believe that
no other parties who are qualified Carl's Jr. and Hardee's
franchisees are likely to be willing and able to purchase the
Assets at a higher price than that offered by the Buyer, and in
the interest of closing the transaction sooner and thereby
preserving value, the Sale Motion will be modified to request that
the Assets be sold to the Buyer for a base purchase price of $41
million without further bidding or an auction process.
(b) Pizza Revolution Proceeds: The net proceeds of the sale
of the assets of the Debtors' non-debtor subsidiary Pizza
Revolucion, LLC will be paid to Western Alliance for application
to the Debtors' obligations.
(c) Equipment Loan/Lease Claims: Up to $1.3 million of the
Sale Proceeds will be made available to permit the Trustee to
satisfy cure obligations or payoff amounts owed to lessors or
lenders with interests in equipment that is or may be included in
the Assets transferred to the Buyer, if the Buyer does not assume
these obligations. To the extent that these funds are not
required for these purposes, any excess will be paid to Western
Alliance for application to the Debtors' obligations.
(d) Franchisor Cure Obligations: $6.75 million of the Sale
Proceeds and possibly additional amounts, will be made available
to permit the Trustee to satisfy cure obligations under the
Debtors' leases and franchise agreements with Carl's Jr.
Restaurants LLC and Hardee's Restaurants LLC (the "Franchisors").
Since the filing of the Sale Motion, the Trustee and the
Franchisors have agreed to an aggregate cure obligation of $6.75
million, plus certain unliquidated amounts, for these agreements.
(e) Other Secured Claims: $1.827 million of the Sale Proceeds
will be made available to permit the Trustee to satisfy state and
local tax claims, mechanics' liens, and materialmen's liens that
have priority over the liens of Western Alliance. To the extent
that these funds are not required for these purposes, any excess
will be paid to Western Alliance for application to the Debtors'
obligations.
P. Gregg Curry, Chapter 11 Trustee, is represented by:
Robert J. Miller, Esq.
Bryce A. Suzuki, Esq.
Justin A. Sabin, Esq.
BRYAN CAVE LLP
Two North Central Avenue, Suite 2200
Phoenix, AZ 85004
Telephone: (602)364-7000
E-mail: rjmiller@bryancave.com
bryce.suzuki@byrancave.com
justin.sabin@bryancave.com
- and -
Michael W. Carmel, Esq.
MICHAEL W. CARMEL LTD.
80 E. Columbus Ave.
Phoenix, AZ 85012
Telephone: (602)264-4965
Facsimile: (602)277-0144
E-mail: Michael@mcarmellaw.com
About Frontier Star
Guadalupe, Arizona-based Frontier Star LLC and Frontier Star CJ
LLC are large Carl's Jr. and Hardee's franchisees operated by
three grandchildren of Carl Karcher, who founded the Carl's Jr.
hamburger chain, now owned by parent company CKE Restaurants, Inc.
The grandchildren include the LeVecke siblings Carl, Margaret and
Jason, who is listed as chief executive officer/manager of both
companies. The LeVecke siblings had more than 130 Carl's Jr. and
Hardee's franchises in seven states and Puerto Vallarta, Mexico,
as of late 2013.
Frontier Star, LLC and Frontier Star CJ, LLC filed Chapter 11
bankruptcy petitions (Bankr. D. Ariz. Lead Case No. 15-09383) on
July 27, 2015. The petitions were signed by Jason LeVecke as
CEO/manager. The Cavanagh Law Firm serves as counsel to the
Debtors.
On Nov. 19, 2015, P. Gregg Curry was appointed as the Debtors'
Chapter 11 trustee.
Frontier Star disclosed $71.9 million in assets and $27.3 million
in debt in its schedules.
MEXICO: Keeps Rate Steady as Peso Strengthens and Fed Holds
-----------------------------------------------------------
Nacha Cattan and Eric Martin at Bloomberg News report that Mexico
kept its overnight interest rate unchanged after the peso's
rebound from a record low eased inflation pressures and the
Federal Reserve left borrowing costs on hold.
Banco de Mexico, led by Governor Agustin Carstens, held the
overnight rate at 3.75 percent March 18 as forecast by all 25
economists surveyed by Bloomberg. The central bank said it will
pay special attention to the exchange rate and its possible pass-
through to consumer prices, while a faster peso appreciation could
lower inflation, according to the statement accompanying the
board's decision, Bloomberg News notes.
