/raid1/www/Hosts/bankrupt/TCRLA_Public/170419.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, April 19, 2017, Vol. 18, No. 77
Headlines
A R G E N T I N A
COMPANIA GENERAL: S&P Affirms 'B-' CCR; Outlook Remains Stable
B A H A M A S
BAHA MAR: Expected to Open Partially on April 21
B R A Z I L
RB CAPITAL: Moody's Hikes Global Scale LC Rating to B1
B O L I V I A
BOLIVIA: Coca Growers Seek Suspension of New Coca Law
C A Y M A N I S L A N D S
AMDS SERVICE: Shareholders' Final Meeting Set for April 21
ARKONA LIMITED: Shareholders' Final Meeting Set for April 26
BOAT LIMITED: Shareholders' Final Meeting Set for April 19
CFG MEXICO: Shareholders' Final Meeting Set for April 20
DIDI INVESTMENT: Members' Final Meeting Set for April 28
FMCP AFRICA: Shareholders' Final Meeting Set for April 24
FMCP AFRICA MASTER: Shareholders' Final Meeting Set for April 24
HARMONY PEACE: Members' Final Meeting Set for April 28
MALOU INVESTMENTS: Shareholders' Final Meeting Set for April 27
M.A.M COMPANY: Shareholders' Final Meeting Set for April 27
NANU INVESTMENTS: Shareholders' Final Meeting Set for April 28
SYMBEST LTD: Shareholders' Final Meeting Set for April 28
VERTIGO LIMITED: Members' Final Meeting Set for April 28
J A M A I C A
IAN FLEMING INT'L: Government Urged to Divest Airport
P E R U
ORAZUL ENERGY: Fitch Assigns BB Long-Term IDR; Outlook Stable
T R I N I D A D & T O B A G O
PRICESMART: US Currency Shortage Hurting Trinidad Operations
V E N E Z U E L A
VENEZUELA: Staves Off Default, but Low Oil Prices Pose a Threat
- - - - -
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A R G E N T I N A
=================
COMPANIA GENERAL: S&P Affirms 'B-' CCR; Outlook Remains Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' corporate credit and debt
ratings on Compania General de Combustibles S.A. (CGC). The
outlook remains stable.
The 'B-' ratings incorporate CGC's improved maturity profile after
the bond issuance and the Feb. 21, 2017, syndicated loan
agreement. However the ratings remain constrained by CGC's small
size and narrow scope of operations, because 85%-90% of its oil
and gas production comes from one basin in Argentina, its high
leverage, and volatile regulatory framework.
S&P expects CGC to face relatively manageable free cash flow
deficits through 2019, as the company devotes internal cash
generation to internal expansion and interest payment. S&P's
ratings on CGC also incorporate the ongoing financial flexibility
derived from its ownership structure (70% equity stake from
Corporacion America S.A., not rated). However, S&P don't factor
in any additional notches to CGC's ratings on the basis of
extraordinary financial support.
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B A H A M A S
=============
BAHA MAR: Expected to Open Partially on April 21
------------------------------------------------
The New York Times reports that the Bahamas resort Baha Mar has
taken more than 10 years to open, but on Friday, April 21, the
$4.2 billion, 1,000-acre development on a half-mile of beachfront
in Nassau is expected to finally debut -- at least, in part.
Baha Mar comprises of three hotel brands -- Grand Hyatt, SLS
Hotels and Rosewood Hotels & Resorts -- for a total of 2,300
rooms, according to The New York Times. Grand Hyatt, with 1,800
rooms, is the largest and will be previewing on opening day; with
nightly rates in the mid-$300 range, it's also the most
affordable, the report notes. The 300-room SLS, with starting
rates at upward of $500 a night, will debut later this year, and
the 200-room Rosewood, the most upscale of the three with room
prices from $700, is scheduled to open next spring (Grand Hyatt is
open for invited guests initially and is accepting paid
reservations for late May), the report relays.
