/raid1/www/Hosts/bankrupt/TCRLA_Public/161103.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, November 3, 2016, Vol. 17, No. 218
Headlines
A R G E N T I N A
ELECTROINGENIERIA SA: Moody's Lowers CFR to Caa2, Outlook Negative
ENTRE RIOS PROVINCE: S&P Assigns 'B-' ICRs, Outlook Stable
PROVINCE OF MISIONES: Moody's Assigns B3 Issuer Ratings
B O L I V I A
CREDISEGURO SA: Moody's Withdraws B1 Local Currency IFS Rating
B R A Z I L
BANCO MODAL: Moody's Affirms B1 Currency Deposit Rating
BRAZIL: Amnesty Program Collects $15.8 Billion in Taxes and Fines
JBS USA: S&P Affirms 'BB' Corporate Credit Ratings
SANTA CATARINA: Fitch Affirms 'BB' Long Term Issuer Default Rating
SAO PAULO: Fitch Affirms 'BB' LT Issuer Default Rating
C A Y M A N I S L A N D S
BLACKSTONE ABS: Commences Liquidation Proceedings
CHINA FISHERY: Bid for Appointment of Ch. 11 Trustee Granted
ERFRA II: Commences Liquidation Proceedings
ERFRA DEAL: Commences Liquidation Proceedings
IBERLEASING 2000-1: Commences Liquidation Proceedings
MAC INVESTMENTS: Commences Liquidation Proceedings
NYK FINANCE: Commences Liquidation Proceedings
OPTIMAL JAPAN: Commences Liquidation Proceedings
QORVO CAYMAN: Commences Liquidation Proceedings
VECTORIS SPC: Commences Liquidation Proceedings
VENTURE III: Commences Liquidation Proceedings
C O L O M B I A
TECNOGLASS INC: Moody's Assigns Ba3 CFR, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Sediment Chokes Icon Dam, Agency Warns
DOMINICAN REPUBLIC: Bank Raises Overnight Rate From 5% to 5.50%
G U A T E M A L A
CEMENTOS PROGRESO: S&P Affirms 'BB' CCR & Revises Outlook to Neg.
M E X I C O
SIXSIGMA NETWORKS: S&P Affirms 'B+' CCR, Outlook Remains Stable
P E R U
ANDINO INVESTMENT: S&P Affirms 'B' Ratings; Outlook Negative
T R I N I D A D & T O B A G O
TRINIDAD CEMENT: Revenue Declines 18% at 2016 3rd Quarter
V E N E Z U E L A
VENEZUELA: Begins Talks With Divided Opposition
X X X X X X X X X
GUVERA LATAM: Fails to Pay Severance Fee to Staff
- - - - -
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A R G E N T I N A
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ELECTROINGENIERIA SA: Moody's Lowers CFR to Caa2, Outlook Negative
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Moody's Latin America Agente de Calificacion de Riesgo has
downgraded the rating of Electroingenieria S.A. (EISA)'s senior
unsecured notes and its corporate family rating to Caa2 from Caa1
in the global scale and to B3.ar from Ba1.ar in the national
scale. The outlook on the ratings was changed to negative from
stable.
Approximately $26 million (ARS400 million) in rated debt
instruments affected.
RATINGS RATIONALE
The downgrade to Caa2/B3.ar reflects EISA's weakened credit
metrics and increased liquidity risk, mainly as a consequence of
projects delays during the last year. The liquidity profile of
the company has significantly deteriorated during 2016, resulting
in an increased reliance on external sources of financing to cover
basic capital expenditures requirements and higher refinancing
risk for the company's short term liabilities. Moody's expects
EISA's liquidity to continue being pressured by working cash
requirements and refinancing needs in the next few quarters.
EISA's main project in its backlog and main cash flow generator,
the Presidente Nestor Kirchner and Gobernador Jorge Cepernic
hydroelectric dams project (66% of total backlog as of September
2016), suffered significant delays over the last year. The delays
are mainly a result of reviews by the new administration of
president Mauricio Macri on the terms and conditions of the
contract, including the contract's price, which ended up with an
addendum finally being signed on Aug. 31, 2016. With negotiations
still in place regarding payments' amounts, the high reliance on
one single project for revenue generation significantly increases
the company's vulnerability to any delays in approval of work
certificates and payments.
EISA is exposed to high refinancing needs of short term
obligations while facing limited internal cash generation. With
total short term debt as adjusted by Moody's of ARS619 million and
cash and marketable securities of ARS47 million as of June 2016,
the ratio of cash to short term debt has deteriorated to 7.6%,
down from 55% as of December 2015. In addition, EISA's leverage
as adjusted by Moody's has increased to 9.9 times, from 4.1 times
as of December 2015, and interest coverage as measured by adjusted
EBITDA to interest expense has deteriorated to 0.3 times, from 0.8
times.
EISA alternative sources of liquidity are very limited. The
company has real estate assets worth ARS134 million as of
June 2016, but the bulk of its assets may not be readily sold
without impairment to value. As a consequence, Moody's believes
that proceeds from potential asset sales would likely be enough to
cover only secured debt, leaving little excess liquidity for the
company.
EISA's Caa2/B3.ar ratings continue to be supported by the
company's high quality backlog of engineering and construction
work, which is expected to support medium and long-term revenue
growth. The main projects in the company's backlog are strategic
for the country's goal of reducing its energy deficit. The
ratings also take into account EISA long track record in large and
complex construction projects and certified capacity to bid.
EISA's ratings are mainly constrained by its small size in
relation to global peers, high leverage and tight liquidity
profile. In addition, the rating is also constrained by EISA's
backlog and revenue concentration in public works in Argentina,
particularly in its hydroelectric division, with exposure to both
the natioanl and provincial levels of government risk. Moody's
views EISA's concentration of revenue generation in the
hydroelectric dams project to be its main driver for cash flow and
margin volatility.
EISA's large backlog includes several strategic projects in the
energy sector, including the construction of two hydroelectric
dams Presidente Nestor Kirchner and Gobernador Jorge Cepernic in
the province of Santa Cruz, and the construction of the Manuel
Belgrano II thermal power plant in the province of Buenos Aires.
Total project backlog as of September 2016 amounted to ARS36,5
billion (approximately $2.4 billion).
The negative outlook on the company's ratings is based on Moody's
expectations that EISA's tight liquidity profile will continue in
the coming quarters as refinancing needs and weak operating
performance continue, leaving the company highly vulnerable to any
adverse development.
The ratings or the outlook could experience upward pressure if
EISA were to increase revenue diversification, with lower exposure
to the public sector in Argentina and increased exposure to public
and private projects of clients with strong credit profile. An
improvement in liquidity, a reduction in leverage, such as
adjusted debt to EBITDA to less than 6.5 times, and interest
coverage (EBITDA/Interest expense) exceeding 1.0 time, on a
sustained basis, could also positively affect the rating.
A rating downgrade could be prompted in case the company fails to
show improvement in operating performance and liquidity metrics or
fails to meet short term financial obligations. The ratings could
also come under downward pressure if there were a material
decrease in public works in Argentina or a deterioration in the
terms of payment from the company's main clients.
Founded in 1977 and based in the city of Cordoba in Argentina,
EISA operates in the engineering, construction, operation and
maintenance of large electromechanical, civil, architectural,
road, sanitation and water works and services. It also engages in
the engineering and construction of power systems, transformer
stations, interconnections and nuclear power plants. As of the
last twelve months ended June 2016, total revenues amounted to ARS
2,0 billion (approximately $169 million).
ENTRE RIOS PROVINCE: S&P Assigns 'B-' ICRs, Outlook Stable
----------------------------------------------------------
S&P Global Ratings assigned its 'B-' foreign and local currency
issuer credit ratings on the province of Entre Rios. The outlook
is stable. S&P also assigned a 'B-' issue-level rating on the
province's senior unsecured notes for up to $250 million. The
amortizing notes will be denominated in dollars, and the province
will use the proceeds to fund infrastructure projects, improve its
debt maturity profile and service debt, and fund loans to its
municipalities.
RATIONALE
The 'B-' ratings and 'b-' stand-alone credit profile (SACP)
reflect the province's individual credit profile and the
institutional framework in which it operates. (SACP is a means of
assessing the intrinsic creditworthiness of Entre Rios under the
assumption that there's no rating cap.) Entre Rios, like all local
and regional governments (LRGs) in Argentina, operates under a
very volatile and underfunded institutional framework. At the
same time, Entre Rios' weak budgetary performance, economy, and
liquidity, and very weak budgetary flexibility are rating
constraints. On the other hand, the province's moderate
contingent liabilities and debt burden support its
creditworthiness.
