/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/160525.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 Wednesday, May 25, 2016, Vol. 17, No. 102 Headlines A N T I G U A & B A R B U D A GRAND BAY CASINO: Unexpectedly Shuts Down, Leaves Workers Unpaid B A R B A D O S BARBADOS: Turning Corner But Challenges Remain, IMF Says B R A Z I L BRAZIL: Minister Says "Diagnosis" Of Crisis is Top Priority TRANSMISSORA ALIANCA: S&P Affirms 'BB' CCR; Outlook Remains Neg. ULTRAPAR PARTICIPACOES: S&P Affirms 'BB+' CCR; Outlook Negative VALE SA: Brazil Stocks Extend Weekly Drop as Firm's Shares Tumble VALID S.A.: Fitch Assigns 'BB-' Issuer Default Ratings D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Free Zones' 161,257 Jobs Reveal Robust Sector J A M A I C A DIGICEL GROUP: Tests Huawei's XG-PON in Jamaica DIGICEL GROUP: Fitch Affirms 'B' Issuer Default Rating P A N A M A BANCO INTERNACIONAL: Moody's Puts ba2 BCA on Review on Downgrade P U E R T O R I C O AEROPOSTALE INC: Has Interim OK to Tap $100-Mil. in DIP Loans AEROPOSTALE INC: Shareholder Eyes Claims Against Lender Sycamore AEROPOSTALE INC: GA, Tiger Capital to Facilitate Store Closures ALLIED FINANCIAL: Sale of Property Doesn't Have Objections AMERICAN AGENCIES: 14-Day Extension on CBA Decision Sought ASOCIACION DE PROPIETARIOS: Seeks OK to Hire Biaggi as Accountant DORAL FINANCIAL: Settles UMB Claim for $16-Mil. ESTEBAN BEAUTY: Seeks Approval to Hire Lozada as Legal Counsel MORGANS HOTEL: Stockholders Elect 9 Directors T R I N I D A D & T O B A G O REPSOL SA: Wins Block Offshore Barbados TRINIDAD AND TOBAGO ELECTRICITY: Faces Billions of Debts V E N E Z U E L A VENEZUELA: Antigua & Barbuda Consultant Suggests to Cut Ties X X X X X X X X X LATAM: Need More Autonomy to Manage Their Own Taxes, IDB Says - - - - - =============================== A N T I G U A & B A R B U D A =============================== GRAND BAY CASINO: Unexpectedly Shuts Down, Leaves Workers Unpaid ----------------------------------------------------------------- The Daily Observer reports that the Grand Bay Casino has been unexpectedly shut down, leaving casino staff without a fortnight's pay. An official at the company, who spoke with OBSERVER media on behalf of the owner, Anthony Velardi, said there is not enough float to operate the casino, since the investor is unwilling to devote any more money into the company without first securing his investments. The investor reportedly encountered challenges with his management team, the source said, adding that there were suspicions of theft with the team from Antigua, according to The Daily Observer. The report notes that this suspicion, coupled with prior unforeseen challenges met by the investor, put him in a state of panic, forcing him to withdraw his money from the casino, the source said. Mr. Velardi's action, left casino staff without pay and caused the building to remain closed, as it could not operate on the float amount left back, the report notes. A decision has since been made between Mr. Verladi and the unnamed investor, to reopen the casino in the summer and remunerate staff, the report notes. If operations are resumed as promised, the Grand Bay Casino, located at Dickenson Bay, will undergo some structural changes, as the investor tries to keep the business afloat, the report says. A minimum of US $25,000 float is needed to operate the casino, notes the report. =============== B A R B A D O S =============== BARBADOS: Turning Corner But Challenges Remain, IMF Says -------------------------------------------------------- Caribbean360.com reports that the International Monetary Fund (IMF) says the Barbados economy still faces serious challenges although it appears to have turned the corner. In a statement issued following a May 9-19 visit for Article IV Consultations, the Fund said real GDP grew by 0.8 percent last year buoyed by a surge in tourism arrivals, while employment increased by two percent, according to Caribbean360.com. It said inflation is low, reflecting a sharp drop in import prices, and the financial system is stable with a decline in non- performing loans, the report notes. "The current account deficit has narrowed significantly, reflecting lower oil and other import prices -- despite an increased volume of oil and intermediate goods imports -- while exports grew modestly. Net international reserves fell by US$57 million since the beginning of 2015, reflecting lower foreign direct investment and debt amortization," the statement said, the report relays. Although growth has resumed and short-term prospects are positive, the Fund said imbalances persist between available resources and government programs, notes the report. And while it suggested that favorable external developments have provided some room for maneuvering, it said the country remains highly vulnerable and may not realize its potential without deep- seated reforms to align revenues and expenditures and reduce debt, the report says. "Fiscal reforms have yielded less than expected. After significant consolidation in Financial Year 2014/15, the deficit in Financial Year 2015/16 remained broadly unchanged, short of government's objective, due to delayed implementation of June 2015 tax measures and slow progress with the reform of the state owned enterprises. Consequently, public sector debt rose to 105.5 percent of GDP from 98 percent at the end of Financial Year 2013/14. The large cash requirements of the government are a challenge increasingly met by the Central Bank," the Washington-based institution said, the report notes. The IMF has projected a 2.1 percent increase in growth this year, which it said reflects higher private and public investment, mainly in refurbishing and expansion of the tourism stock, the report discloses. However, it pointed to de-risking as an area of concern as well as government financing requirements and possible delays in government-backed projects, the report relays. The Fund suggested: "To reverse large increases in debt and place it on a downward trajectory, the mission recommends fiscal adjustment of at least 3.5 percent of GDP over the next three years. This would be on top of the expected improvement in performance this year reflecting a full year of the 2015 revenue measures," notes the report. It also recommended that government push ahead with measures to improve public sector efficiency, conduct reforms to increase labour market flexibility, increase training opportunities and move forward with a viable and affordable agricultural strategy to strengthen its links with the tourism sector, the report adds. As reported in the Troubled Company Reporter-Latin America on April 5, 2016, Moody's Investors Service downgraded Barbados' government bond rating and issuer rating to Caa1 and changed the outlook to stable. =========== B R A Z I L =========== BRAZIL: Minister Says "Diagnosis" Of Crisis is Top Priority ----------------------------------------------------------- EFE News reports that Finance Minister Henrique Meirelles said that a "diagnosis" of the nation's economic crisis is the "No. 1 challenge" facing acting-President Michel Temer. "This is a very important moment for Brazil's economy" and, in that sense, "we'll experience some key moments" that can be "extremely positive," Mr. Meirelles said in a speech at a forum organized by Veja magazine in Sao Paulo, according to EFE News. After taking office as Temer's minister and head of the economic team, Mr. Meirelles said that a thorough study and understanding of the economy is the "basic starting point" for straightening out the country's finances, the report notes. "We need a diagnosis to identify the source of the problem," Mr. Meirelles said. Mr. Meirelles is considered a very important player by Temer, who took over the presidency last May 12 when President Dilma Rousseff was suspended from office to face impeachment proceedings for irregularities in the accounts of her presidency in 2014 and 2015, the report recalls. Brazil, whose economy dipped 3.8 percent in 2015 and this year is set to end with a similar decline, also suffers from high inflation, which in December reached 10.67 percent, along with growing unemployment and high interest rates, the report notes. "It's very important to straighten out inflation, but the focus now should be on calculating the size of the problem and finding solutions that contemplate factors like taxes," the report qouted Mr. Meirelles as saying. In that regard, the minister recalled that between 1991 and 2015 primary expenditure went from 11 percent to 19 percent of GDP, and in the 2008-2015 period, revenues grew by 14 percent and expenditures by 51 percent, the