Bloomberg News relays that the board lifted borrowing costs half a
point in an unscheduled meeting as part of coordinated actions
with the government announced Feb. 17 to bolster the currency and
head off an increase in inflation expectations. The peso has
responded well, strengthening the most among major currencies
after Brazil's real since then, Bloomberg News says. That
appreciation opens the door for the central bank to return to its
previous strategy of pairing rate increases with the Fed,
according to Goldman Sachs Group Inc., Bloomberg News notes.
"It's a bit of a victory lap, that the measures announced Feb. 17
were very effective in anchoring the currency," said Alberto
Ramos, chief Latin America economist at Goldman Sachs in New York,
Bloomberg News relays. "If the currency remains well anchored, if
there is no evidence of significant pass-through to domestic
prices, they will match whatever the Fed does over the next
meetings," he added.
Risk Assessments
The Fed kept rates steady and scaled back forecasts for interest-
rate increases this year due to weaker global growth, Bloomberg
News says. Mexico's central bank cut its own forecast for the
nation's growth this year to 2 percent to 3 percent from 2.5
percent to 3.5 percent on March 3, saying that slower U.S.
industrial activity will hurt demand for the nation's goods,
Bloomberg News notes. The U.S. is the destination for 80 percent
of Mexico's exports, Bloomberg News relays.
Banxico said in its statement that the nation's economic expansion
has decelerated with respect to the third quarter of last year,
with some signs of private consumption slowing, Bloomberg News
discloses.
"The board will follow very closely the evolution of all inflation
determinants and expectations for the medium and long term,
especially the exchange rate," according to the statement,
Bloomberg News notes. "It will also be alert to the relative
monetary position between Mexico and the U.S., without neglecting
the evolution of the output gap," the statement added.
Economic weakness in Mexico and the peso's recent appreciation,
along with a rise in global oil prices and a dovish Fed, make it
more likely the central bank will remain on hold for longer,
according to Bank of America Corp, Bloomberg News relays.
"Given the turn of events since Banxico hiked 50 basis points, now
the risk is that if things continue to be this way, the economy
may decelerate," Carlos Capistran, chief Mexico economist at Bank
of America, said before the rate decision, Bloomberg News notes.
Capistran sees Banxico remaining on hold until a quarter-point
increase in the fourth quarter, adding that he doesn't see the
central bank cutting rates as global uncertainty could lead to
more peso weakness, Bloomberg News notes. The peso is the second-
best performer among the 16 most traded currencies since reaching
a record low of 19.4448 per dollar on Feb. 11, rising 12 percent.
Bloomberg News relays that the peso dropped on Friday, March 18
and maintained its loss after the decision, weakening 0.4 percent
to 17.3815 per dollar at 2:05 p.m. in Mexico City.
Manuel Sanchez, a central bank deputy governor, said in an
interview March 8 that he's concerned about the risks of further
peso depreciation spurring inflation, Bloomberg News notes. After
slowing last year to levels not seen since the late 1960s,
inflation quickened to 2.87 percent in February, Bloomberg News
relays. Policy makers expect the annual pace of consumer price
increase to rise slightly above the 3 percent target in the second
and third quarters, Bloomberg News adds.
======================
P U E R T O R I C O
======================
PUERTO RICO GENERAL: S&P Affirms 'CC' Rating on Tax-Backed Debt
---------------------------------------------------------------
Standard & Poor's Ratings Services has affirmed its 'CC' rating on
various issues of the Commonwealth of Puerto Rico's tax-backed
debt not currently in default. The affirmed ratings includes
those on Puerto Rico general obligation (GO) debt and general fund
appropriation secured debt, excluding already defaulted debt of
the Puerto Rico Public Finance Corp. (PFC), currently rated 'D'.
Standard & Poor's has also affirmed its 'CC' rating on Puerto Rico
Sales Tax Financing Corp. (COFINA) debt, Puerto Rico Convention
Center District Authority (CCD) debt, and Puerto Rico Highways and
Transportation Authority (HTA) debt. The outlook on all debt is
negative.
"We rate debt 'CC' when we expect default to be a virtual
certainty, regardless of the anticipated time to default," said
Standard & Poor's credit analyst David Hitchcock. "In our view,
all of Puerto Rico's tax-backed debt is highly vulnerable to
nonpayment," Mr. Hitchcock.
Standard & Poor's believes a default or restructuring is highly
likely and could take the form of either a missed debt service
payment or a distressed exchange that S&P would characterize as a
default. Puerto Rico reports weak projected liquidity that likely
will result in a missed interest payment for the separately rated
Puerto Rico Government Development Bank (GDB) on April 1, 2016 or
a missed GDB principal payment on May 2, 2016.