Overall, S&P doesn't believe the new issuance will hurt the
province's financial profile. Partly resulting in the lack of a
formal debt policy, Entre Rios has had uncertain access to
external financing over the past several years as a result of
market conditions, including the sovereign's default in 2014, and
has mostly relied on short- and medium-term debt to finance its
budget. The limited access to financing and double-digit
inflation have reduced the province's debt to about 30% of
operating revenue in 2015 from 35% in 2013. Nevertheless, S&P
believes that Entre Rios' debt burden will rise to 39% of
operating revenue by 2018, partly as a result of the province's
improved access to international markets, particularly following
the sovereign's cure of its default in May 2016. Under this new
context, the province plans to issue up to $250 million, which
will be the province's first international bond. S&P expects
future international issuances will increase the province's
exposure to exchange rate risk, and given the lack of a formal
debt policy or debt management office, S&P will monitor Entre
Rios' management of this issuance closely. As of June 30, 2016,
the province's debt reached nearly ARP13.2 billion, of which 31%
was denominated in foreign currency. At the same time, Entre Rios
owes approximately 37% of its total debt to the federal
government, 29% to multilateral lending institutions, 23% to
domestic and international banks and other financial institutions,
and 11% to domestic market security holders.
Continuing the Partido Justicialista-leaning Frente Para la
Victoria (FPV) political party's dominance of the province,
Gustavo Eduardo Bordet won gubernatorial election in October 2015.
According to the local law, the governor's party has a majority in
the Provincial House of Deputies, while the Provincial Senate has
a one-seat FPV majority. Nevertheless, political differences in
Entre Rios historically haven't impeded the implementation of
reforms or budget approvals, and the latter has occurred before
the start of the fiscal year over the past decade. All of these
factors reflect a generally strong political consensus across
party lines. While this is the first time in the province's
history that the governor's political party is different from that
of Argentina's president, early indications suggest that the
relationship between both levels of government will be
constructive for the next four years.
S&P believes that the province's political consensus and
continuity through changes in administration, along with its
fiscal transparency that's greater than those of nearly all other
Argentine provinces, lends strength to the provincial
administration. However, certain limitations contribute to S&P's
assessment of an overall weak financial management. In
particular, while Entre Rios has a centralized cash management
system, which consolidates nearly all public-sector entities
except for several provincial hospitals and schools, the province
lacks formal debt or liquidity policies. At the same time,
although the province is working towards implementing a results-
based budgeting process, the current one is incremental in nature.
The province benefits from a consensus to implement reforms, such
as on taxes at the end of 2013 to address the social security
system's deficit. However, structural factors, partly determined
at the sovereign level -- including the very volatile and
underfunded institutional framework given the ongoing
modifications to fiscal regulations, which jeopardize financial
planning -- have hindered the province's ability to address its
fiscal imbalances.
S&P expects Entre Rios to post its second consecutive year of
operating deficits, which S&P expects to reach 2.4% of operating
revenue in 2016, and a wider deficit after capital revenues and
expenditures of 8.2% of total revenue, reflecting the province's
weak budgetary performance and the expected economic downturn this
year amid high inflation. S&P don't expect the gradual drop in
the 15% deduction from the coparticipation funds starting in mid-
2016 to bolster the province's budgetary performance this year.
(The national government originally withheld 15% of those funds to
cover the financing for National Social Security Administration
(ANSES)). This is because S&P expects Entre Rios to receive
additional revenue of just over 1% of its operating revenue in
2016 from this move which will be offset by factors that will
shrink the coparticipation tax revenue pool, including the
economy's likely contraction this year and federal tax reforms.
However, S&P expects the additional revenue from the lower
coparticipation deduction and the likely pickup in economic growth
to improve the province's budgetary performance in the next two
years. Additionally, S&P's base-case scenario excludes the
potential positive impact that additional funds from the national
government to finance part of the provincial social security
system's deficit, which S&P expects to reach around 3% of
operating revenue in 2016. However, ANSES has recently audited
the province's social security system to move towards such
financing, which would be a potential upside to S&P's current
forecasts. Entre Rios is one of the provinces that did not
transfer its pension system to the federal government in the
1990s.
Entre Rios' fiscal dependence on the sovereign, particularly for
structural improvements to its budgetary performance, highlights
the province's very weak budgetary flexibility, in S&P's opinion.
S&P believes Entre Rios' fiscal burden is average compared to its
closest provincial neighbors, while its own-source revenue has
reached nearly 49% of operating revenue in 2015 following the 2013
tax reform. However, S&P believes that its dependence on the
federal government for a majority of revenue will deepen over the
next couple of years. S&P expects this factor, along with
policies to strengthen industry and tourism amid a likely 1.5%
contraction of economy in 2016, and an estimated provincial GDP
per capita of $12,737, to limit the province's ability to raise
its own revenue. At the same time, although Entre Rios' capital
spending, which S&P expects to average 12.6% of total spending for
the next three years, is higher than that of some other Argentine
LRGs, this partly reflects the province's underdeveloped
infrastructure, making it difficult to sharply cut this spending
in the future. Additionally, double-digit inflation and ongoing
demands for public servants' salary increases, following the
province's granting of an 18% nominal rise in the public-sector
employee wages in March and additional 10% and 3% increases
effective in July and October, respectively, limit Entre Rios'
spending flexibility and predictability, in S&P's opinion.
S&P believes Entre Rios has moderate contingent liabilities. The
province incorporates 13 decentralized entities' finances in its
budget -- including several ports, a university, and an energy
regulator. The 11 province-owned companies, whose finances are
excluded from the budget, include an electricity distribution
company, a gas company, and an insurance company.
Liquidity
Entre Rios' liquidity is weak, in S&P's opinion. After including
S&P's expectation for the province's internal cash flow generation
for the next 12 months, which incorporates a deficit after capital
revenues and spending before interest payments, S&P don't believe
that the province has any free cash or liquid assets (cash and
assets that aren't required to meet daily operating needs or
planned capital costs) to cover its debt service during the same
period. S&P expects the latter to reach close to ARP6 billion, of
which it estimates that about half is due to financial
institutions and domestic market security holders, 6% to the
federal government and 4% to multilateral lending institutions.
Nevertheless, S&P believes that the province will be able to meet
its debt service obligations using internal and external cash flow
generation capabilities. At the same time, despite S&P's
expectation that the province will issue up to $250 million in
international capital markets in 2016, which should help to
improve its otherwise short-term debt maturity profile and ease
liquidity needs, S&P believes that Entre Rios' access to external
liquidity will remain uncertain largely because of S&P's
evaluation of the ongoing development of the domestic capital
markets in Argentina as well as S&P's assessment of the domestic
banking system. For the latter, S&P's Banking Industry Country
Risk Assessment (BICRA) is at group '9'. S&P's BICRAs, which
evaluate and compare global banking systems, are grouped on a
scale from '1' to '10' ranging from what S&P views as the lowest-
risk banking systems (group '1') to the highest-risk (group '10').
Although Entre Rios currently doesn't have outstanding
international bonds, it faces quarterly capital payments on its
ARP1.4 billion outstanding in domestic securities, of which
ARP381 million are dollar denominated. The province doesn't have
a strictly committed credit line with a commercial bank, but a 30-
day lending facility--Fondo Unificado Comun--from the provincial
bank, Nuevo Banco de Entre Rios. As of June 30, 2016, the
province had ARP1.4 billion outstanding under this credit
facility, which is consolidated in its debt.
OUTLOOK
The stable outlook on Entre Rios mirrors the one on the sovereign.
Given that S&P doesn't believe that the province could meet the
conditions to have a higher rating than the sovereign, S&P would
only consider raising its ratings on the province in the next 12
months if S&P was to raise Argentina's foreign and local currency
ratings, along with the transfer and convertibility assessment
(T&C). Such an upgrade would have to be accompanied by the
development of more formal debt and liquidity policies, including
clearly defined targets, as well as improved budgetary flexibility
or consistently stronger budgetary performance in the form of
operating surpluses greater than 5%. At the same time, structural
improvements in the institutional framework, in which the province
operates, could help strengthen its creditworthiness. On the
other hand, S&P could lower the ratings on Entre Rios during the
same period if Argentina's T&C assessment weakens, if S&P was to
lower the sovereign local or foreign currency ratings, or if S&P
perceives that the province's financial commitments are
unsustainable, or that Entre Rios faces a near-term payment
crisis.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.