The New York Times relates that accommodations are only a
component of Baha Mar. The project also includes a 100,000-
square-foot casino -- the largest in the Caribbean -- that
overlooks the ocean, according to Baha Mar's president, Graeme
Davis; 42 restaurants and lounges; 30 luxury retailers including
Rolex and Bulgari; an 18-hole Jack Nicklaus Signature Golf Course
and Golf Club; 11 swimming pools surrounded by more than 250 palm
trees; and a free-standing Espa brand spa with 24 treatment rooms
(white marble plays a prominent role), the report discloses. The
casino, the golf course, seven of the swimming pools, a part of
the spa and a handful of retailers and restaurants will be open on
April 21, while the rest of the amenities are scheduled to be
introduced over the next year, the report relays.
Large-scale flashy resorts, in the vein of those in Macau and Las
Vegas, may not be an anomaly today, The New York Times points out,
but the drama leading up to Baha Mar's opening sets it apart from
the bunch -- the Nassau-based development group BMD Holdings Ltd.,
led by the chief executive Sarkis Izmirlian announced plans for
the project, then a $1.6 billion venture, with much fanfare in
late 2005.
Construction did not begin until early 2011 and was funded through
a $2.45 billion loan from the Export-Import Bank of China, along
with an $850 million investment from Baha Mar and a $150 million
investment from the contractor, China Construction America, the
report relays.
Moroever, a scheduled opening in May 2015 never happened, the
report continues.
With the project more than 90 percent complete, Baha Mar declared
bankruptcy, saying that China Construction America had repeatedly
delayed the venture by missing construction deadlines, The New
York Times relays. The construction company issued its own
accusations of mismanagement, and a bitter fight ensued.
Around 2,000 employees, most of them Bahamians who had been wooed
to the resort with promises of bright futures, were out of jobs,
the report relays. Baha Mar was at a standstill.
Its revival happened November of last year, when the Hong Kong-
based conglomerate Chow Tai Fook Enterprises signed an agreement
to buy the resort from the Export-Import Bank of China for an
undisclosed sum, The New York Times notes. Chow Tai Fook is
involved in several businesses, including jewelry stores in Asia
and casinos in Macau, and was already familiar with Baha Mar
because it owns Rosewood Hotels & Resorts, a brand that was set to
be one of the project's hotel operators before the bankruptcy
filing, according to the report.
The company is able to open Baha Mar so soon after agreeing to buy
it, Mr. Davis said, because the Export-Import Bank had invested
$700 million to finish building the resort over the last 18
months. "What we bought is a property that was nearly complete,"
The New York Times quoted Mr. Davis as saying.
For travel agents, the April 21 opening does not come without
skepticism. Bobby Zur, who owns Travel Artistry, a consultancy in
Franklin Lakes, N.J., and is on the hotel committee for the travel
network Virtuoso, said that he was apprehensive about soft
openings in general, particularly when it came to large-scale
resorts, but that Baha Mar had added challenges for the long-term,
the report relays. "Creating a resort destination that has within
it different levels of luxury and an appeal to disparate
demographics can be done but isn't always easy to accomplish," he
said, the report notes.
But Mr. Zur said he was optimistic about the resort because
Rosewood was involved. "Rosewood is a brand that's very protective
of its guests and who it partners with, so I feel more confident
that the project will come out of the gates faster and more
smoothly than it would have otherwise," he said, the report
discloses.
Dan Marmontello, the Caribbean product manager for
CheapCaribbean.com, a site that sells affordable Caribbean and
Mexico trips, will be staying at Baha Mar later this month as an
invited guest, the report relays. He said that he planned to sell
the resort only if he thought that, after seeing it firsthand, it
was ready to receive paying guests. "It doesn't matter that not
everything is up and running," he said, "but we need to make sure
that there are enough amenities available so that our clients can
go and have a good time there," the report quoted Mr. Marmontello
as saying.
Baha Mar is one of the largest resorts to open in North America,
according to Zachary Sears, a senior economist at Tourism
Economics, which is part of the research firm Oxford Economics.
The resort has 1,500 employees -- many of whom had been laid off
during the bankruptcy -- but when all the hotels are open, the
plan is to have 5,500, The New York Times notes. According to
estimates from a 2013 report from Oxford Economics, Baha Mar could
contribute around 12 percent to the gross domestic product of the
Bahamas once the resort is complete and operating, the report
relays.
Much of Baha Mar's appeal was expected to come from its emphasis
on Bahamian culture and the local environment, according to the
resort's president, Graeme Davis.