report says. For that reason, he said, "the golden rule" in such a scenario is "deficit financing, never again," the report notes. As for the type of measures to be adopted by the government, Mr. Meirelles declined to give details because they "are being studied" and will be announced, the report adds. However, Mr. Meirelles said, "we have to take measures that are efficient and that really work, because this isn't a time for mistakes, it's a time to get it right and I'm in a hurry," notes the report. As reported in the Troubled Company Reporter-Latin America on March 29, 2016, severe contraction that was preceded by several years of below-trend growth has impaired Brazil's (Ba2 negative) underlying economic strength, despite the country's large and diversified economy, says Moody's Investors Service. The country's credit rating is also coming under pressure from the government's high level of mandatory spending. TRANSMISSORA ALIANCA: S&P Affirms 'BB' CCR; Outlook Remains Neg. ---------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' global scale and 'brAA-' national scale corporate credit ratings on Transmissora Alianca de Energia Eletrica S.A. (TAESA). S&P also affirmed its 'brAA-' long-term issue-level rating on the company's debt. The outlook remains negative. The foreign currency ratings on Brazil limit the ratings on TAESA. This reflects S&P's view of an appreciable likelihood that the electric utilities would follow the sovereign in a default scenario because S&P believes that their regulated status exposes them to the sovereign's potential credit quality deterioration (i.e. potential tariff controls, revenue collection, and credit availability would suffer in such scenario). S&P withdrew its recovery ratings on the company's rated debt based on S&P's understanding that TAESA, as a regulated electric utility, isn't subject to Brazil's insolvency regime if it defaults, unless after the concession expires, according to the Law 12,767/2012. Despite our view that a debt restructuring could overall maximize recoveries for the creditors, this law reduces the predictability in a default scenario for the regulated electric utilities. Issue-level ratings on TAESA remain unchanged, and S&P now uses its traditional issue rating notching guidelines. The ratings on TAESA reflect S&P's view of its satisfactory business risk profile and adequate liquidity. S&P also incorporates its expectation that the company will maintain its solid credit metrics in the next few years in line with an intermediate financial risk profile. S&P's business risk profile assessment on TAESA reflects a proven and favorable regulatory framework in Brazil that supports a stable and predictable revenue stream, the company's monopoly rights to exploit Brazil's large electricity transmission assets (about 9,803 kilometers long), very low counterparty risk, and efficient operations. ULTRAPAR PARTICIPACOES: S&P Affirms 'BB+' CCR; Outlook Negative --------------------------------------------------------------- S&P Global Ratings Services affirmed its 'BB+' global scale and 'brAA+' national scale corporate credit ratings on Ultrapar Participacoes S.A. The outlook remains negative. The affirmation reflects S&P's expectation that Ultrapar's performance will remain resilient even amid Brazil's economic slump in the next two years. The company's strong cash flow generation, historically prudent financial policy, solid cash reserves, and projected low leverage reinforce S&P's expectation thatUltrapar will continue to post strong credit metrics. The affirmation also reflects Ultrapar's substantial share of Brazil's fuel distribution market--including its well-known brand and advantageous service station locations--and the dominant position in other business lines through Ultragaz and Oxiteno. All these factors underscore S&P's 'bbb' stand-alone credit profile (SACP) on the company. The negative outlook on Ultrapar reflects the negative outlook on Brazil because S&P defines the maximum rating differential between both at one notch. This stems from the company's high exposure to the domestic economy, sensitivity to economic downturns, and from the still high interest burden and short-term debt concentration. A downgrade of Ultrapar is more likely to occur if S&P was to take the same rating action on. S&P could revise downward the company's SACP if liquidity deteriorates amid lower operating efficiency and more restricted access to debt refinancing. An aggressive debt-financed growth strategy that weakens credit metrics to adjusted debt to EBITDA higher than 3.0x and FFO to debt of less than 35% on a consistent basis could also prompt a downward revision of the SACP. Absent any changes to Ultrapar's SACP, a positive rating action on Brazil could result in a similar action on the company. Any significant decoupling of Ultrapar's business from the Brazilian economy cycles could also result in a higher number of notches differentiation from the sovereign's ratings. VALE SA: Brazil Stocks Extend Weekly Drop as Firm's Shares Tumble ----------------------------------------------------------------- Ney Hayashi Cruz and Vinicius Andrade at Bloomberg News report that the Ibovespa extended a weekly drop as mining company Vale SA tumbled and real-estate companies slumped after a report that the government may cut the number of units to be built under its housing program. Vale was among the biggest contributors to the index's slide on May 20 amid lower metal prices, according to Bloomberg News. The BM&FBovespa Real Estate Index of 14 homebuilders posted its sixth consecutive decline, led by MRV Engenharia e Participacoes SA, the Bloomberg News notes. "There's a lot of pressure coming from Vale, which fell quite a lot," said Paulo Figueiredo, an economist at asset management firm FN Capital in Petropolis, Brazil. "And the construction sector is being affected by news about the housing program," Mr. Figueiredo added. Real-estate shares slumped after O Estado de S.Paulo newspaper said the government was scrapping a plan to build two million homes by 2018, an initiative sponsored by Dilma Rousseff, who stepped down from the presidency earlier this month to wait for a trial that may result in her impeachment, Bloomberg News relays. Newly-appointed Cities Minister Bruno Araujo issued a statement denying the report, saying that social programs are a priority for Acting President Michel Temer, Bloomberg News says. The Ibovespa lost 0.8 percent to 49,722.75 at the close of trading on May 21 in Sao Paulo as 33 of its 59 stocks fell. Vale lost 3.8 percent. MRV retreated 4.5 percent, Bloomberg News relays. The benchmark index has dropped 4 percent last week following a global rout on concern that the Federal Reserve may raise interest rates as early as next month, Bloomberg News notes. The gauge is trading at 11.9 times estimated earnings, it's cheapest since March 2, Bloomberg News adds. As reported in the Troubled Company Reporter-Latin America on March 1, 2016, Moody's America Latina downgraded Vale S.A.'s ratings to Ba3 from Baa3 in the global scale local currency and to A3.br from Aa1.br in the national scale rating (NSR) and the ratings assigned to the senior unsecured notes (Debentures de Infraestrutura) issued by Vale S.A. VALID S.A.: Fitch Assigns 'BB-' Issuer Default Ratings ------------------------------------------------------ Fitch Ratings has assigned 'BB-' Foreign and Local Currency Long- Term Issuer Default Ratings (IDRs) and an 'AA-(bra)' Long-Term National Scale Rating to Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao S.A. (Valid). The Rating Outlook is Stable. At the same time, the agency has assigned a Long-Term National Scale Rating of 'AA-(bra)' to Valid's senior unsecured debentures in the amount of BRL150 million-BRL200 million, due 2019. Issuance proceeds are for short-term debt refinancing. KEY RATING DRIVERS Fitch said, "Valid's ratings incorporate favorable revenue and cash flow diversification in terms of geographic footprint, services and clients. It also considers the company's position as one of the largest credit card producers in Brazil and as a global supplier of SIM cards. The analysis also considers the company's track record of financial discipline supported by adequate liquidity, elongated debt maturity schedule and low leverage. Fitch expects net adjusted debt/EBITDAR to remain below 2.5x over the next three years. We have also factored in positive free cash flow (FCF) from 2017 on." Fitch said, "ratings concerns are the potentially disruptive technologies, such as mobile payments and embedded SIM cards that could lead to a reduction in revenues. Temporary mismatches in