RATINGS LIST
New Rating
Entre Rios (Province of)
Issuer Credit Rating B-/Stable/--
Senior Unsecured B-
PROVINCE OF MISIONES: Moody's Assigns B3 Issuer Ratings
-------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo assigned
first-time issuer ratings of B3 (Global Scale, local currency) and
Baa3.ar (Argentina National Scale, local currency) to the Province
of Misiones. In the same rating action, Moody's has assigned B3
and Baa3.ar ratings on Global/National scales in local currency
respectively to the proposed ARS1,015.1 million Senior Unsecured
Notes to be issued by this Province. The rating outlook on
Misiones's ratings is stable, in line with the stable outlook of
the Argentine Government given the strong macroeconomic and
financial linkages with the sovereign.
RATINGS RATIONALE
The B3/Baa3.ar issuer and debt ratings assigned to the Province of
Misiones and to its proposed Notes, reflect the following key
credit strengths: an adequate economic base, low current and
expected debt level -- with a very low exposure to foreign
exchange obligations -- and the record of sustained operating
surpluses. First of all, Misiones shows relatively strong economic
fundamentals as the richest province in the Northern east region
of Argentina -- its per capita GDP reached the country's national
level for 2014 -- and with an adequate diversification by economic
activity. Secondly, Misiones's debt to total revenues declined
from 51% in 2010 to a projected 16% for the end of current fiscal
year, which is a very low debt level compared to peers. This debt
profile is further strengthened by the province's limited exposure
to foreign currency obligations of only 8% of total. Finally,
Misiones gross operating surplus averaged almost 13% during the
last five fiscal years -which is still a relatively strong level-,
albeit declining to 6.8% of 2015 fiscal year from 18% of 2010.
On the credit challenges, Moody's mainly points out Misiones's
sustained cash financing deficits, which have been very high
especially during 2013 and 2015 fiscal years, accounting to 10 and
13.5% of its total revenues respectively. In addition, and like
in the case of other provinces in Argentina, the intrinsic credit
strengths of the Province of Misiones are constrained by the lack
of consistent and predictable policies at the national level which
affect the institutional framework under which the province
operates and, in Moody's view, anchors its credit quality to that
of the Sovereign.
Commenting on the assignment of debt ratings to the planned
ARS1,015.1 million Notes in particular, Moody's said that the
B3/Baa3.ar ratings are in line with Misiones's issuer ratings
because these Notes do not count with any special credit
enhancement that differentiate them from the general solvency of
the Province reflected in its issuer ratings. Moody's went on to
say that the projected debt services does not represent an
important financial burden for this province given the 2 years of
grace period for principal payments. The proposed Notes were
authorized by Governor's Decree Nß1.183 of 2016, will have a
maturity of 15 years and amortize in 156 monthly payments since
the end of the 25th month. The province of Misiones will exchange
these new bonds for the outstanding amount of TMPS and TMPJ Notes
which are in default since June of 2003. In this proposed debt
exchange, Moody's expects the acceptance of bondholders that
represent the majority of the outstanding principal of the
mentioned bonds.
Finally, Moody's said that the still pending resolution of the
default status of some of Misiones outstanding bonds (called
"CEMIS" Series 1,2 &3) is a negative credit consideration but it
will not exert a negative impact in the province's financial
profile going forward because they represent a declining 7% of its
total debt as of June 2016 and less than 1% of its total revenues
budgeted for 2016 fiscal year.
The assigned ratings included in this rating action are based on
preliminary documentation received by Moody's as of the rating
assignment date. Moody's does not expect changes to the
documentation reviewed over this period nor anticipates changes in
the main conditions that the Notes will carry. Should issuance
conditions and/or final documentation and/or execution and
effective issuance of the above mentioned Bonds exchange deviate
from the original ones submitted and reviewed by the rating agency
and/or do not materialize in the effective exchange of the
outstanding TMPS and TMPJ Bonds, Moody's will assess the impact
that these differences may have on the ratings and act
accordingly.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Given the strong macroeconomic and financial linkages between the
sovereign and sub-sovereign entities, an upgrade or an outlook
change to positive of Argentina's sovereign bonds ratings could
lead to an upgrade or to an outlook change of the Province of
Misiones ratings. Conversely, a downgrade in Argentina's bond
ratings or outlook change to negative and/or deterioration in the
idiosyncratic risk profile arising in this Province could exert
downward pressure on the ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2013.
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B O L I V I A
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CREDISEGURO SA: Moody's Withdraws B1 Local Currency IFS Rating
--------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo S.A. has
withdrawn the B1 global local currency and A1.bo Bolivia national
scale insurance financial strength (IFS) ratings of Crediseguro
S.A. Seguros Personales.
Moody's has withdrawn the rating for its own business reasons.
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B R A Z I L
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BANCO MODAL: Moody's Affirms B1 Currency Deposit Rating
-------------------------------------------------------
Moody's Investors Service upgraded the long-term Brazilian
national scale deposit ratings to Baa2.br from Baa3.br. At the
same time, Moody's affirmed Modal's short-term Brazilian national
scale deposit rating of BR-3; the long-term local and foreign
currency deposit ratings of B1; and its short-term local and
foreign currency deposit ratings of 'Not Prime'. Moody's also
affirmed the baseline credit assessment (BCA) and adjusted BCA of
b1; and the long- and short-term counterparty risk assessments of
Ba3(cr) and Not Prime(cr), respectively. The outlook remains
stable.
These ratings of Banco Modal S.A. were upgraded:
Long-term Brazilian national scale deposit rating to Baa2.br,
from Baa3.br
These ratings and assessments of Banco Modal S.A. were affirmed:
Short-term Brazilian national scale deposit rating of BR-3
Long-term global local currency deposit rating of B1; stable
outlook
Short-term global local currency deposit rating of Not Prime
Long-term foreign currency deposit rating of B1; stable outlook
Short-term foreign currency deposit rating of Not Prime
Baseline credit assessment of b1
Adjusted baseline credit assessment of b1
Long-term counterparty risk assessment of Ba3(cr)
Short-term counterparty risk assessment of Not Prime(cr)
Outlook Actions:
Outlook, Remains Stable
RATINGS RATIONALE
In affirming Modal's global scale ratings and upgrading the
Brazilian national scale rating, Moody's acknowledges Modal's
enhanced loss absorption capacity following the conversion of its
Tier 2 debt into common equity that took place in March 2016. As
a result, Moody's capital measure of tangible common equity (TCE)
to risk-weighted assets improved to 11.1% in June 2016, from 7.6%
in December 2015.
Moody's also notes that Modal's profitability is showing signs of
improvement after recording net losses in 2014. The bank's new
business model, which targets primarily corporate and investment
banking focused on middle market and large infrastructure
companies, as well as asset management, has started to deliver the
benefits that were advertised when the model was initially adopted
in 2012. However, the bank has yet to demonstrate that it can
continue to deliver positive results in a sustainable manner.
After rising to a reasonably healthy 0.8% in 2015 from -0.15% in
2014, the reported net income to tangible assets fell back to 0%
at the conglomerate level, net of minority stakes, in the first
six months of 2016.
At the same time, Moody's acknowledges that the business
environment for investment banking remains challenging and the
bank remains highly exposed to and dependent upon of its merchant
banking investments, the total market value of which exceeded 50%
of the bank's TCE as of June 2016. However, the continued success
and future valuation of these investments is difficult to forecast
with any certainty, as these investments are mostly in non-
financial private companies with limited transparency. Modal's
asset risk could also be impacted by the still adverse environment
for credit risk, particularly considering the high borrower
concentration of its loan portfolio.
Modal has been gradually reducing its reliance on market funds,
confidence-sensitive investors, and deposits taken via third-party
brokers, by increasingly obtaining granular deposits through its
proprietary brokerage platform that was created at the end of
2015. While this unit still represents just a small portion of
its total funding, the bank's continued dependence on market
funding is also partially offset by its large amount of liquid
assets, and the favorable duration of assets versus liabilities.
WHAT COULD MAKE THE RATING GO UP
Modal's ratings could be upgraded if it is able to consistently
improve its profitability and reduce earnings volatility, while
decreasing its exposure to risky merchant investments and
maintaining its capital position around current levels.
WHAT COULD MAKE THE RATING GO DOWN
The bank's ratings could face downward pressure if its recent
improvements to capital and profitability prove unsustainable
and/or the bank encounters problems with its merchant investments.
METHODOLOGIES & LAST RATING ACTION
The principal methodology used in these ratings was Banks
published in January 2016.
The last rating action on Modal was on Sept. 8, 2014, when Moody's
downgraded Modal's long-term global local- and foreign-currency
deposit ratings to B1 from Ba3; and long- and short-term Brazilian
national scale deposit ratings to Baa3.br from A2.br, and to BR-3
from BR-2, respectively. At the same time, Moody's lowered its
baseline credit assessment (BCA) to b1 from ba3. Moody's also
affirmed the short-term global local- and foreign-currency deposit
ratings of Not Prime. The outlook on all ratings remained stable.