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The bankruptcy cases are assigned to Judge Kevin J. Carey. The
Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz,
Esq.,and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in New York. The Debtors' Delaware counsel are Laura
Davis Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson,
Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones
LLP, in Wilmington, Delaware. The Debtors' Bahamian counsel is
Glinton Sweeting O'Brien. The Debtors' special litigation counsel
is Kobre & Kim LLP. The Debtors' construction counsel is Glaser
Weil Fink Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime
Clerk LLC.
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B R A Z I L
===========
RB CAPITAL: Moody's Hikes Global Scale LC Rating to B1
------------------------------------------------------
Moody's America Latina Ltda. has upgraded to B1 from B2 (global
scale, local currency) and to Baa1.br from Ba2.br (national scale)
the ratings of 3rd series of certificates of RB Capital
Securitizadora S.A., the 4th series of certificates of RB Capital
Securitizadora S.A and the 42nd series of certificates of RB
Capital Securitizadora S.A.. These three series of real estate
certificates (CRI) issued by RB Capital Securitizadora S.A. are
backed by built-to-suit lease agreements with Petr¢leo Brasileiro
S.A. -- Petrobras (B1 positive outlook).
The rating action follows Moody's decision to upgrade Petrobras'
senior unsecured rating to B1 (positive outlook) from B2 (stable
outlook) on 10 April 2017.
The full rating action is:
Issuer: RB Capital Securitizadora S.A.
3rd series CRI backed by a built-to-suit lease agreement: Upgraded
to B1 from B2 (global scale, local currency); Upgraded to Baa1.br
from Ba2.br (national scale); and
4th series CRI backed by a built-to-suit lease agreement: Upgraded
to B1 from B2 (global scale, local currency); Upgraded to Baa1.br
from Ba2.br (national scale); and
42nd series CRI backed by a built-to-suit lease agreement:
Upgraded to B1 from B2 (global scale, local currency); Upgraded to
Baa1.br from Ba2.br (national scale).
RATINGS RATIONALE
Moody's views the certificates as being full pass through of
Petrobras' senior unsecured credit risk under the built-to-suit
lease agreements.
The B1 / Baa1.br ratings of the 3rd, 4th and 42nd series of
certificates issued by RB Capital Securitizadora S.A. are
primarily based on Petrobras' ability to make payments under the
underlying lease agreements. Also, Petrobras covers any trust
expenses. Finally, a termination event under the lease agreements
would result in a call under the rated certificates.
Factors that would lead to an upgrade or downgrade of the ratings:
Any future changes to the senior unsecured debt rating of
Petrobras will lead to a change in the ratings assigned to the
certificates.
RATING METHODOLOGY
The principal methodology used in these ratings was "Rating
Transactions Based on the Credit Substitution Approach: Letter of
Credit-backed, Insured and Guaranteed Debts," published in
December 2015.
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B O L I V I A
=============
BOLIVIA: Coca Growers Seek Suspension of New Coca Law
-----------------------------------------------------
EFE News reports that coca growers of the subtropical Yungas
region in the Bolivian province of La Paz expressed their
intention to file suit before the Constitutional Court against the
new coca law enacted last March, which enlarges the legal area of
coca crops in Bolivia from 12,000 to 22,000 hectares (30,000 to
54,000 acres).
Representatives of the La Paz Provincial Coca Producers
Association (Adepcoca) told the media they wish to file an appeal
of partial unconstitutionality against two articles of Law 906
because they violate the constitution, which specifically protects
"the ancestral original coca," according to EFE News.