terms of sales price and cost readjustments are also subject of monitoring. The moderate FX exposure and material participation of contracts with public clients in revenues were also factored into our analysis. Exposure to Brazil's adverse macroeconomic environment which has pressured consolidated results was also considered. These risks are somewhat mitigated by Valid's favorable historical operational performance, aided by long-term relationships with clients and adequate strategy for incorporating new technologies in its portfolio." The ongoing growth in international operations as a result of the latest acquisitions is also positive for Valid's credit profile. Fitch expects the company to gradually improve its capital structure driven by expansion of operating margins and the synergy gains from the recently acquired businesses. Diversified Service and Client Portfolio Valid's credit profile benefits from the diverse range of services it provides and geographical diversification that partially diminishes the risks from a downturn in a specific market. The company's diverse client base is also noted as a positive. As of the LTM ended March 31, 2016, Valid's top five clients represented 20% of revenues, with the largest client contributing with only 7%. Valid produces magnetic and chip-based credit cards and prints IDs and drivers' licenses, as well as other documents. It is also the sixth largest global producer of SIM cards for mobile devices and provides digital certification. The company has plants in seven countries serving clients in several nations, accounting for 53% of revenues generated in Brazil in first quarter 2016 (1Q16). The company's business volume is subject to macroeconomic volatility in services such as credit card production and drivers' license issuance. The SIM card manufacturing segment carries the risks associated with regulatory changes in the telecom sector. Low Leverage to Remain Fitch estimates Valid's net adjusted leverage to remain below 2.5x over the next three years as the company develops its operations and benefits from gains in scale and synergies. As of the LTM ended March 31, 2016, the ratios of total adjusted debt/EBITDAR and net adjusted debt/EBITDAR reached 3.0x and 2.4x, respectively. Net adjusted leverage saw only moderate growth compared to 2.2x in 2015 and 1.8x in 2014, due to pressure on margins as a result of lower volume in Brazil and non-recurring items related to capacity adjustments and severance payments. Positive FCF from 2017 On Fitch believes Valid will report negative FCF in 2016 and positive FCF from 2017 on supported by moderate capex and revenue expansion. The company's robust cash flow from operations (CFFO) should resume its growth trend starting in 2017, after a moderate reduction in 2016. As of the LTM ended March 2016, Valid reported CFFO of BRL175 million, pressured by lower volumes in Brazil and non-recurring items related to capacity adjustments. Nevertheless, CFFO was enough to cover capex of BRL111 million and dividends of BRL62 million, leading to FCF of BRL2 million. Manageable FX Exposure Fitch considers Valid's international footprint as a mitigant to FX exposure on its costs and debt. The company has supported its international expansion since 2012, which reached 53% of total revenues generated abroad during the 1Q16. At the same time, 59% of Valid's total debt and 54% of its costs and expenses were U.S.- dollar denominated. The international expansion has also helped to partially offset the macroeconomic deceleration in regions such as Brazil over the past two to three years. Fitch estimates that a 10% depreciation in the BRL would raise Valid's net leverage by 0.1x. Disruptive Technologies Risks Fitch sees new technologies as the main threat to Valid's current businesses. The company's favorable track record in reshaping its services to clients' demand and in incorporating new technologies through acquisitions partially mitigates this risk. Valid's business profile benefits from its proven track record of successfully acquiring and integrating a myriad of companies since 2007, which has led to business expansion, increased geographic footprint, and the addition of services-provision capacity to its portfolio. Costs and Revenue Mismatch Fitch sees the timing mismatch of cost and revenue readjustments as a negative aspect of Valid's important identification business segment, which represents around 50% of its EBITDA. This specific business is labor intensive, with collective-wage adjustments with unions in Brazil typically at the beginning of the year, while contracts are adjusted throughout the year. Such features could pressure EBITDAR margins particularly during times of high cost inflation. In the LTM ended March 2016, net revenues of BRL1.7 billion and EBITDAR of BRL328 million represented an EBITDAR margin of 19.1% KEY ASSUMPTIONS -- Revenue growth of 18% in 2016 and 9% in 2017 mainly driven by the incorporation of two acquisitions (Fundamenture and MSC) in 2015; -- EBITDA margins of 15.5% in 2016 and 16.5% in 2017, pressured by the economic slowdown in Brazil and the sale of low value- added SIM cards by Fundamenture; -- No additional acquisitions; -- Dividend pay-out rates slightly above 50%. RATING SENSITIVITIES Future developments that may, individually or collectively, lead to a negative rating action include: -- Net adjusted leverage consistently above 3x; -- Loss of important contracts, leading to a cash flow reduction and deterioration of liquidity; -- Disruptive technologies with faster-than-anticipated adoption, forcing Valid to discontinue a segment or service; -- Cash- to short-term coverage ratio sustaining below 1x. Future developments that may, individually or collectively, lead to a positive rating action include: -- Margin improvements and expansion of hard-currency cash flows could trigger a positive rating action conditioned to a sustained conservative financial profile. LIQUIDITY Fitch believes Valid will maintain an adequate liquidity position over the next three years. On March 31, 2016, the company reported a cash position of BRL215 million that covered the BRL173 million short-term debt at 1.2x, which represented a moderate reduction compared to the 1.5x reported in both 2015 and 2014. The company's financial flexibility has benefited from the satisfactory debt maturity schedule that has historically kept short-term loans below 25% of total debt, evidencing company's commitment to liability management. Total adjusted debt was BRL988 million at the end of 1Q16 and incorporates off-balance-sheet debt of BRL270 million related to the opportunity cost of rental expenses. FULL LIST OF RATING ACTIONS Fitch has assigned the following ratings: -- Foreign Currency Long-Term IDR 'BB-'; -- Local Currency Long-Term IDR 'BB-'; -- National Long Term Rating 'AA-(bra)'; -- BRL200 million unsecured debenture issuance due in June 2019 'AA-(bra)'. The Rating Outlook for the corporate ratings is Stable. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Free Zones' 161,257 Jobs Reveal Robust Sector ----------------------------------------------------------------- Dominican Today reports that Dominican Republic's free zones continue being one of the economy's most robust sectors, accounting for as many as 161,257 direct jobs in 2015. The National Free Zone Council's (CNZFE) latest report says there were 5.2% more jobs last year than the 153,342 in 2014, according to Dominican Today. CNZFE Director Luisa Fernandez said the report shows that garments and textiles continue to create the most direct jobs, with 44,744, or 27.8% of the total, Dominican Today notes. Ms. Fernandez said tobacco and derivatives follow, with 25,293 (15.7%); services 22,929 (14.2%); medicine and pharmacists 19,942 (12.4%), and footwear and its components, 18,140 (11.2%), the report relays. Ms. Fernandez said the sector's exports topped US$5.5 billion during the analyzed period, or a relative growth of 4.8% compared with the same period in 2014, the report notes. As reported in the Troubled Company Reporter-Latin America on Dec. 3, 2015, Fitch Ratings affirmed the Dominican Republic's long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlooks on the long-term IDRs are revised to Positive from Stable. The issue ratings on the Dominican Republic's senior unsecured foreign and local currency bonds are affirmed at 'B+'. The Country Ceiling is affirmed at 'BB-' and the short-term foreign currency IDR at 'B'. ============= J A M A I C A ============= DIGICEL GROUP: Tests Huawei's XG-PON in Jamaica ------------------------------------------------ lightwaveonline.com reports that Huawei said it has