Banco Modal S.A. is headquartered in Rio de Janeiro, Brazil. It
reported total assets of BRL2.4 billion ($742.1 million) and
equity of BRL376.2 million ($117.4 million) as of June 30, 2016.
BRAZIL: Amnesty Program Collects $15.8 Billion in Taxes and Fines
-----------------------------------------------------------------
Paulo Trevisani at The Wall Street Journal reports that the
Brazilian government collected BRL50.9 billion (US$15.8 billion)
in taxes and fines under an amnesty program offered to individuals
and corporations with undeclared but legitimate funds parked
overseas, the Finance Ministry said.
By the program's Monday, Oct. 31 deadline, 25,114 individuals and
firms agreed to pay a 15% income tax and a fine equal to taxes
paid, lower than they would have paid without the program, in
exchange for immunity from potential prosecution for tax evasion
and other charges, the ministry said, according to The Wall Street
Journal.
A total of BRL169.9 billion in undeclared offshore assets were
reported under the amnesty program, the ministry said. Under the
program, taxpayers could also avoid paying interest on their
overdue taxes, the report notes.
The extra revenue collected by the government would help the
administration of President Michel Temer meet this year's fiscal
target amid a swelling budget gap and debt load, the report
relays.
The government's target for this year is to have a primary
deficit, which excludes debt payments, of BRL170.5 billion, the
report relays. As of September, the deficit was BRL85.5 billion.
Brazil's central bank said it counted an inflow from abroad of $10
billion through the end of October as a result of the amnesty, the
report relays. Some people used money already in Brazil to pay
their taxes and fines, resulting in some of the difference between
the amount collected by the government and the amount brought
home, the report adds.
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.
JBS USA: S&P Affirms 'BB' Corporate Credit Ratings
--------------------------------------------------
S&P Global Ratings affirmed its 'BB' global scale corporate credit
ratings on JBS and JBS USA Lux S.A. and S&P's 'brAA-' national
scale corporate credit rating on JBS. S&P also affirmed its 'BB'
senior unsecured ratings on JBS and JBS USA. In addition, S&P
raised senior secured debt ratings on JBS USA to 'BBB-' from 'BB'.
S&P revised the recovery rating on this debt to '1', reflecting a
very high (90%-100%) recovery, from '3'. Moreover, S&P revised
its recovery rating on JBS USA's unsecured debt to '3', reflecting
a meaningful (50%-70%; the lower band of the range) recovery, from
'4'. Finally, S&P kept its recovery rating on JBS's unsecured
debt at '4', reflecting an average (30%-50%; now in the lower band
of the range) recovery, unchanged.
The issue-level rating on JBS USA's secured debt (comprising of
term loans) follows S&P's revised approach to the value of the
collateral package in a default scenario under an EBITDA multiple
valuation approach, which S&P believes better reflects the
characteristics of such a scenario. S&P is now giving the full
benefit of the value of the security package, while S&P previously
used to stress its value in a default scenario. In addition, S&P
is performing two separate valuations for JBS and JBS USA because
it believes that secured creditors' claims of the group's U.S.
subsidiaries won't be consolidated with Brazilian claims in a
scenario of JBS's default. Therefore, creditors would be able to
fully enforce their claims in the U.S.
The corporate and unsecured debt ratings affirmation reflects
S&P's expectation of an improvement in JBS' consolidated margins
and cash flows amid better conditions in the U.S. beef market and
the group's resilient U.S. pork and poultry and its Mercosul beef
operations. However, still high grain prices in Brazil should
continue keep margins of the Seara subsidiary at below 10%.
Moreover, while weaker global prices for meat prevent JBS's free
operating cash flow (FOCF) from improving this year, S&P believes
the group could maintain consolidated margins above 7% in 2017 and
improve its liquidity position with gradual incremental cash
flows.
On Oct. 25, 2016, JBS' minority shareholder -- Banco Nacional de
Desenvolvimento Economico (BNDES) -- vetoed the group's
reorganization proposal. Although, in S&P's view, this event is
credit neutral because the reorganization wouldn't change asset or
cash flow allocation, the veto underscores a balanced power
arrangement among JBS shareholders, supporting S&P's de-linkage
approach of the ratings of JBS from those of its majority owner
J&F Investimentos S.A. (B+/Stable/--). S&P expects to maintain
this approach at least through 2019 when the shareholders
agreement expires.
S&P expects JBS's operating efficiency to recover in 2017 thanks
to the decrease in raw material prices (grain in Brazil, cattle in
Brazil and the U.S., and hogs in the U.S.) as the grain harvest
approaches and amid higher cattle availability, as well as from
the opening of new markets for Brazilian beef (China, Saudi
Arabia, and more recently, the U.S.). However, the stagnant
demand in Brazil and the appreciating Brazilian real would, in
S&P's view, prevent the group's margins from rising above 8%, as
seen in 2015.
S&P continues to consider JBS's financial policy as negative due
to its currency hedging policies and an aggressive debt-financed
growth in the recent past, which resulted in significant cash flow
volatility. Cash flow hedges caused a cash outflow of more than
R$6 billion this year, in contrast to a R$10 billion inflow in
2015. As the group has cancelled its currency hedges in the past
few months, S&P doesn't expect additional outflows of this nature
in the next 12 months.
SANTA CATARINA: Fitch Affirms 'BB' Long Term Issuer Default Rating
------------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of the Brazilian state of Santa Catarina at 'BB'. The Rating
Outlook remains Negative. The Rating Outlook reflects the Negative
Outlook of Brazil.
Fitch has also downgraded Santa Catarina's national long-term
rating to 'AA-(bra)' from 'AA(bra)' with a Stable Outlook as a
result of worse debt ratios, as expressed by direct debt/current
balance that reached 17.9 times (x) in 2015 from 11.6x in 2014.
The ratings reflect Santa Catarina's fiscal performance aligned
with Fitch's expectations. Operating margins remained fairly
stable reaching 4.6% in 2015 and should increase to levels close
to 7% until 2018. The ratings also reflect the state's above
average tax autonomy when compared to 'BB' rated entities, in
which tax revenues represented 67.8% of operating revenues in
2015.
KEY RATING DRIVERS
Debt and Other Long-term Liabilities: Fitch considers Santa
Catarina's debt profile to be a neutral rating factor with
negative trend reflecting the worsening in debt sustainability
metrics. Santa Catarina's consolidated debt of BRL18.9 billion in
2015 represented 37.5 years of the state's current balance, higher
than 'BB' rated entities. As a counterbalancing effect, 75% is
directly against the federal government, which provides the state
with implicit support.
Economy: Fitch considers Santa Catarina's economy to be a neutral
rating factor with negative trend reflecting the rise in
unemployment to 6.6% in September, 2016 from 3.9% posted in August
2015, still lower than Brazil (11.6%). With a granular economy
based on services, the state has been able to partially compensate
for very weak economic performance with increased activity in the
food segment and exports. Given the overall severe economic
conditions, Santa Catarina should post a GDP contraction of around
3% in 2016, better than Brazil's 3.5% contraction, according to
Fitch.
Finances: Fitch considers Santa Catarina's finances to be a
neutral rating factor reflecting the state's above average fiscal
autonomy, which is counterbalanced by its fairly concentrated tax
base and rigid operating expenditures. The negative trend reflects
declining operating margins that reached 4.6% in 2015. Fitch
expects operating margins to increase to levels close to 7% until
2018 as the overall economic conditions improve.
Management and Administration: Fitch considers the state's
management and administration practices as a neutral rating factor
with stable trend. Santa Catarina is governed by Joao Raimundo
Colombo, now affiliated with the right-center Social Democratic
Party (PSD; Partido Social Democratico). The 10 largest private
investments should total BRL3.1 billion over the next five years,
which should directly affect job creation and tax revenues.
RATING SENSITIVITIES
Any rating action affecting the Federative Republic of Brazil,
currently rated 'BB'/Outlook Negative, will exert a direct impact
over the Santa Catarina's ratings.
Should operating margins consistently fall below 5%, a negative
review of the ratings would follow. Moreover, any further negative
action affecting Brazilian sovereign ratings could have a direct,
corresponding effect on the state's ratings.
KEY ASSUMPTIONS
The ratings and Outlooks are sensitive to these assumptions:
-- Fitch assumes a moderate level of sovereign support for
Santa Catarina even considering the Weak Institutional
Framework given the national relevance of State and the high
exposure to Federal Government decisions;
-- Fitch expects some progress on the government's legislative
agenda especially the ones affecting subnationals such as
pension reform and additional federal debt relief.