==========================
C A Y M A N I S L A N D S
==========================
AMDS SERVICE: Shareholders' Final Meeting Set for April 21
----------------------------------------------------------
The shareholders of AMDS Service Co., Limited will hold their
final meeting on April 21, 2017, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Liu Minghua
Five Villager Group 012
Rock Plate Beach Village
Jianshi Town
Taoyuan County, Hunan
China
Telephone: +86 0755 8337 4353 8009
ARKONA LIMITED: Shareholders' Final Meeting Set for April 26
------------------------------------------------------------
The members of Arkona Limited will hold their final meeting on
April 26, 2017, at 9:00 a.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Windward 1, Regatta Office Park
P.O. Box 897 Grand Cayman KY1-1103
Cayman Islands
Telephone: (345) 949-7576
Facsimile: (345) 949-8295
BOAT LIMITED: Shareholders' Final Meeting Set for April 19
----------------------------------------------------------
The shareholders of Boat Limited will hold their final meeting on
April 19, 2017, at 10:00 a.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Christopher McLoughlin
IHS Markit
Ropemaker Place, 4th Floor
25 Ropemaker Street
London EC2Y 9LY
United Kingdom
CFG MEXICO: Shareholders' Final Meeting Set for April 20
--------------------------------------------------------
The shareholders of CFG Mexico Holdings (Cayman) Ltd. will hold
their final meeting on April 20, 2017, at 10:00 a.m., to receive
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
DIDI INVESTMENT: Members' Final Meeting Set for April 28
--------------------------------------------------------
The members of Didi Investment Company will hold their final
meeting on April 28, 2017, to receive the liquidator's report on
the company's wind-up proceedings and property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
FMCP AFRICA: Shareholders' Final Meeting Set for April 24
---------------------------------------------------------
The shareholders of FMCP Africa Liquid Strategies Fund Limited
will hold their final meeting on April 24, 2017, at 10:00 a.m., to
receive the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Krys Global VL Services Limited
Governors Square, Building 6, 2nd Floor
23 Lime Tree Bay Avenue
P.O. Box 31237 Grand Cayman KY1-1205
Cayman Islands
Telephone: +1 (345) 947 4700
Facsimile: +1 (345) 946 6728
FMCP AFRICA MASTER: Shareholders' Final Meeting Set for April 24
----------------------------------------------------------------
The shareholders of FMCP Africa Liquid Strategies Master Fund
Limited will hold their final meeting on April 24, 2017, at
10:15 a.m., to receive the liquidator's report on the company's
wind-up proceedings and property disposal.
The company's liquidator is:
Krys Global VL Services Limited
Governors Square, Building 6, 2nd Floor
23 Lime Tree Bay Avenue
P.O. Box 31237 Grand Cayman KY1-1205
Cayman Islands
Telephone: +1 (345) 947 4700
Facsimile: +1 (345) 946 6728
HARMONY PEACE: Members' Final Meeting Set for April 28
------------------------------------------------------
The members of Harmony Peace Holding Limited will hold their final
meeting on April 28, 2017, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Karen Anne Marshall
c/o Cone Marshall Limited
Telephone: +64 9 307 3950
Level 3, 18 Stanley Street
Auckland Central 1010
New Zealand
MALOU INVESTMENTS: Shareholders' Final Meeting Set for April 27
---------------------------------------------------------------
The shareholders of Malou Investments Limited will hold their
final meeting on April 27, 2017, to receive the liquidator's
report on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Zedra Directors (Cayman) Limited
c/o Enola Reid
136 Shedden Road
One Capital Place, 3rd Floor
P.O. Box 487, George Town Grand Cayman KY1-1106
Cayman Islands
Telephone: +1 (345) 914-5413
M.A.M COMPANY: Shareholders' Final Meeting Set for April 27
-----------------------------------------------------------
The shareholders of M.A.M Company Limited will hold their final
meeting on April 27, 2017, to receive the liquidator's report on
the company's wind-up proceedings and property disposal.
The company's liquidator is:
Zedra Directors (Cayman) Limited
c/o Enola Reid
136 Shedden Road
One Capital Place, 3rd Floor
P.O. Box 487, George Town Grand Cayman KY1-1106
Cayman Islands
Telephone: +1 (345) 914-5413
NANU INVESTMENTS: Shareholders' Final Meeting Set for April 28
--------------------------------------------------------------
The shareholders of Nanu Investments Limited will hold their final
meeting on April 28, 2017, at 10:30 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Russell Smith
c/o Antoine Powell
BDO CRI (Cayman) Ltd.