collaborated with Digicel Group on a trial of the communications technology vendor's XG-PON equipment in Jamaica. The demonstration took place in Digicel's lab in downtown Kingston and used the operator's new fiber to the home (FTTH) network, according to lightwaveonline.com. The test used Huawei's Multi-Service Single FAN platform. "This was a very exciting trial, and we were blown away by the speeds reached and how simple it is to move to these speeds when the region needs it," said John Suranyi, CEO of Digicel Play Caribbean and Central America, the report relays. "This shows how we can evolve towards multi-gigabit speeds as and when our customers demand it and not only puts Digicel Jamaica head and shoulders above all competition, but also places the region alongside the broadband global power houses such as Singapore and Korea." Digicel Group provides communications and entertainment services in 33 markets in the Caribbean, Central America, and Asia Pacific, the report relays. Over the past 15 years, the company says it has invested more than $5 billion in its infrastructure worldwide, the report discloses. "With the direct correlation between broadband penetration and increased GDP widely accepted, this will help attract inward direct investment and promote economic growth," Mr. Suranyi continued, notes lightwaveonline.com. "To date we have invested over $100 million in our FTTH fiber program in Jamaica and our customers are starting to see the real benefits of our investment." DIGICEL GROUP: Fitch Affirms 'B' Issuer Default Rating ------------------------------------------------------ Fitch Ratings has affirmed the ratings of Digicel Group Limited (DGL) and its subsidiaries Digicel Limited (DL) and Digicel International Finance Limited (DIFL), collectively referred to as 'Digicel' as follows. DGL -- Long-Term Issuer Default Rating (IDR) at 'B'; Stable Outlook; -- $US 2.0 billion 8.25% senior subordinated notes due 2020 at 'B-/RR5'; -- $US 1 billion 7.125% senior unsecured notes due 2022 at 'B-/RR5'. DL -- Long-Term IDR at 'B'; Stable Outlook; -- $US 250 million 7% senior notes due 2020 at 'B/RR4'; -- $US 1.3 billion 6% senior notes due 2021 at 'B/RR4'; -- $US 925 million 6.75% senior notes due 2023 at 'B/RR4'; DIFL -- Long-Term IDR at 'B'; Stable Outlook; -- Senior secured credit facility at 'B+/RR3'. The Rating Outlook is Stable. KEY RATING DRIVERS Digicel's ratings reflect its well-diversified geographical operations with leading market positions, strong network quality, and brand recognition, which have and will continue to enable stable performance and cash flow generation. The ratings are tempered by the company's historically aggressive shareholder returns, high leverage, ongoing FX volatility in some of its key markets, and business concentration in countries with low ratings. Under Fitch's approach to rating entities within a corporate group structure, the IDRs of DGL and its subsidiaries, DL and DIFL, are equal, based on a consolidated group credit profile given the strong strategic and financial linkages. Different rating levels for each entity's debt instruments reflect varying recovery prospects given default according to seniority of the claims. Fitch believes that DIFL's secured credit facility has good recovery prospects under default, reflected in its 'RR3' Recovery Rating, as it is secured by assets of operating subsidiaries. DL's senior unsecured notes are legally and structurally subordinated to DIFL's credit facility, thus it has a lower Recovery Rating of 'RR4', which indicates average recovery prospects. DGL's senior notes are the most junior in rankings as they are subordinated to DL's senior notes, resulting in below- average recovery prospects. That has resulted in the assignment of a 'RR5' Recovery Rating. Stable Performance Beset by FX Digicel has generated stable operating results on a local-currency (LC) basis in the first nine months of fiscal 2016 (9MFY16), ended on March 31, 2016. Fitch expects this trend to continue over the medium term. During the period, the company's constant-currency- based service revenue posted stable growth of 4% underpinned by increasing data revenue supporting average revenue per user (ARPU), and strong growth in 'Other Markets' and non-mobile segments. Its high EBITDA margin, measured by EBITDA to total revenues, remained stable at 41.8%, which compares to 41.4% a year ago, backed by cost control efforts including subsidies despite competitive pressures. (Fitch's EBITDA calculation includes staff costs related to share options.) Subscriber base expansion has remained slow but stable, with the total subscriber base reaching 13.9 million as of December 2015 from 13.8 million a year ago. Negatively, this growth has been largely diluted by ongoing FX volatility in some of its key markets, mainly Haiti, Papua New Guinea, and French West Indies. As a result, the reported service revenues in $US during the 9MFY16 contracted by 2% compared to a year ago. Although the negative FX movement impact in each of the company's operational geographic areas is immaterial given the close revenue-cost currency match, continued local-currency depreciation would weaken the company's ability to service debt obligation, which is mostly denominated in $US in the absence of any FX hedging. Negative FCF to Reverse Fitch forecasts Digicel's FCF generation to turn positive from FY17 backed by lower capex in the absence of dividend payments. Digicel's FCF has remained in negative territory in recent years mainly due to high capex for fiber network investments. The company's capex soared to $US552 million and $US649 million in FY14 and FY15, respectively, from just $US361 million in FY13, with the capital intensity ratio, measured by capex-to-sales, rising to above 20% compared to just 13% during the same period. Capex remained high at $US469 million during the 9MFY16, with the capital intensity ratio hovering at around 22%, resulting in continued negative FCF given CFFO of just $US317 million. This trend is likely to reverse from FY17 and onwards as major investments for fiber is mostly completed in main markets. As such, Fitch forecasts Digicel's capex to decline to around $US450 million in FY17 and further down to below $US400 million in FY18, which is more in line with the previous level before major fiber deployment. In addition, Fitch believes that the company will continue to refrain from any sizable shareholder distribution in the short to medium term to shore up its cash position. This will enable the company to return to positive FCF generation and help support modest deleveraging over the medium term. High Leverage Digicel's leverage is high, which is incorporated in its 'B' rating level. The company's leverage has been gradually trending up driven mainly by a combination of high capex and dividends while its EBITDA growth has been relatively flat, in part due to negative FX impact. Digicel's consolidated gross debt amounted to $US6.4 billion as of Dec. 31, 2015, which unfavorably compares to $US4.9 billion at end-FY12, while EBITDAR remained at around $US1.2 billion during those years, resulting in high gross and net leverage of 5.7x and 5.5x, respectively. Positively, Fitch forecasts these ratios to gradually fall, backed by positive FCF generation from FY17. Positive Revenue Diversification Ongoing revenue diversification away from traditional mobile voice is positive as the revenue proportion of mobile voice fell to 56% during 9MFY16 from 64% a year ago. The contribution from mobile data should continue to steadily increase over the medium term, mitigating negative pressures on the voice ARPU, which has suffered from competitive pressures and reduced mobile termination rates in some markets. During 9MFY16, data revenues grew by 14% from a year ago on a local currency basis, accounting for 35% of mobile service revenues, driven by a steady increase in smartphone penetration to 41% from 31% a year ago. In addition, Digicel's recent strategic focus on cable and broadband should enable further revenue diversification as it continues to connect more homes on its established networks. The company's total cable RGUs have increased by 127% during the period to 152,000 from 67,000 with the segmental revenues increasing by 200% to $US57 million from $US19 million. Despite marginal EBITDA contribution in the short to medium term, cable and broadband should be a meaningful cash generator in the long term along with business solutions and diaspora segments, of which revenues grew by 25% and 16% during the 9MFY16 compared to a year ago. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Digicel include -- Low-to-mid single-digit annual revenue growth in FY2017 and FY2018; -- EBITDA margin to fall towards 40% over the medium- to long- term; -- Positive FCF generation from FY2017 with reduced capex; -- No dividend payments over the medium term; -- Net leverage to fall to below 5.5x over the medium term. RATING SENSITIVITIES A negative rating action could be considered if consolidated leverage at DGL increases above 6.0x on a sustained basis, due to a combination of competitive pressures, negative FX movement, high capex, sizable acquisitions, and aggressive shareholder distributions. In addition, Digicel's inability to proactively execute refinancing of sizeable bullet maturities in the medium- to long-term could also pressure its credit quality. Conversely, a positive rating action could be considered in the case of a sustained reduction in consolidated gross leverage to 4.0x or below, and material improvement in FCF generation with conservative debt maturities management. LIQUIDITY Digicel's short-term liquidity profile is adequate as the company does not face any sizable debt maturity until FY18, when $US210 million of DIFL loan is amortized, while it held readily- available-cash balance of $US291 million as of December 31, 2015. However, the company's current cash balance is materially lower than its historical levels of at least $US500 million or higher while its debt maturity materially increases to $US629 million in FY19 as the remainder of DIFL facility becomes due. Digicel's failure to return to meaningful FCF generation or successful extension/refinancing of DIFL facility could pressure the ratings over the medium term. =========== P A N A M A =========== BANCO INTERNACIONAL: Moody's Puts ba2 BCA on Review on Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed on review for downgrade the ba2 baseline credit assessment (BCA) of Banco Internacional de Costa Rica (BICSA). The bank's Ba2/Not Prime long and short-term foreign currency deposit ratings, as well as its adjusted BCA and counterparty risk assessments are unaffected by this announcement. This assessment was placed on review for downgrade: Banco Internacional de Costa Rica: Baseline Credit Assessment of ba2 RATIONALE FOR THE REVIEW FOR DOWNGRADE ON THE BASELINE CREDIT ASSESSMENT The review for downgrade on BICSA's ba2 BCA follows a deterioration in the bank's liquidity amid inherently high funding risks. Liquid assets have declined steadily to just 12.5% of total assets as of March 2016, from 21.5% a year earlier, as the bank reduced its holdings of deposits at banks to chiefly grow its loan book. At the same time, the quality of liquid assets has also declined, as cash and bank deposits dropped to just 44% of liquid assets from 73% during the same period; total corporate bonds now accounts for near 40% of the overall investment book. Moody's bank analyst Georges Hatcherian added that "the lower liquidity cushion leaves the bank more exposed to rollover risk given its largely short-term and wholesale funding structure, during a time of heightened market volatility". Hatcherian added that "significant deposit concentration adds to potential funding volatility, with the largest 20 depositors comprising almost half of total deposits". In addition, profitability will continue to be pressured by narrowing net interest margins (NIM), coupled with limited room for efficiency gains in light of the bank's increased investment in information technology systems. BICSA's NIM will continue to be affected by competition and by higher funding costs as dollar rates increase in line with the bank's short term funding. Credit costs are also likely to increase due to BICSA's growth in the decelerating economies of South America, besides the bank's traditional focus on Costa Rica and Panama. The review on the BCA will focus on BICSA's funding and liquidity plans for 2016 and 2017. Moody's will also assess the liquidity of the bank's investment portfolio in a scenario of stress. WHAT COULD CAUSE THE RATINGS TO MOVE DOWN The bank's BCA will likely be lowered if the level of liquidity does not appear likely to improve, or if the review of the investment portfolio indicates that large portions of it are at risk of becoming illiquid in a stress scenario. However, the BCA could be confirmed if the bank presents a credible plan to restore liquidity to more robust levels and the review of the investment portfolio concludes that it is likely to remain highly liquid even in a stress scenario. Even if the BCA is lowered to ba3, BICSA's Ba2 foreign currency deposit rating will not be affected given the high likelihood that Banco de Costa Rica (BCR), BICSA's controlling parent, will provide support to BICSA if necessary. However, BICSA's outlook would be revised to negative in such a scenario, in line with BCR's negative outlook. The last rating action on Banco Internacional de Costa Rica was on June 3, 2015, when Moody's downgraded the bank's deposit rating to Ba2 from Ba1, while it lowered its adjusted BCA to ba2 from ba1. Based in Panama City, Panama, Banco Internacional de Costa Rica is owned by Banco de Costa Rica and Banco Nacional de Costa Rica, with a 51% and 49% of stake, respectively. The bank reported total consolidated assets of about $1.9 billion and shareholders' equity of $208 million as of March 2016. ====================== P U E R T O R I C O ====================== AEROPOSTALE INC: Has Interim OK to Tap $100-Mil. in DIP Loans ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorizes Aeropostale, Inc., to borrow on an interim basis up to $55,000,000 at any time outstanding of the revolving credit loans. The Debtors are also authorized to obtain postpetition financing of up to $160,000,000, comprising of a $75,000,000 term loan and a $85,000,000 revolving credit facility. Pursuant to the Interim DIP Order, the Debtors are allowed to use up to $100,000,000 of the DIP Facility -- inclusive of an aggregate amount of approximately $78,000,000 to repay all outstanding obligations under the Prepetition ABL Credit Agreement on an interim basis -- consisting of up to $55,000,000 at any time outstanding of "Revolving Credit Loans," and up to $45,000,000 of "Term Loans" for the interim period. Use of Proceeds of the DIP Facility is solely for the purposes set forth in the DIP Financing Documents including, inter alia, to pay or fund: (a) Certain costs, fees and expenses related to the Chapter 11 Cases. (b) The repayment of the Prepetition ABL Obligations. (c) The cash collateralization of certain letters of credit as approved by the DIP Agent and the Required Lenders. (d) The cash collateralization of certain outstanding letters of credit issued pursuant to the Prepetition ABL Credit Agreement on the terms set forth in the DIP Credit Agreement. (e) An escrow account for payments on account of any contingent indemnity obligations under the Prepetition ABL Credit Documents, in an amount not to exceed $350,000. (f) The cash collateralization of certain cash management obligations owed to Bank of America, N.A., under the Prepetition ABL Credit Documents in an amount not to exceed $250,000. (g) The cash collateralization of certain cash management obligations owed to Wells Fargo Bank, N.A., under the Prepetition ABL Credit Documents in an amount not to exceed $10,000. (h) the cash collateralization of certain bank product obligations related to credit cards under the Prepetition ABL Credit Documents in the amount set forth in the DIP Credit Agreement The Final Hearing to consider entry of the Final Order and final approval of the DIP Facility will be held on June 2, 2016. A full-text copy of the Interim DIP Order dated May 06, 2016, with Budget is available at https://is.gd/5hazA4 About Aeropostale, Inc. Aeropostale, Inc. is a specialty retailer of casual apparel and accessories, principally serving young women and men through its Aeropostale(R) and Aeropostale Factory(TM) stores and website and 4 to 12 year-olds through its P.S. from Aeropostale stores and website. The Company provides customers with a focused selection of high quality fashion and fashion basic merchandise at compelling values in an exciting and customer friendly store environment. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. As of May 1, 2016 the Company operated 739 Aeropostale(R) stores in 50 states and Puerto Rico, 41 Aeropostale stores in Canada and 25 P.S. from Aeropostale(R) stores in 12 states. In addition, pursuant to various licensing agreements, the Company's licensees currently operate 322 Aeropostale(R) and P.S. from Aeropostale(R) locations in the Middle East, Asia, Europe, and Latin America. Since November 2012, Aeropostale, Inc. has operated GoJane.com, an online women's fashion footwear and apparel retailer. Aeropostale, Inc. and 10 of its affiliates each filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 16-11275) on May 4, 2016. The petitions were signed by Marc G. Schuback as senior vice president, general counsel and secretary. The Debtors listed total assets of $354.38 million and total debts of $390.02 million as of Jan. 30, 2016. The Debtors have hired Weil, Gotshal & Manges LLP as counsel; FTI Consulting, Inc. as restructuring advisor; Stifel, Nicolaus & Company, Inc. and Miller Buckfire & Company LLC as investment bankers; RCS Real Estate Advisors as real estate advisors; Prime Clerk LLC as claims and noticing agent; Stikeman Elliot LLP as Canadian counsel; and Togut, Segal & Segal LLP as conflicts counsel. Judge Sean H. Lane is assigned to the cases. AEROPOSTALE INC: Shareholder Eyes Claims Against Lender Sycamore ---------------------------------------------------------------- Peg Brickley, writing for Daily Bankruptcy Review, reported that Aeropostale Inc. shareholder Aria Partners GP says claims against lender Sycamore Partners could be the best shot backers of the retailer have to make good their losses. According to the report, Sycamore and Aeropostale have been trading accusations over who is to blame for Aeropostale's bankruptcy, a dispute that has dominated the chapter 11 case that began May 4. Swamped with hundreds of millions of dollars in debt, Aeropostale has said it would trim down and survive chapter 11 bankruptcy, despite the market forces arrayed against it, the report related. Mall traffic is down, competition from faster fast-fashion rivals like H&M is up, and Aeropostale is struggling to pay store lease costs that run about $200 million annually, the report further related. If a turnaround is out of the question, Aeropostale hopes to find a buyer for the apparel chain that, as of the end of January, numbered 811 stores, the report noted. More than 150 of those outlets are slated for closure and more may follow, the report further noted. Creditors and shareholders are watching the bankruptcy closely, hoping the company holds value despite the pressures of operating in bankruptcy, the report said. Now a penny stock traded on the over-the-counter market, Aeropostale shares sold for more than $2 per share a year ago, the report added. About Aeropostale, Inc. Aeropostale, Inc. is a specialty retailer of casual apparel and accessories, principally serving young women and men through its Aeropostale(R) and Aeropostale Factory(TM) stores and website and 4 to 12 year-olds through its P.S. from Aeropostale stores and website. The Company provides customers with a focused selection of high quality fashion and fashion basic merchandise at compelling values in an exciting and customer friendly store environment. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. As of May 1, 2016 the Company operated 739 Aeropostale(R) stores in 50 states and Puerto Rico, 41 Aeropostale stores in Canada and 25 P.S. from Aeropostale(R) stores in 12 states. In addition, pursuant to various licensing agreements, the Company's licensees currently operate 322 Aeropostale(R) and P.S. from Aeropostale(R) locations in the Middle East, Asia, Europe, and Latin America. Since November 2012, Aeropostale, Inc. has operated GoJane.com, an online women's fashion footwear and apparel retailer. Aeropostale, Inc. and 10 of its affiliates each filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 16-11275) on May 4, 2016. The petitions were signed by Marc G. Schuback as senior vice president, general counsel and secretary. The Debtors listed total assets of $354.38 million and total debts of $390.02 million as of Jan. 30, 2016. The Debtors have hired Weil, Gotshal & Manges LLP as counsel; FTI Consulting, Inc. as restructuring advisor; Stifel, Nicolaus & Company, Inc. and Miller Buckfire & Company LLC as investment bankers; RCS Real Estate Advisors as real estate advisors; Prime Clerk LLC as claims and noticing agent; Stikeman Elliot LLP as Canadian counsel; and Togut, Segal & Segal LLP as conflicts counsel. Judge Sean H. Lane is assigned to the cases. AEROPOSTALE INC: GA, Tiger Capital to Facilitate Store Closures --------------------------------------------------------------- A joint venture between Great American Group (GA) and Tiger Capital Group on May 12 disclosed that it has partnered with Aeropostale, Inc., a mall-based specialty retailer of casual apparel for young women and men, to facilitate the orderly exit of 113 of its stores and factory outlets across the U.S. These are the same closures announced on May 4, 2016, in conjunction with Aeropostale's voluntary Chapter 11 filings. As previously disclosed, sales at the 113 closing locations began on May 7, 2016 and will last only until the respective stores' merchandise and fixtures have been sold. A list of the closing Aeropostale locations in the U.S. is available at https://brileyfin.leadpages.co/aeropostale-stores/ It continues to be business as usual at all other Aeropostale locations. Great American Group is a provider of advisory and valuation services, asset disposition and auction solutions, and a subsidiary of B. Riley Financial, Inc. Tiger Capital Group provides comprehensive valuations, disposition services, capital infusions, and operational expertise to companies in times of growth, distress or transition. "Our deep history of working with specialty apparel retailers such as Aeropostale has given us the experience to quickly and efficiently exit these locations, and assist Aeropostale in optimizing its store footprint," said Scott Carpenter, President of GA's Retail Solutions division. "This is a rare opportunity for customers to take advantage of significant savings on some of their favorite apparel and accessories," stated Michael McGrail, Chief Operating Officer of Tiger Capital Group. "Following this sale process, Aeropostale shoppers will still find their favorite fashions at over 600 ongoing Aeropostale stores nationwide and at Aeropostale.com." About Aeropostale, Inc. Aeropostale, Inc. is a specialty retailer of casual apparel and accessories, principally serving young women and men through its Aeropostale(R) and Aeropostale Factory(TM) stores and website and 4 to 12 year-olds through its P.S. from Aeropostale stores and website. The Company provides customers with a focused selection of high quality fashion and fashion basic merchandise at compelling values in an exciting and customer friendly store environment. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. As of May 1, 2016 the Company operated 739 Aeropostale(R) stores in 50 states and Puerto Rico, 41 Aeropostale stores in Canada and 25 P.S. from Aeropostale(R) stores in 12 states. In addition, pursuant to various licensing agreements, the Company's licensees currently operate 322 Aeropostale(R) and P.S. from Aeropostale(R) locations in the Middle East, Asia, Europe, and Latin America. Since November 2012, Aeropostale, Inc. has operated GoJane.com, an online women's fashion footwear and apparel retailer. Aeropostale, Inc. and 10 of its affiliates each filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 16-11275) on May 4, 2016. The petitions were signed by Marc G. Schuback as senior vice president, general counsel and secretary. The Debtors listed total assets of $354.38 million and total debts of $390.02 million as of Jan. 30, 2016. The Debtors have hired Weil, Gotshal & Manges LLP as counsel; FTI Consulting, Inc. as restructuring advisor; Stifel, Nicolaus & Company, Inc. and Miller Buckfire & Company LLC as investment bankers; RCS Real Estate Advisors as real estate advisors; Prime Clerk LLC as claims and noticing agent; Stikeman Elliot LLP as Canadian counsel; and Togut, Segal & Segal LLP as conflicts counsel. Judge Sean H. Lane is assigned to the cases. ALLIED FINANCIAL: Sale of Property Doesn't Have Objections ---------------------------------------------------------- Allied Financial, Inc., asks the U.S. Bankruptcy Court for the District of Puerto Rico to approve its motion to sell property as unopposed. The Debtor relates that it had served a copy of its Motion Requesting Order for Sale of Property ("Motion for Sale") to all creditors and parties in interest, including CRIM. The Court gave CRIM 10 days to file an objection, and that no objection has been filed. Allied Financial, Inc., is represented by: Carmen D. Conde Torres, Esq. C. CONDE & ASSOC. San Jose Street #254, 5th Floor San Juan, PR 00901-1253 Telephone: (787)729-2900 Facsimile: (787)729-2203 E-mail: condecarmen@condelaw.com About Allied Financial Allied