Fitch has taken the following rating actions:
State of Santa Catarina:
-- Foreign Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Foreign Currency Short-Term IDR affirmed at 'B';
-- Local Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Local Currency Short-Term IDR affirmed at 'B';
-- National Long-term rating downgraded to 'AA-(bra)' from
'AA(bra)'; Stable Outlook;
-- National Short-term rating affirmed at 'F1+(bra)'.
SAO PAULO: Fitch Affirms 'BB' LT Issuer Default Rating
------------------------------------------------------
Fitch Ratings has affirmed the Brazilian Municipality of Sao
Paulo's (Sao Paulo) Long-Term Issuer Default Rating (IDR) at 'BB'.
The Rating Outlook remains Negative. The Rating Outlook reflects
the Negative Outlook of Brazil.
Fitch has also downgraded Sao Paulo's national long-term rating to
'AA(bra)' from 'AA+(bra)' with a Stable Outlook as a result of
ratings recalibration following successive downgrades of the
sovereign over the past 18 months.
The ratings affirmation reflects Sao Paulo's capacity to generate
higher-than-average operating margins when compared to local peers
in Brazil even during stressed times. The ratings also reflect the
fact that Sao Paulo is Brazil's wealthiest city, generating
roughly 10% of Brazilian GDP, with above-average social and
economic indicators.
KEY RATING DRIVERS
Debt and Other Long-term Liabilities: Fitch considers Sao Paulo's
debt profile to be a neutral rating factor with stable trend. Sao
Paulo's consolidated debt of BRL30.4 billion in April 2016
represented 0.7 year of the city's current balance. Fitch notes
that the city has obtained approval to apply the new inflation
index to its prevalent federal debt portion, back-dated to the
beginning of the contract in 2000, which virtually halved the
amount. In 2015, consolidated debt reached BRL76.1 billion.
Economy: Fitch considers Sao Paulo's economy to be a strong rating
factor. Sao Paulo is Brazil's wealthiest city with above average
social and economic indicators. The negative trend reflects the
rising unemployment rate. According to Dieese (Departamento
Internsindical de Estatistica e Estudos Socioeconomicos)
unemployment reached 14.4% of total economically active population
in June 2016, up from 11.3% registered in June 2015. This compares
unfavorably with other regions.
Finances: Fitch considers Sao Paulo's finances to be a strong
rating factor. This is explained by the city's operating margins
that have reached an annual average of 13.6% over the last five
years. This is higher than peers in the 'BB' rating category
(8.9%). The negative trend reflects the slowdown in overall
collections expected for 2016. As a counterbalancing factor, Sao
Paulo presents moderate fiscal autonomy in which tax revenues
represented 52.2% of the city's operating expenditures in 2015.
Management and Administration: Management is a neutral rating
factor with stable trend. The overall policy consensus is to
maintain strong ties with the federal government. Sao Paulo held
elections in October 2016 and the new administration will take
seat on Jan. 1, 2017. The city has not yet concluded the
convergence to the international accounting standards nor has been
able to implement corrective measures in its pension system.
RATING SENSITIVITIES
Sao Paulo's ratings are constrained by the Brazilian sovereign.
Any rating action affecting the Federative Republic of Brazil,
currently rated 'BB'/Outlook Negative, will exert a direct impact
over the city's ratings.
Any further negative action affecting Brazilian sovereign ratings
could have a direct corresponding effect on the city's ratings.
KEY ASSUMPTIONS
The ratings and Outlooks are sensitive to these assumptions:
-- Fitch assumes a high level of sovereign support for Sao
Paulo even considering the weak institutional framework
given the national relevance of the city and the fact the
city's most relevant creditor is the Federal Government.
-- Fitch expects some progress on the government's legislative
agenda especially the ones affecting subnationals such as
pension reform and additional federal debt relief.
Fitch has taken the following rating actions:
Municipality of Sao Paulo:
-- Foreign Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Foreign Currency Short-Term IDR affirmed at 'B';
-- Local Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Local Currency Short-Term IDR affirmed at 'B';
-- National Long-term rating downgraded to 'AA(bra)' from
'AA+(bra)'; Stable Outlook;
-- National Short-term rating affirmed at 'F1+(bra)'.
==========================
C A Y M A N I S L A N D S
==========================
BLACKSTONE ABS: Commences Liquidation Proceedings
-------------------------------------------------
The sole shareholder of Blackstone ABS Offshore (E) Fund Ltd., on
Oct. 11, 2016, 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:
Patrick Agemian
Walkers
190 Elgin Avenue, George Town
Grand Cayman KY1-9001
Cayman Islands
Telephone: (345) 914 6365
CHINA FISHERY: Bid for Appointment of Ch. 11 Trustee Granted
------------------------------------------------------------
Judge James L. Garrity of the United States Bankruptcy Court for
the Southern District of New York granted the motion for the
appointment of a Chapter 11 Trustee for China Fishery Group
Limited (Cayman), and its debtor affiliates.
The motion was filed by Cooperatieve Rabobank U.A., Standard
Chartered Bank (Hong Kong) Limited and DBS Bank (Hong Kong),
Limited, seeking the appointment of a Chapter 11 trustee pursuant
to section 1104(a)(2) of the Bankruptcy Code. The motion was
joined by Bank of America, N.A., Malayan Banking Berhad,
Hong Kong Branch, the Insolvency Administrator of the Pickenpack
Group, and the Senior Noteholders Committee.
The motion was opposed by the Debtors, who were joined by the
Peruvian Opcos (defined below), certain of the equity holders of
Debtor N.S. Hong, an Informal Steering Committee of bondholders of
Pacific Andes Resources Development Limited (PARD), a non-Debtor
that is subject to its own insolvency proceeding in Singapore, and
certain bank creditors at different levels of the Debtors' capital
structure.
The Debtors comprise a small part of the Pacific Andes Group of
companies that collectively constitute the world's 12th largest
fishing company. Members of the Ng Family, through Debtor N.S.
Hong, control the group's operations. The Debtors consist
principally of holding companies and defunct, non-operating
companies. None have assets in the United States except for their
interests in retainers paid to their United States advisors.
Whatever value they have is derived from their mostly indirect
interests in three Peruvian operating companies CFG Investments
S.A.C. (CFGI), Corporacion Pesquera Inca S.A.C. (Copeinca), and
Sustainable Fishing Resources S.A.C. (SFR, and together with CFGI
and Copeinca, the "Peruvian Opcos"). Those entities operate the
Pacific Andes Group's anchovy fishing business and together
control a significant percentage of the anchovy fishing quotas
fixed by the Peruvian government. They are not Chapter 11
debtors, but are the subject of involuntary insolvency proceedings
filed against them in Peru (the "Peruvian Insolvency
Proceedings"), at their behest, by three "friendly" local
creditors. The putative "foreign representative" of the Peruvian
Opcos has filed petitions for recognition of those proceedings
under Chapter 15 of the Bankruptcy Code on their behalves.
The Chapter 11 cases, PARD's voluntary insolvency proceeding in
Singapore, and the Peruvian Involuntary Proceedings were commenced
simultaneously in violation of certain deeds of undertaking
entered into pre-petition by, among others, certain of the
Debtors, the Movants and the Hong Kong and Shanghai Banking
Corporation ("HSBC"), and, ultimately, to block an agreed sale of
the Peruvian Opcos' business.
The Movants sought the appointment of a Chapter 11 trustee for the
Debtors under section 1104(a)(2) of the Bankruptcy Code for a
variety of reasons, the most pressing of which is to cause the
Peruvian Opcos to challenge those insolvency proceedings. In
substance, they contended that the trustee should cause the
Peruvian Opcos to contest the involuntary petitions by, among
other things, exercising their rights under Peruvian law to
satisfy the claims of the petitioning creditors. The Movants
maintained that after those proceedings are dismissed, the trustee
should cause the Debtors to sell the Peruvian business, pay off
the creditors of the Peruvian Opcos, and distribute the net
proceeds from the sale to the Debtors' creditors and shareholders
in accordance with their rights and priorities. Thus, while the
Debtors are advocating a "wait and see" approach, with the value
of the Peruvian Opcos to be realized and distributed through the
Peruvian Insolvency Proceedings, the Movants, through their
motion, sought, among other things, to obtain the benefit of their
pre-petition bargain with the Debtors.
Based upon his review of the voluminous record made in connection
with the motion, Judge Garrity found that in balancing the
advantages and disadvantages to appointing a trustee, the Movants
have established by clear and convincing evidence that it is in
the best interest of the Debtors' estate and creditors that a
trustee be appointed.