S&P expects the July 1, 2016, debt service payment of $224.6
million for HTA and $9.5 million for CCD debt will be paid from
the last of trustee-held HTA and CCD bond reserves, and that these
issuers will default on the succeeding Jan. 1, 2017, debt service
payment date. Puerto Rico has not been forwarding to the bond
trustee money pledged to HTA and CCD debt service payments, and
S&P believes a default on HTA and CCD debt is a virtual certainty
by Jan. 1 of next year.
The COFINA bond trustee holds sufficient money to make the next
upcoming August 2016 COFINA debt service payment from pledged
sales tax set-asides in the first half of the fiscal year, but in
S&P's view weak projected liquidity and the commonwealth's
apparent unwillingness to prioritize debt service over other
operating costs, as evidenced by current commonwealth
restructuring proposals, lead S&P to conclude that annual
segregation of sales taxes pledged to COFINA that are scheduled to
start again on July 1 may not occur. The commonwealth's current
proposal for COFINA debt would impose a greater restructuring
haircut on COFINA than on GO debt.
S&P believes that default could occur earlier than scheduled debt
service due dates for all tax-backed debt, if the U.S. Congress
grants Puerto Rico's request for debt restructuring authority,
whether it be an extension to Puerto Rico of Chapter 9 bankruptcy
law provisions that currently apply to the states, which would
allowed Puerto Rico to file its public corporations into
bankruptcy; or a "super Chapter 9" that applies to the Puerto Rico
central government; or if other types of special restructuring
authority were authorized by Congress, such as one that might
require majority consensual approval of bondholders.
S&P rates all Puerto Rico tax-backed debt at 'CC', except for
Puerto Rico Public Finance Corp. and Puerto Rico Infrastructure
Financing Authority federal rum excise tax-secured debt, which is
currently in default and rated 'D', reflecting Puerto Rico's
projection of limited liquidity available to make payment for all
its debt through the remainder of the fiscal year, the likelihood
of another operating deficit in the current fiscal year that could
further pressure liquidity, and the commonwealth's proposal for
all bondholders to take significant restructuring haircuts.
The negative outlook reflects S&P's view that default is a virtual
certainty. If any specific debt issues fell into default, S&P
would lower its rating on the debt to 'D'. Although S&P do not
expect it to occur, if liquidity improved to the extent it
believed it likely the commonwealth would avoid near-term default,
S&P could potentially raise our rating back to the 'CCC' category.
PUERTO RICO: Fights for Chapter 9 Bankruptcy in Supreme Court
-------------------------------------------------------------
Mary Williams Walsh at The New York Times reports that debt-laden
Puerto Rico went toe to toe with its creditors at the Supreme
Court, arguing that it has been wrongly locked out of the
bankruptcy courts, the only place it can reasonably expect to
restructure its crushing debt.
"We've talked a lot about legal principles," said the lawyer
Christopher Landau, summing up his arguments on behalf of the
commonwealth, according to The New York Times. "But this is also
a flesh-and-blood situation in Puerto Rico," he added.
Hanging on the outcome, Mr. Landau said, were questions like
"whether people in a village in Puerto Rico will be able to get
clean water," the report notes.
Puerto Rico is struggling with $72 billion in debt and has been
saying for more than a year that it needs to restructure at least
some of it under Chapter 9, the part of the bankruptcy code for
insolvent local governments, the report relays. But Puerto Rico
cannot do so, because Chapter 9 specifically excludes it, although
it is unclear why, the report discloses.
In 2014, the island tried to get around that exclusion by enacting
its own version of a bankruptcy law, designed for its big public
utilities, which account for about $26 billion of the total debt.
But that attempt ran afoul of yet another provision of the code,
which says that only Congress can enact bankruptcy laws.
"Congress has shut the door," said Mr. Landau, notes the NY Times.
"There is no door for Puerto Rico, and no key for Puerto Rico."
Many of the justices' questions, and the parties' responses,
involved possible rationales for tying Puerto Rico's hands, as
Congress went out of its way to do in 1984, the report relays,
notes the NY Times. Its amendment that year also barred the
District of Columbia, without leaving any legislative history or
indication of intent, the report discloses.
"Why would Congress preclude Puerto Rico from Chapter 9?" asked
Chief Justice John G. Roberts Jr., the report notes.
"Why would Congress put Puerto Rico in this never-never land?"
asked Justice Ruth Bader Ginsburg, the report relays. "Why in the
world? What explains Congress wanting to put Puerto Rico in this
anomalous position of not being able to restructure its debt?"
"It's the question that everyone asks when they pick up this
case," said Mr. Landau, the report relates.
Mr. Landau and the lawyer representing Puerto Rico's creditors,
Matthew D. McGill, agreed that no one knew for sure, but both
offered theories, the report discloses.