Building 3, Floor 2, Governors Square
23 Lime Tree Bay Avenue
P.O. Box 31229 Grand Cayman KY1-1205
Cayman Islands
Telephone: (345) 815-4558
SYMBEST LTD: Shareholders' Final Meeting Set for April 28
---------------------------------------------------------
The shareholders of Symbest Ltd. will hold their final meeting on
April 28, 2017, at 10:30 a.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Trident Liquidators (Cayman) Ltd.
c/o Lisa Thoppil
One Capital Place, 4th Floor
P.O. Box 847, George Town Grand Cayman, KY1-1103
Cayman Islands
Telephone: (345) 949 0880
Facsimile: (345) 949 0881
VERTIGO LIMITED: Members' Final Meeting Set for April 28
--------------------------------------------------------
The members of Vertigo Limited will hold their final meeting on
April 28, 2017, to receive the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
=============
J A M A I C A
=============
IAN FLEMING INT'L: Government Urged to Divest Airport
-----------------------------------------------------
RJR News reports that the Parliamentary Opposition wants the
Jamaican Government to delay the expansion of Ian Fleming
International Airport in St. Mary, given the losses it has been
racking up.
During his contribution to the Sectoral Debate, Opposition
Spokesman on Transport Mikael Phillips said the airport is losing
50 to 70 million dollars annually, according to RJR News.
Mr. Phillips said, with 2,700 landings, of which only 200 are
foreign aircraft, it would not be prudent to spend $2 billion to
extend the runway and carry out improvements to the terminal
building, RJR News notes.
The report relays that Mr. Phillips claimed that, even with the
expansion, the largest planes that will be able to land at Ian
Fleming International will be regional carriers and 90 seater
planes.
He added that, given the completion date of February 2018, the
expenditure is likely to be higher than $2 billion and called for
the Transport Minister to give the country an update on the cost
and scope of work to be carried out with time-lines set, the
report notes.
The Opposition Spokesman also called for Transportation Minister
Mike Henry to state whether any contracts have been signed with
carriers to bring flights to Ian Fleming International, the report
discloses.
He recommended that the government approach hoteliers and private
investors and package Ian Fleming International for divestment,
the report adds.
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P E R U
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ORAZUL ENERGY: Fitch Assigns BB Long-Term IDR; Outlook Stable
-------------------------------------------------------------
Fitch Ratings has assigned 'BB' Long-Term Foreign Currency and
Local Currency Issuer Default Ratings (IDRs) to Orazul Energy
Egenor S. en C. por A. and Subsidiary (Egenor). Fitch has also
assigned a 'BB(EXP)' rating to Egenor's USD$550 million of
proposed senior unsecured notes to be jointly guaranteed by
Egenor's subsidiaries and its sister company Aguaytia Energy del
Peru S.R.L. (Aguaytia) and subsidiaries. Both Egenor and Aquaytia
are wholly-owned subsidiaries of Orazul Energia Peru S.A.C.
The Rating Outlook is Stable.
KEY RATING DRIVERS
Egenor's rating considers the combined assets and operations of
Egenor and Aguaytia and is supported by Orazul's sizeable
hydroelectric assets combined with its vertically integrated
thermal generation business, which provides the company with
unique operational and financial flexibility in the Peruvian
energy market. Further, the company benefits from a strong
contracted position that lowers overall business risk. This
flexibility and lower business risk profile mitigates the negative
pressure from the leverage levels that are high for the rating
category, as well as serving as a counterbalance to commodity
volatility within the smaller hydrocarbon segment of the business.
Contracts Lower Business Risk and Cash Flow Volatility
In 2016, over 80% of Orazul's energy sales were under power
purchase agreements (PPAs), primarily to distribution companies
and with 10% to 15% of sales going to the mining sector.
Counterparty risk is low, with roughly a quarter of the company's
client base being composed of high quality Peruvian corporates.
Orazul's energy contracts are dollar linked, effectively
mitigating foreign exchange volatility. PPAs are medium-term in
duration. Fitch estimates that approximately 30% of Orazul's
energy revenues are from capacity payments. Orazul derives 90% of
its revenues from energy sales.
The remaining 10% of sales relate to hydrocarbon products, namely
natural gasoline and liquefied petroleum gas. These products have
been under pressure and are expected to remain only marginal
contributors to overall revenues and profitability. In the last
several years, Aquaytia's sole off-taker for natural gas, Maple
Gas, has struggled to keep its accounts up-to-date. Consequently,
in 2016, Aguaytia wrote off USD$9 million of bad debt related to
receivables from Maple Gas. It is expected to take an additional
USD$6 million of impairments in 2017 before improved distribution
infrastructure allows the company to redirect sales to financially
stronger clients.