Judge Garrity found that the Movants have shown that they have
lost all confidence in the Debtors' management for a number of
good reasons, and that this lack of confidence in management is
both justified and understandable.
Further, Judge Garrity also found that the Debtors have not
articulated any course of action, any time frame for implementing
a reorganization strategy, or any back-up plans if the Peruvian
business does not improve. Based upon the record of the motion,
the judge concluded that it is clear that the Debtors' prospects
for rehabilitation are problematic, if not dim.
Judge Garrity also found that the Debtors, their estates,
creditors and equity holders will substantially benefit from the
appointment of a trustee. The judge explained that, contrary to
Debtors' contention, such an appointment is not merely
prophylactic but is essential to facilitate the Debtors'
reorganization. Although Judge Garrity was mindful of the
potential expense associated with the appointment of a
trustee, the judge found that the benefits to be realized by the
Debtors, their estates, creditors and equity holders from the
appointment of a trustee will outstrip the costs associated with
it.
The United States Trustee was thus directed to appoint a
Chapter 11 trustee for Debtor CFG Peru Singapore, the 100% direct
and indirect owner of the Peruvian Opcos, pursuant to section
1104(d)(2) of the Bankruptcy Code, and to seek approval of such
appointment in accordance with Rule 2007 of the Federal Rules of
Bankruptcy Procedure.
A full-text copy of Judge Garrity's October 28, 2016 order is
available at http://bankrupt.com/misc/nysb16-11895-203.pdf
The Debtors were represented by:
Howard B. Kleinberg, Esq.
Edward J. LoBello, Esq.
Jil Mazer-Marino, Esq.
MEYER, SUOZZI, ENGLISH & KLEIN, PC
990 Stewart Avenue
Garden City, NY 11530
Tel: (516)741-6565
Fax: (516)741-6706
Email: mantongiovanni@msek.com
hkleinberg@msek.com
jmazermarino@msek.com
-- and --
Paul F. Millus, Esq.
Thomas R. Slome, Esq.
Daniel B. Rinali, Esq.
MEYER, SUOZZI, ENGLISH & KLEIN, PC
1350 Broadway, Suite 501
New York, NY 10018
Tel: (212)239-4999
Fax: (212)239-1311
Email: pmillus@msek.com
tslome@msek.com
drinaldi@msek.com
CFG Investment, S.A.C., Corporacion Pesquera Inca S.A.C. and
Sustainable Fishing Resources S.A.C. are represented by:
James S. Carr, Esq.
Jason R. Adams, Esq.
William Gyves, Esq.
KELLEY DRYE & WARREN LLP
101 Park Avenue
New York, NY 10178
Tel: (212)808-7800
Fax: (212)808-7897
Email: jcarr@kelleydrye.com
jadams@kelleydrye.com
wgyves@kelleydrye.com
Equity Holders of Debtor N.S. Hong Investments (BVI) Limited is
represented by:
Gerald C. Bender, Esq.
Paul Kizel, Esq.
Keara M. Waldron, Esq.
LOWENSTEIN SANDLER LLP
1251 Avenue of the Americas
New York, NY 10020
Tel: (212)262-6700
Fax: (212)262-7402
Email: gbender@lowenstein.com
pkizel@lowenstein.com
kwaldron@lowenstein.com
Club Lenders are represented by:
R. Craig Martin, Esq.
Mordechai Y. Sutton, Esq.
DLA PIPER LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Tel: (212)335-4500
Fax: (212)335-4501
Email: craig.martin@dlapiper.com
mordechai.sutton@dlapiper.com
-- and --
Richard A. Chesley, Esq.
John K. Lyons, Esq.
Jeffrey Torosian, Esq.
DLA PIPER LLP (US)
203 North LaSalle Street
Suite 1900
Chicago, IL 60601
Tel: (312)368-4000
Fax: (312)236-7516
Email: richard.chesley@dlapiper.com
john.lyons@dlapiper.com
jeffrey.torosian@dlapiper.com
Bank of America, N.A. is represented by:
Lee S. Attanasio, Esq.
John G. Hutchinson, Esq.
Andrew P. Propps, Esq.
SIDLEY AUSTIN LLP
787 Seventh Avenue
New York, NY 10019
Tel: (212)839-5300
Fax: (212)839-5599
Email: lattanasio@sidley.com
jhutchinson@sidley.com
apropps@sidley.com
About China Fishery Group Limited
China Fishery Group Limited (Cayman), et al., along with certain
non-debtor affiliated entities, are part of a business group
known as the Pacific Andes Group, which is the 12th largest
seafood company in the world and one of the world's foremost
vertically integrated seafood companies. Hong Kong based-The
Pacific Andes Group provides seafood products to leading global
wholesalers, processors and food service companies and has
operations across the seafood value chain.
China Fishery Group Limited (Cayman) and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Case No. 16-11895) on June 30, 2016. The petition was
signed by Ng Puay Yee, chief executive officer.
The case is assigned to Judge James L. Garrity Jr.
At the time of the filing, the Debtor estimated its assets at
$500 million to $1 billion and debts at $10 million to $50
million.
Howard B. Kleinberg, Esq., Edward J. LoBello, Esq. and Jil
Mazer-Marino, Esq. of Meyer, Suozzi, English & Klein, P.C. serve
as legal counsel. The Debtor has tapped Goldin Associates, LLC,
as financial advisor and RSR Consulting LLC as restructuring
consultant.
ERFRA II: Commences Liquidation Proceedings
-------------------------------------------
At an extraordinary meeting held on Oct. 14, 2016, the
shareholders of ERFRA II Deal Limited resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
ERFRA DEAL: Commences Liquidation Proceedings
---------------------------------------------
At an extraordinary meeting held on Oct. 14, 2016, the
shareholders of Erfra Deal Limited resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
IBERLEASING 2000-1: Commences Liquidation Proceedings
-----------------------------------------------------
At an extraordinary meeting held on Oct. 14, 2016, the
shareholders of Iberleasing 2000-1 Limited resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
MAC INVESTMENTS: Commences Liquidation Proceedings
--------------------------------------------------
At an extraordinary meeting held on Sept. 27, 2016, the
shareholders of Mac Investments Ltd. resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
NYK FINANCE: Commences Liquidation Proceedings
----------------------------------------------
The sole shareholder of NYK Finance (Cayman) Ltd., on Oct. 10,
2016, 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:
Naoki Shindo
Circumference FS (Cayman) Ltd.
Century Yard, 4th Floor
Cricket Square, Elgin Avenue, George Town
PO Box 32322 Grand Cayman
Cayman Islands
OPTIMAL JAPAN: Commences Liquidation Proceedings
------------------------------------------------
The sole shareholder of Optimal Japan Absolute Long Fund-US
Feeder, on Oct. 11, 2016, 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:
Optimal Fund Management Pty Limited
Carey Olsen
Willow House, Cricket Square
PO Box 10008 Grand Cayman KY1-1001
Cayman Islands
QORVO CAYMAN: Commences Liquidation Proceedings
-----------------------------------------------
The sole shareholder of QORVO Cayman Islands, Ltd., on Oct. 11,
2016, resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Allen Youngdahl
Qorvo, Inc.
7628 Thorndike Road
Greensboro
North Carolina 27409-9421
United States of America
Telephone: +1 (336) 678 5909
VECTORIS SPC: Commences Liquidation Proceedings
-----------------------------------------------
The sole shareholder of Vectoris SPC, on Oct. 6, 2016, resolved to
voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Doran + Minehane
59/60 O' Connell Street
Limerick
Ireland
Telephone: 00353 61 430000
Facsimile: 00353 61 408613
VENTURE III: Commences Liquidation Proceedings
----------------------------------------------
At an extraordinary meeting held on Oct. 14, 2016, the
shareholders of Venture III CDO Limited resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
===============
C O L O M B I A
===============
TECNOGLASS INC: Moody's Assigns Ba3 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service assigned a Ba3 Corporate Family Rating
to Tecnoglass, Inc. (TGLS). At the same time, Moody's assigned a
Ba3 rating to its proposed USD 225 million senior unsecured notes
due 2023. Proceeds from the notes will be used to repay all of
the company's outstanding debt and other general business
purposes. The outlook of the ratings is stable.
This is the first time that Moody's assigns ratings to TGLS.
RATINGS RATIONALE
TGLS's Ba3 corporate family rating is supported by the company's
solid credit metrics, including its EBITA margin at 17.5%, an
adequate interest coverage of 3.4 times and leverage of 3.6 times
for the last twelve months ended June 30, 2016. Furthermore,
TGLS' strategy to focus on high value added products, combined
with the company's low cost structure and the positive prospects
for the construction industry both in Colombia and in the US,
provide room for additional improvements. The rating also
incorporates TGLS' adequate liquidity pro forma for the proposed
issuance of USD 225 million notes due 2023. After the
transaction, liquidity will also be supported by at least USD30
million under committed facilities and a comfortable maturity
profile.