Mr. McGill said the 1984 amendment was not all that mysterious if
you considered that Congress had a long history of micromanaging
Puerto Rico's indebtedness, the report notes. Mr. McGill cited a
1917 federal law that specifically limited the amount of debt that
Puerto Rico could take on, which remained in force until Puerto
Rico ratified its own constitution in 1952, the report relays.
Even then, he said, Congress agreed to lift its own debt
restriction only because Puerto Rico had included a similar
restriction in its new constitution, the report adds.
Mr. McGill also said that Congress had tacitly encouraged the
widespread purchasing of Puerto Rican debt, by permitting Puerto
Rico to market its bonds as triple-tax-exempt in all American
states and cities, the report notes. As a result, Puerto Rican
debt is exceptionally widely held across the United States
mainland, and Congress may have wanted to protect investors by
making it hard for Puerto Rico to renege, the report relays.
"The third reason is that by 1984, Puerto Rico and D.C. were the
two most indebted territories, by a lot," Mr. McGill said. Under
those circumstances, Congress was unlikely to have wanted to
"allow the District of Columbia and Puerto Rico to write their own
municipal bankruptcy laws, which may or may not treat their
nationwide creditors fairly," Mr. McGill added.
Mr. Landau offered an entirely different theory as to why Congress
had enacted the laws at issue, the report relays. Mr. Landau said
the legal provisions were being misread, and that Congress had not
really intended to shut Puerto Rico out of bankruptcy, the report
notes.
While lawyers, judges and policy makers have grappled with these
issues, Puerto Rico's finances have gone from bad to worse, the
report says. The island has already defaulted on about $221
million of debt, prompting lawsuits by some of the affected
creditors, the report discloses. And bigger, far more contentious
defaults appear imminent.
On May 1, the island's all-important Government Development Bank
must make debt payments of $422 million, which it does not seem to
have, the report relays. Two months later, about $2 billion is
due from the central government and a number of big public
enterprises: the electric power authority, the water and sewer
authority and the highway authority, among others, the report
notes. Puerto Rico's constitution effectively guarantees at least
some of those payments, but the money to make them appears to have
dried up, the report says.
Gov. Alejandro Garcia Padilla has said that he will not make debt
payments if it means depriving the Puerto Rican people of
essential services, the report relays. But skipping the big
payments due in May and July would probably mean many more
creditor lawsuits, the report notes.
And a default by the Government Development Bank, which oversees
the island's finances, could set off a far-reaching chain
reaction, the report says. The bank has guaranteed the debts of
numerous other agencies and private companies, and insured
hundreds of personal mortgages, the report relays. Those
guarantees and insurance would presumably lose value in a default,
hurting the balance sheets of any number of institutions, the
report adds.
The report notes that analysts have warned that it could take
years to sort out the resulting mess, and in the meantime, Puerto
Rico would be a pariah, less and less able to protect the safety
and well-being of its more than three million residents.
When it first enacted its own version of bankruptcy in 2014,
Puerto Rico had hoped to restructure only a few large government
enterprises, the report discloses.
But two big mutual fund companies, Franklin Advisers and
OppenheimerFunds, filed suit on the same day the law was enacted,
the report relays. They argued that no matter how much Puerto
Rico might want to take shelter from creditors, the bankruptcy
code clearly said it could not file for Chapter 9 protection, nor
could it enact its own bankruptcy law, the report says. The
United States District Court in San Juan and the Court of Appeals
for the First Circuit agreed.
As the case inched along through the courts, it became
increasingly clear that restructuring the public enterprises alone
would not be nearly enough to solve Puerto Rico's problems, the
report says.
Last year, certain congressional committees began working with the
Treasury Department on legislation that would give Puerto Rico a
legal framework for restructuring all of its debts under the
Territorial Clause of the United States Constitution, the report
recalls. That approach would help Puerto Rico cope without
running into the special exclusion that has been keeping the
island out of Chapter 9, the report relays.
"Isn't there also legislation to put Puerto Rico back in Chapter
9?" Justice Ginsburg asked.
"Yes there is," said Mr. McGill, the report notes. "Congress is
considering a range of options for Puerto Rico, including Chapter
9, just as Congress considered a range of options for the District
of Columbia during its own financial crisis in the 1990s, which
resulted in a financial control board rather than Chapter 9," he
added.
A House bill is expected to be introduced by the end of March, in
keeping with instructions issued by the speaker, Paul D. Ryan. A
Senate bill is likely to follow, the report relays. They are
expected to provide some framework for restructuring other than
Chapter 9, the report notes. Congressional action is likely to
come well before any court ruling, 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.