Financial, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 16-00180) on Jan. 15, 2016. The petition was signed by Rafael Portela, president of the Board of Directors. The Debtor disclosed total assets of $10.3 million and total debts of $9.14 million. C. Conde & Assoc. represents the Debtor as counsel. Mildred Caban Flores has been assigned the case. AMERICAN AGENCIES: 14-Day Extension on CBA Decision Sought ---------------------------------------------------------- American Agencies Co., Inc. and New Steel, Inc. ask the U.S. Bankruptcy Court for the District of Puerto Rico to extend their time to assume or reject their collective bargaining agreement with United Steel Workers, for 14 days. The Debtors aver that they are still negotiating the terms for the termination of the collective bargaining agreement and that additional time is needed in order for the parties to seek an amicable resolution. American Agencies Co. and New Steel are represented by: Carmen D. Conde Torres, Esq. Luisa S. Valle Castro, Esq. C. CONDE & ASSOC. San Jose Street #254, 5th Floor San Juan, PR 00901-1253 Telephone: (787)729-2900 Facsimile: (787)729-2203 E-mail: condecarmen@condelaw.com About American Agencies Co. Puerto Rico-based American Agencies Co., Inc., founded in 1956 by Eng. Jorge A. Rivera Cardona sells and installs steel fabricated structures, along with the sale of doors and hardware. American Agencies operates from leased facilities in Rio Piedras, Puerto Rico. New Steel, Inc., fabricates steel structures that American Agencies sells and installs. American Agencies and New Steel filed Chapter 11 bankruptcy petitions (Bankr. D.P.R. Case Nos. 15-07088 and 15-07090, respectively) on Sept. 15, 2015. The petitions were signed by Omir Mendez, the president. The Debtors cases are substantive consolidated under Lead Case 15-07088. American Agencies disclosed $6,810,695 in assets and $9,738,804 in debt in its schedules. New Steel disclosed $8,429,855 in assets and $12,182,464 in debt in its schedules. Banco Popular de Puerto Rico is the largest secured creditor. The Debtors tapped C. Conde & Associates as counsel; Doris Barroso Vicens, CPA, at RSM ROC & Company, as accountant; Xavier A. Curret from Landa Umpierre, P.S., as external auditor; Moises Avila-Sanchez, Esq., from Avila, Martinez & Hernandez, P.S.C., as special counsel relating to collective bargaining agreements; Jose Julian Alvarez-Maldonado Esq., from the firm Fiddler, Gonzalez & Rodriguez, P.S.C., as special counsel to provide special services in corporate and contractual matters; and Ismael Isern Suarez from I.S. Appraiser Group, P.S.C., as appraiser. ASOCIACION DE PROPIETARIOS: Seeks OK to Hire Biaggi as Accountant ----------------------------------------------------------------- Asociacion De Propietarios Condominio Radio Centro seeks approval from the U.S. Bankruptcy Court in Puerto Rico to hire Asdrubal Delgado Biaggi as its accountant. The Debtor tapped Mr. Biaggi to: (1) assist the Debtor in preparing its monthly reports of operation; (2) prepare financial statements; (3) assist the Debtor in preparing the cash flow projections needed for the disclosure statement; (4) assist the Debtor in financial accounting in connection with the administration of its estate; (5) assist the Debtor in the preparation and filing of federal, state and municipal tax returns. Mr. Biaggi will receive $50 per hour and will receive reimbursement for work-related expenses. In a court filing, Mr. Biaggi disclosed that he does not hold or represent any interest adverse to the Debtor's estate. Mr. Biaggi can be reached through: Asdrubal Delgado Biaggi 3062 Monaco Street Cabo Rojo, PR 00623 Cel: 787-519-1963 Fax: 787-986-7439 E-mail: vipblock@hotmail.com The Debtor can be reached through: Gloria Justiniano Irizarry, Esq. Justiniano's Law Office Ensanche Martinez Calle A. Ramirez Silva #8 Mayaguez, PR 00680-4714 Email: justinianolaw@gmail.com About Asociacion De Propietarios Asociacion De Propietarios Condominio Radio Centro sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 16-03291) on April 27, 2016. The Debtor is represented by Gloria Justiniano Irizarry, Esq., at Justiniano's Law Office. DORAL FINANCIAL: Settles UMB Claim for $16-Mil. ----------------------------------------------- Doral Financial Corp. and the Official Committee of Unsecured Creditors jointly ask the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement agreement with UMB Bank, N.A., in its capacity as indenture trustee. The Settlement Agreement is the result of a good faith and arm's-length discussion among the parties and provides for the resolution of the parties' disputes regarding the amount of the Claim and UMB's entitlement to prepayment or liquidated damages, interest, fees, and other expenses. The Settlement Agreement provides that UMB will have an allowed claim against the Debtor of $16,000,000 and that the Debtor and UMB will provide mutual releases. The Committee and the Debtor believe that the requirements of Rule 9019 are satisfied because the Settlement Agreement, including the mutual releases therein, are fair, equitable, and reasonable given the issues involved and the potential burden to the estate deriving from litigation. The Debtor's and the Committee's professionals worked together to assess the Debtor's rights and obligations with respect to the Claim and the Loan Guaranty. Based on this analysis, the Debtor and the Committee believe that the benefits to be received in an immediate settlement via the Settlement Agreement far outweigh the complexities, uncertainties, and costs of litigating the Claim with UMB. And while the Settlement Agreement contemplates the release of the former and current officers or directors of the Debtor by UMB, thereby eliminating the risk of indemnification or contribution claims by such parties against the estate if UMB were to bring claims against such parties, the Settlement Agreement does not contemplate any release of the officers or directors by the Debtor, the estate, or the Committee. Doral Financial Corp. is represented by: Mark I. Bane, Esq. ROPES & GRAY LLP 1211 Avenue of the Americas New York, NY 10036-8704 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 Email: mark.bane@ropesgray.com -- and -- James A. Wright III, Esq. Prudential Tower 800 Boylston Street Boston, MA 02199-3600 Telephone: (617) 951-7000 Facsimile: (617) 951-7050 Email: james.wright@ropesgray.com Official Committee of Unsecured Creditors is represented by: Brian D. Pfeiffer SCHULTE ROTH & ZABEL LLP Taejin Kim 919 Third Avenue New York, NY 10022 Telephone: (212) 756-2000 Facsimile: (212) 593-5955 Email: brian.pfeiffer@srz.com tae.kim@srz.com About Doral Financial Corp. Doral Financial Corp. (the "DFC") is a holding company whose primary operating asset was equity in Doral Bank. DFC maintains offices in New York City, Coral Gables, Florida and San Juan, Puerto Rico. The company has three wholly-owned subsidiaries: Doral Properties, Inc., Doral Insurance Agency, LLC, and Doral Recovery, Inc. On Feb. 27, 2015, regulators placed Doral Bank into receivership and named the Federal Deposit Insurance Corp. as receiver. Doral Bank served customers through 26 branches located in New York, Florida, and Puerto Rico. DFC sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 15-10573) in Manhattan on March 11, 2015. The case is assigned to Judge Shelley C. Chapman. It estimated $50 million to $100 million in assets and $100 million to $500 million in debt as of the bankruptcy filing. ESTEBAN BEAUTY: Seeks Approval to Hire Lozada as Legal Counsel -------------------------------------------------------------- Esteban Beauty Distributor Corp. seeks approval from the U.S. Bankruptcy Court in Puerto Rico to hire Lozada Law & Associates, LLC as its legal counsel. Maria Soledad Lozada-Figueroa, Esq., the primary attorney tasked to provide the services, will receive $200 per hour and will be reimbursed by the Debtor for work-related expenses. Other Lozada professionals will also provide services to the Debtor as needed. The hourly rate for partners or associates is $150 while the hourly rate for paralegals is $75. In a court filing, Ms. Figueroa disclosed that her firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Mar-a Soledad Lozada-Figueroa Lozada Law & Associates, LLC PO Box 9023888 San Juan, P.R. 00902-3888 Phone: (787) 200-0673 Cel: (787) 533-1400 Email: msl@lozadalaw.com About Esteban Beauty Esteban Beauty Distributor Corp. sought protection under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Puerto Rico (Case No. 16-03796) on May 11, 2016. MORGANS HOTEL: Stockholders Elect 9 Directors --------------------------------------------- Morgans