Balancing these positives are TGLS' narrow business lines and
small operating scale when compared to other rated peers, the
volatile nature of the industry in which it operates, and the
negative working capital associated with its growth. TGLS' Ba3
also incorporates the company's still evolving corporate
governance standards.
Pro-forma for the proposed USD 225 million issuance, TGLS'
liquidity will be adequate. The company has historically funded
negative working capital with short term debt and refinanced it
with long term proceeds on both a secured and an unsecured basis.
The notes will have a seven-year tenor and will be guaranteed by
main operating subsidiaries. TGLS plans to use the proceeds to
refinance USD 200 million in secured debt. Hence, the proposed
issuance will materially improve TGLS' capital structure,
consolidate debt at the holding level and extend maturities. In
terms of cash generation, Moody's anticipates that it will remain
pressured in the upcoming quarters given high working capital
needs related with a still rapid growth phase. However, TGLS
should be able to cover cash needs with internal sources and
availability under committed lines (estimated at around USD30
million to be signed in the upcoming week).
Except for working capital, cash needs will be limited as the
company has already completed its expansion program and the plant
has capacity for growth. Additionally, the company is not
anticipating to pay dividends other than USD 3 million in 2016.
Pro forma for the transaction, TGLS will have some currency
mismatch as the bulk of its debt will be denominated in USD and
only 65% of its revenues are in USD. This risk is mitigated by
our expectation that USD cash generation will be enough to cover
USD cash needs. For 2016, Moody's expects TGLS to generate USD
170 million in revenues denominated in USD, which are enough to
cover around USD 118 million in costs plus USD 14 million in
interests and an average of USD 13 million in capex as per Moody's
conservative estimates.
The stable outlook reflects Moody's expectation that TGLS will be
able to execute its organic growth plan in the U.S. while
maintaining its strong margins and adequate liquidity profile.
An upgrade for TGLS' ratings is unlikely in the near term due to
its narrow business profile and operating scale. Quantitatively,
an upgrade would also require leverage below 2.5 times and
operating margins of 20% on a sustainable basis.
TGLS' Ba3 ratings could be downgraded if the company fails to
maintain an adequate liquidity profile or interest coverage of at
least 2 times. A leverage close to 4 times with low prospects of
decline could also lead to a downgrade.
Tecnoglass, Inc. (TGLS) is a Colombian company engaged in the high
spec windows production focused on the commercial and residential
markets in the US and Colombia. TGLS is 82% owned by the Daes
family who is actively involved in the operating activities of the
company. The company was created in 1984 and is listed in NASDAQ
since 2013 and in the Colombian Stock Exchange since January 2016.
Tecnoglass Inc is a holding company and owner of all the group's
operating subsidiaries.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Sediment Chokes Icon Dam, Agency Warns
----------------------------------------------------------
Dominican Today reports that the Regional Development Council
(CRD) technical department listed the problems and potential
solutions for the country's hydroelectric dams based on several
studies.
At the top of the CRD list is Tavera dam, built at a cost of over
US$45 million in 1973, which supplies 96 megawatts of energy,
irrigates 9,100 hectares of farmlands and supplies the main
aqueducts in the Cibao region, according to Dominican Today.
"After more than 40 years since built, the population which
depends on the dam asks: What's happening?, Is it that the dam is
empty?"
The CRD responds that the dam is not empty, "it's full, but with
sediment, rubble, tree trunks, garbage and much more," the report
relays.
The CRD warns that the problem is such that the 63 meters of the
dam's water surface at 80 meters above sea level is now totally
sedimented, leaving just 17 meters to store water, the report
notes.
"The reason is that even if it rains in the river basin, it
doesn't accumulate the amount of water that the dam was designed
to store," CRD said.
Technical criteria CRD conclude that it has that affected the
Taveras dam, is the same as the other dams in the country, the
absence of adequate reforestation of their sockets.
"After the four decades elapsed since 1973, deforestation in all
watersheds has expanded and the expected consequences have been:
reduced river flows that feed the dams, accelerated soil erosion
and rivers swelling in rainy weather are becoming more intense and
cause more flooding and shorten the dams' lifespan, the CRD warns,
adding: Deforestation in the country is very damaging," the report
adds.
As reported in the Troubled Company Reporter-Latin America on
July 1, 2016, Moody's Investors Service has changed the outlook on
the Dominican Republic's long term issuer and debt ratings to
positive from stable. The ratings have been affirmed at B1.
DOMINICAN REPUBLIC: Bank Raises Overnight Rate From 5% to 5.50%
---------------------------------------------------------------
Dominican Today reports that the Central Bank raised its overnight
rate from 5.00 to 5.50% annually, a decision it affirms aims to a
deal with "possible deviation in inflation targets that could be
produced by the upward trend on oil prices."
It said the measure on the benchmark rate, adopted at its last
monetary policy meeting, took effect on Oct. 31, according to
Dominican Today.
The Central Bank said as a result of formula to manage short-term
liquidity, the overnight rate climbed from 3.50% to 4.00% per
annum and the expansion facilities rate (repos), rises from 6.50%
to 7.00% annually, the report notes.
As reported in the Troubled Company Reporter-Latin America on
July 1, 2016, Moody's Investors Service has changed the outlook on
the Dominican Republic's long term issuer and debt ratings to
positive from stable. The ratings have been affirmed at B1.
=================
G U A T E M A L A
=================
CEMENTOS PROGRESO: S&P Affirms 'BB' CCR & Revises Outlook to Neg.
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on Cementos Progreso, S.A.
(CemPro) to negative from stable to parallel S&P's outlook on the
Republic of Guatemala. At the same time, S&P affirmed its 'BB'
long-term corporate credit and issue-level ratings on CemPro.
The outlook revision on CemPro follows a similar rating action on
the Republic of Guatemala. S&P believes that CemPro wouldn't
overcome a sovereign default stress test scenario, which makes it
highly unlikely for the company to have a higher rating level than
the sovereign foreign currency rating. Ultimately, if a
sovereign's foreign currency default occurs, there's a high
likelihood that CemPro would default as well, reflecting S&P's
view that the company's operations are highly correlated to
Guatemala's macroeconomic conditions.
"We stress tested CemPro under a Guatemalan sovereign default
scenario because the former generates all of its revenue, EBITDA,
and cash flows in this country. In this hypothetical scenario, we
assume the country to experience a deep recession and a sharp
increase in the unemployment rate. Under this scenario, the
company would be also exposed to higher interest rates, local
currency volatility, and inflation. This would weaken CemPro's
sale volumes, EBITDA margins, and cash flow generation given its
high sensitivity to country risk. Under this hypothetical
scenario, we believe that CemPro's sources of cash won't be
sufficient to cover its cash needs, which leads us to cap the
rating at the same level as the sovereign rating," S&P said.
The negative outlook on CemPro mirrors Guatemala's sovereign
rating outlook, reflecting a downgrade potential on CemPro if S&P
was to downgrade the Republic of Guatemala. In addition, S&P
could lower the ratings on the company if it posts weaker-than-
expected operating and financial performance as a result of a
slowing economy. This would squeeze CemPro's sales, EBITDA, and
cash flow generation to such an extent that its EBITDA margin
would fall below 37.5%, debt to EBITDA increase to more than 3.0x,
and funds from operations to debt fall to less than 20% on a
consistent basis. A negative rating action could also occur if
the company adopts a more aggressive financial policy related to
the use of debt.
S&P could revise the outlook on CemPro to stable from negative if
S&P was to take the same rating action on Guatemala.
===========
M E X I C O
===========
SIXSIGMA NETWORKS: S&P Affirms 'B+' CCR, Outlook Remains Stable
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' ratings on Sixsigma Networks
Mexico, S.A. de C.V. (KIO Networks), including the corporate
credit rating. The outlook on the corporate credit rating remains
stable. At the same time, S&P affirmed its '4L' recovery rating
on the issue, indicating S&P's expectation of an average (30%-50%,
in the lower band of the range) recovery in the event of a payment
default, unchanged.
The rating action reflects the company's continuing expansion in
the public and private sectors, as seen in the recently signed
agreement (PITA Project [Proyecto de Integracion Tecnologica
Aduanera]) with the Mexican fiscal authorities to provide managed
services for the next four years. The total contract value is
MXN5 billion - MXN9 billion and will represent about 15% of the
company's total revenue. Although S&P expects KIO Network's
revenue to surge as a result of this new contract and that it will
provide certainty to its cash flow generation, its debt to EBTIDA
will remain above 5x during the next 12-18 months given the
company's high debt levels.