================================
T R I N I D A D & T O B A G O
================================
* TRINIDAD & TOBAGO: Jobs Out There for Retrenched Workers
----------------------------------------------------------
Trinidad Express reports that President of the Trinidad and Tobago
Chamber of Commerce Robert Trestrail said that business in the
country believes it should never be the first option to lay off
workers.
"In fact that only comes after exhausting all measures to ensure
the business can survive" Mr. Trestrail said, the report notes.
Mr. Trestrail was speaking at the Chamber's business luncheon held
at the Hyatt Regency (Trinidad) in Port of Spain.
Mr. Trestrail recalled media reports recently where "much has been
ventilated about the actions of business, and the need to treat
workers with respect, ensuring that what is legally due is paid to
them," the report adds.
=============
U R U G U A Y
=============
CONSORCIO DEL URUGUAY: Moody's Assigns B1 Global Scale CFR
----------------------------------------------------------
Moody's Investors Service has assigned a B1 global scale and a
A2.uy national scale corporate family ratings to Consorcio del
Uruguay S.A. All the ratings carry a stable outlook.
These assessments and ratings were assigned to Consorcio del
Uruguay S.A.:
Global Corporate Family Rating: B1
Uruguayan National Scale Corporate Family Rating: A2.uy
RATINGS RATIONALE
Consorcio del Uruguay's B1 Corporate Family Rating reflects the
company's highly specialized business model focused on providing
saving and credit services, which results in low income
diversification. At the same time, the rating also considers
Consorcio's well-established franchise as the unique player in the
market niche in which it operates and takes into account
Consorcio's experienced management team, its high flexibility in
managing liquidity, and its good asset quality, profitability and
capitalization metrics. Consorcio targets low to middle income
individuals who typically don't have access to commercial banking
services.
The entity's business model is based on managing groups of
individuals who commit to contributing a predetermined number of
installments to a fund under one of a number of savings plans,
with varying tenor and yield characteristics. The fund is then
used to grant mortgages or consumer loans to the fund's
contributors, which are typically pooled in groups of 200 or 400
members depending on the number of installments defined in each
plan. Loans are awarded under the terms and conditions of the
agreements signed with customers by both lottery and a bidding
process whereby contributors bid the number of installments they
will contribute in advance, which are then deducted from the loan.
Consequently, Consorcio's contributors have little control oover
the timing of the loans they receive.
Under the operating guidelines, fund contributors have no ability
to withdraw their savings, unless they are awarded a loan,
therefore, Consorcio's liquidity risk is negligible. Moreover,
regulations ensure that Consorcio is allowed to reduce or
temporarily suspend loan origination if ts liquidity is low. For
the past three years, Consorcio's liquidity has been adequate, as
suggested by a 29.25% average ratio of liquid assets to total
assets.
Consorcio exhibits low delinquency levels thanks to the high level
of collateralization --roughly 90% of its loan portfolio is
secured- and high granularity of its loan portfolio, with its top
10 borrowers representing less than 10% of its total loans. As of
December 2015, Consorcio's non-performing loan ratio was a low
0.26% and it has been showing a downward trend, as it was 0.86% in
December 2012. In addition, Consorcio lends predominantly in
local currency, a practice that reduces risks of currency
mismatches that are common among Uruguayan banks, and can often
lead to higher asset quality problems.
Consorcio's main source of income is fees, which are deducted from
each installment paid by clients. It also generates interest
income from its cash and securities holdings, which are primarily
invested in the local market. Despite the high operating costs
related to the activity, as reflected in an average cost to income
ratio of 71.26% in last three years, the entity's pre-tax, pre-
provision income on average managed assets was 2.26% as of
December 2015 and averaged 3.19% for last three years.
Shareholders reinvested 90% of the entity's net income in the past
two years, which shows their commitment towards further growth.
Consorcio is regulated by the Uruguayan Central Bank, which sets
conservative capital requirements for the company. Nevertheless,
the entity's tangible common equity to tangible managed assets
equaled 11.37% as of December 2015, and exceeded regulatory
minimum Tier 1 capital requirements by 33%.
WHAT COULD CHANGE THE RATING UP OR DOWN
Consorcio's ratings could face upward pressure if the entity's
risk positioning, asset quality, profitability, or capitalization
improve, while a deterioration in these factors could put downward
pressure on the rating.
Consorcio del Uruguay S.A. is headquartered in Montevideo,
Uruguay, and reported UYU 699.7 million of total assets and UYU
76.2 million of shareholders' equity as of December 2015.
The principal methodology used in these ratings was Finance
Companies published in March 2012.
***********
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 comillionercial 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.
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