Hotel Group Co. held its 2016 annual meeting of stockholders on May 12, 2016, at which the stockholders: (a) elected Andrew Broad, Kenneth E. Cruse, John J. Dougherty, Jason T. Kalisman, Howard M. Lorber, Bradford B. Nugent, Michael E. Olshan, Michelle S. Russo and Adam Stein as directors for one-year terms expiring when their successors are duly elected and qualified; (b) ratified the appointment of BDO USA, LLP as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2016; and (c) approved, by a non-binding, advisory vote, the compensation paid to the Company's named executive officers. About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. Morgans Hotel reported net income attributable to common stockholders of $5.45 million on $220 million of total revenues for the year ended Dec. 31, 2015, compared to a net loss attributable to common stockholders of $66.6 million on $234 million of total revenues for the year ended Dec. 31, 2014. As of March 31, 2016, Morgans Hotel had $518.02 million in total assets, $736.75 million in total liabilities and a total deficit of $218.73 million. ================================ T R I N I D A D & T O B A G O ================================ REPSOL SA: Wins Block Offshore Barbados --------------------------------------- Trinidad Express reports that a second multinational oil and gas producer with major operations in Trinidad and Tobago has secured an offshore block for exploration and production in neighbouring Barbados. Out of Barbados' 2015 offshore licensing bid round, Spain's Repsol SA emerged winner of the Black Belly Offshore Block, according to a May 10 Barbados government statement, reports Trinidad Express. Australia's BHP Billiton was awarded two offshore blocks, Carlisle Bay and Bimshire in April last year, the report notes. The Black Belly block, near the island's maritime border with St Vincent and the Grenadines and St Lucia, covers an area of 2,479 square kilometres (sq km) off Barbados' northwest coast, the report relays. Prime Minister Freundel Stuart said the award of the Black Belly Offshore Block to Repsol SA, represents "another bold step'" in Barbados' journey towards realising its offshore petroleum potential, the report discloses. As reported in the Troubled Company Reporter-Europe on May 3, 2016, Egan-Jones Ratings Agency downgraded the local currency and foreign currency senior unsecured ratings on debt issued by Repsol SA to B+ from BB- on April 29, 2016. TRINIDAD AND TOBAGO ELECTRICITY: Faces Billions of Debts -------------------------------------------------------- Trinidad Express reports that Trinidad and Tobago Electricity Commission (T&TEC), the sole power distribution company in the country, has been mired in debt with no way of extricating itself except by Government handouts. Permanent Secretary in the Ministry of Public Utilities, Vishnu Dhanpaul, told Parliament's Public Administration and Appropriations Committee (PAAC) that T&TEC owed some TT$8 billion to, among others, Government (TT$2.5 billion in "advances"), the National Gas Company (NGC--$2.4 billion for supply of natural gas) and TT$1.6 billion to Trinidad Generation Unlimited (TGU-for power purchased under the take-or-pay agreement), according to Trinidad Express. ================= V E N E Z U E L A ================= VENEZUELA: Antigua & Barbuda Consultant Suggests to Cut Ties ------------------------------------------------------------ The Daily Observer reports that a management and development consultant has suggested that it is time for the region to sever ties with Venezuela. Melanius Alphonse said the current political unrest in Venezuela will have dire economic consequences on the chain of islands that make up the Caribbean, according to The Daily Observer. "If is better if we can cut our losses right now," the report quoted Mr. Alphonse as saying. According to the social commentator, the social, political and economic demise of Venezuela has already happened and the Caribbean could "find itself in a lot of trouble" if it does not cut loose now, the report notes. Over the past few years, Venezuela has stretched its hands out to provide various forms of assistance to many countries in the region, the report relays. Antigua & Barbuda is tied to that country through the Petro Caribe Agreement, as well as other pledges to help the twin island state with housing and other infrastructure, the report says. Venezuela has also invested in the West Indies Oil Company Limited (WIOC), the report notes. Mr. Alphonse also noted unless the prices of oil increases over the next year or so funding for many of these social program in the region will dry up, the report relays. "Where is the money going to come from? Venezuela is broke. They hardly have the money for food, How are they going to give us 2,000 houses in five years? How are they going to pay for our oil," Mr. Alphonse queried, adds the report. As reported in the Troubled Company Reporter-Latin America on March 8, 2016, Moody's Investors Service has affirmed Venezuela's Caa3 issuer and government bond ratings and changed the outlook to negative from stable. The government's senior secured and senior unsecured government bond ratings were affirmed at Caa3, as were the senior unsecured shelf and MTN program ratings at (P)Caa3. ================= X X X X X X X X X ================= LATAM: Need More Autonomy to Manage Their Own Taxes, IDB Says ------------------------------------------------------------- Giving state and city governments in Latin America more autonomy to manage their own sources of tax revenue could promote greater local development and efficiency, according to a new study by the Inter-American Development Bank (IDB). The study, Decentralizing Revenue in Latin America: Why and How, shows that Latin American countries lag other emerging economies and members of the Organization for Economic Co-operation and Development (OECD) in terms of tax revenue decentralization. Local revenues cover only about 30 percent of total spending among sub-national governments in Latin America, compared with about 60 percent for OECD countries and 75 percent for emerging economies in Asia. Currently, Latin American sub-national governments rely heavily on central government transfers to finance their spending. Such transfers can vary widely and unpredictably, undermining local authorities' ability to prepare more stable and realistic budgets. "By giving local authorities more autonomy to manage their tax revenues, countries could increase the availability of resources to finance investments that actually improve people's lives," said Vicente Fretes Cibils, IDB Division Chief of Fiscal and Municipal Management. The study analyzed seven countries -- Argentina, Bolivia, Brazil, Colombia, Mexico, Peru and Venezuela -- finding that several factors hold back fiscal decentralization. Among the main ones are a lack of local institutional capacity to manage taxes properly and political constraints that prompt central governments to exercise greater control over local authorities. "Central governments are often the biggest obstacle to decentralization because they fear they will lose fiscal control, political bargaining power and bureaucratic influence," Fretes Cibils said. "While this may be true in many situations, it is critical for countries to recognize the positive impact revenue decentralization can have on the quality of public goods and services." According to Fretes Cibils, "greater fiscal decentralization would allow state and municipal governments to better allocate resources to meet local needs while making governors and mayors more accountable for their spending because taxpayers can more easily track what they are doing". The study advises countries to consider a range of policies to increase the ability of local governments to manage and generate their own sources of tax revenue and reduce their reliance on central government transfers: Allow sub-national governments to implement surcharges to already existing national taxes, such as on value added or retail sales taxes. Support initiatives to help local governments to increase property tax revenue. Create incentives for sub-national governments to seek local sources of fiscal revenue, while weighing the political impact of imposing heavier tax burdens. Implement reforms to improve transfers to ensure they align with local needs and the capacity by sub-national governments to raise their own taxes. Implement policy and administrative reforms to give sub-national government greater autonomy to manage their tax revenue. *********** 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. * * * End of Transmission * * *