During the second quarter, the company's board of directors
approved a capital contribution of up to $50 million from its main
shareholders. KIO Networks will mainly use the proceeds to
support its ongoing growth and its aggressive contract related
capital expenditures (capex) program directed to the development
of new projects.
The business risk profile reflects the company's small scale,
narrow geographic presence, and slightly lower EBITDA margins than
those of its peers, although improving. In S&P's view, the
mitigating factors are KIO Network's leading market position in
Mexico thanks to its long-term contracts with mid- and large-size
customers.
S&P's rating also incorporates its expectation that the company's
debt to EBITDA will remain above 5.0x in 2016. It also
incorporates the company's aggressive capex program and financial
sponsor ownership in which Tresalia Capital S.A. de C.V. (not
rated), a private equity firm, owns the controlling interest of
KIO Networks.
=======
P E R U
=======
ANDINO INVESTMENT: S&P Affirms 'B' Ratings; Outlook Negative
------------------------------------------------------------
S&P Global revised its outlook on Andino Investment Holding S.A.A.
(AIH) to negative from stable. At the same time, S&P affirmed its
'B' ratings on the company and on its $115 million 144 A/Reg. S
senior unsecured notes due 2020.
The outlook revision reflects the possibility that AIH's credit
metrics won't recover as S&P's base-case scenario currently
assumes. In the 12 months ended June 2016, the company's debt to
EBITDA weakened to 8.5x and funds from operations (FFO) to debt to
3.3%, compared with 6.2x and 7.3%, respectively, in the same
period of 2015. AIH's operating performance suffered in the past
12 months from the slowdown in public and private investments as a
result of political uncertainties amid the 2016 presidential
election in Peru, coupled the decrease in commodity prices that
squeezed the company's foreign trade. However, S&P's base-case
scenario assumes a turnaround in the next 12 months, with an
estimated EBITDA generation rising to approximately $20 million
from $17 million in the 12 months ended June 2016. In addition,
AIH has recently sold certain non-core assets for $13 million,
proceeds from which it used to cancel short-term debt. As a
result, the company now benefits from a manageable debt maturity
schedule, with most of its debt coming due by 2020.
================================
T R I N I D A D & T O B A G O
================================
TRINIDAD CEMENT: Revenue Declines 18% at 2016 3rd Quarter
---------------------------------------------------------
Trinidad Express reports that a steep fall in construction
activity has led to an 18 per cent decline in the Trinidad Cement
Ltd's (TCL) revenue for the third quarter of 2016.
According to TCL chairman Wildred Espinet and director Nigel
Edwards, the Group has faced a decline in sales across all of its
business segments, the report notes.
They noted that the weak demand also impacted some of the
countries in the Group's Caribbean market, but was offset by the
positive performance in Jamaica, according to Trinidad Express.
As reported in the Troubled Company Reporter-Latin America on June
30, 2016, S&P Global Ratings revised its outlook on Trinidad
Cement Limited Group (TCL) to positive from stable. At the same
time, S&P affirmed its 'B-' corporate credit and issue-level
ratings on TCL.
=================
V E N E Z U E L A
=================
VENEZUELA: Begins Talks With Divided Opposition
------------------------------------------------
Anatoly Kurmanaev at The Wall Street Journal reports that
representatives of Venezuelan President Nicolas Maduro and the
country's three main opposition parties began formal talks for the
first time in 2 1/2 years Sunday night, a move which most
Venezuelans and outside observers think will do little to solve
the country's economic and political crisis.
The heads of the opposition parties didn't attend the meeting,
which carried on into early Monday, Oct. 31 and have vowed to
press on with street protests to force Mr. Maduro to allow a
referendum seeking his removal, according to The Wall Street
Journal.
The meeting, which was held in Caracas, established four working
groups to resolve differences on political prisoners, election
dates and separation of powers, the report notes. The two sides
will meet again Nov. 11.
The talks are being brokered by the Vatican, the Union of South
American Nations, or Unasur, and three former presidents,
including Spain's Jose Rodriguez Zapatero, the report relays.
Over a dozen opposition parties, including the Popular Will Party
of jailed politician Leopoldo Lopez, refused to join the talks,
saying no real dialogue could take place while Mr. Maduro
continues imprisoning opponents and delaying or suspending
elections and the referendum, the report says.
"I don't believe in Maduro one bit, they [his officials] are
devils capable of anything," Henrique Capriles, leader of the
biggest opposition party Justice First and former presidential
candidate, said on his official Twitter account, the report
relays. "But I do trust Pope Francis and I believe in the
Church!"
Mr. Capriles, who sent a lower Justice First official to the
meeting, has called supporters to march on the Presidential
Palace, the report notes. He said he would give more details.
Mr. Lopez's Popular Will and about a dozen smaller opposition
parties said they won't join the talks process at all, the report
relays.
Many opposition leaders and activists fear Mr. Maduro will repeat
his strategy from the last talks held in 2014, when he used the
meetings to diffuse the opposition-led protests without making any
concessions to his opponents, the report adds.
As reported in the Troubled Company Reporter-Latin America on
July 5, 2016, Fitch Ratings affirmed Venezuela's Long-Term
Foreign-and Local-Currency Issuer Default Ratings (LT FC/LC IDR)
at 'CCC'. Fitch has also affirmed the sovereign's Short-Term
Foreign Currency (ST FC) IDR at 'C' and country ceiling at 'CCC'.
=================
X X X X X X X X X
=================
GUVERA LATAM: Fails to Pay Severance Fee to Staff
-------------------------------------------------
Lucy Battersby at The Sydney Morning Herald reports that Guvera
has left former employees thousands of dollars out of pocket after
failing to pay severance or entitlements to staff from its North
America and South America business.
According to SMH, Guvera closed offices and removed its app in
Australia, United States, Latin America and Russia and Europe,
after failing to launch on the Australian stock market earlier
this year.
BusinessDay has learnt that former staff in the US and Latin
America wrote directly to Guvera founder Claes Loberg in September
pleading for a payment plan as "many of us are facing financial
distress," SMH relays.
"When the IPO failed, we understood that in the absence of
funding, hard choices would follow," staff wrote in an e-mail seen
by Fairfax Media. Dozens of people received the email, including
chairman Phil Quartararo and non-executive director Steven Porch.
"While it was still a shock to be informed of the closure of our
markets on June 30, we understood the economic reality facing
Guvera and the decision to refocus on the most viable markets."
SMH relates that the letter noted how difficult it is to know that
staff in Australia received final salary plus entitlements while
they remain out of pocket.
"Claes, it is now more than three months since any of us received
any monies from Guvera. No administrator has been appointed. No
payment plan has been presented."
Former employees of Guvera USA Inc and Guvera LATAM have not yet
received a response or money, several confirmed to BusinessDay
this week, says SMH. Guvera USA launched in 2014.
SMH notes that Guvera still operates in India, Indonesia, Saudi
Arabia and recently launched in the United Arab Emirates.
SMH notes that since 2008, Guvera founders Mr. Loberg and Darren
Herft have raised $185 million from individual investors, mostly
self-managed super funds introduced to Guvera through their
accountants. But Guvera ran into serious trouble in June this
year when its application to be listed on the Australian
Securities Exchange was rejected due to concerns about its debt
and profitability.
In June, 60 staff were sacked and two Australian subsidiaries Guv
Services and Guvera Australia were put into administration with
Neil Cussen and Enzio Sentatore of Deloitte, SMH recalls. But
parent company Guvera Limited regained control after striking a
deed of company arrangement in August, which sees it paying
$180,000 a month to the two subsidiaries.
About Guvera
Guvera offered online music and entertainment streaming service.
Deloitte Restructuring Services partners Neil Cussen and Enzio
Sentatore have been appointed as voluntary administrators of
Guvera Australia and Guv Services.
According to The Australian, the firm recently pulled out of the
Australian market after a failed attempt to list on the ASX, in a
float that would have valued the company at more than AUD1
billion.
The company -- which recently lost CEO Darren Herft to co-founder
Claes Loberg, who has taken the job on a temporary basis -- has
also recently pulled out of several other markets, including the
US and Russia, The Australian said.
A memo to investors said shutting the Australian market was
linked to changes in its product and a "strategic re-evaluation
of the business," The Australian added.
***********
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
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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
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***********
S U B S C R I P T I O N I N F O R M A T I O N
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, Ivy B. Magdadaro, Julie Anne L.
Toledo, and Peter A. Chapman, Editors.
Copyright 2016. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
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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 * * *