Metrics to Remain Elevated
Fitch expects Orazul's gross leverage to exceed 4.5x on a
sustained basis following the issuance of the proposed USD$550
million bond. The debt will go towards repaying existing debt at
the Egenor level, with the remaining funds replacing the
shareholders' acquisition financing. While operation cost
efficiencies will have a positive medium-term impact, a shallow
demand curve will limit EBITDA growth through the rating horizon.
Positively, additional financing needs are unlikely in the medium
term. Although the company expects to maintain only a minimum
operating cash balance of approximately USD$10 million, liquidity
concerns are substantially softened by undrawn committed credit
facilities for USD$25 million.
Vertical Integration Provides Cyclical Upside
Termoselva is the thermal generation subsidiary of Aguaytia, with
an effective capacity of 176MW and a natural gas supply contract
with its own parent. As a gas producer and thermal generator, the
company is uniquely positioned to take advantage of dispatch
controls overseen by COES, Peru's electricity grid coordinator.
Termoselva can overdeclare its fuel cost when spot prices are low,
effectively removing itself from the dispatch curve and capturing
margin between its contracted price and the resale of energy
purchased on the spot market while incurring only minimal
operating expenses.
The rest of the country's generators depend on gas sourced from
Peru's primary gas field, Camisea, and are subject to price
controls set up by the regulator. Termoselva also enjoys an
advantage in that theoretically it could buy gas at cost from
Aguaytia. In December of 2016, the royalty was reduced from
USD2.5/MMBTU to USD1.7/MMBTU. Were Termoselva to buy at cost, it
would be among the lowest cost thermal generators in Peru.
Possible Near-term Price Benefits
The possibility of demand surpassing economically efficient supply
creates upside potential for spot sales at the level of Egenor.
Over the last several years, investment in new capacity has
created energy oversupply which, combined with the low cost of
fuel, has kept spot prices low. Approximately 1.5GW of capacity
has been thermal generation in the southern part of Peru, outside
of the country's main gas pipeline footprint and largely dormant
due to fuel cost inefficiency.
The Gasoducto Sur Peruano (GSP) was supposed to extend natural gas
supply to this region more or less as the supply demand gap was
closing. In light of the Odebrecht corruption scandal,
construction on the GSP has been halted, and there are scant
indications that it could be completed now before 2023 at the
earliest. This could result in a sharp elevation in spot prices if
demand dynamics result in the activation of expensive thermal
assets in a few years.
KEY ASSUMPTIONS
-- Volume trend remains shallow through the medium term;
moderately higher spot sales at Egenor;
-- Significantly higher spot purchases in 2017 at Aguaytia,
reflecting fuel cost overdeclaration. Internal generation to
bounce back to historical levels thereafter, as spot prices
gradually increase;
-- Capex bump in 2017 as natural gasoline storage and loading
facility is completed; maintenance capex thereafter;
-- Additional writedowns of Maple Gas impairments in 2017,
flexibility to store product and find new offtakers will
improve profitability of hydrocarbon segment after July 2017
COD of new facility;
-- USD$550 million bond issuance in 2017;
-- Excess cash above USD$10 million to be upstreamed to
shareholders.
RATING SENSITIVITIES
A negative rating action could be considered if leverage were to
substantially exceed 5.0x on a sustained basis. Alternately, a
material rebalancing of the companies' contractual base resulting
in significant cash flow volatility could be viewed negatively in
light of the already-elevated leverage levels.
A positive rating action could be considered if leverage were to
fall below 4.0x on a sustained basis.
LIQUIDITY
Orazul has maintained a conservative capital structure over the
past three years at both Egenor and Aguaytia. Through the
historical period, Egenor has had a gross leverage fluctuating
between 1.1x and 1.3x between 2014 and 2016 and a net leverage of
0.4x in 2014, falling to (0.4x) in 2015 and increasing to 1.1x as
of 2016. Aguaytia has maintained a gross leverage at 0.3x in 2014
and 2015 and fell to 0.0x in 2016 while net leverage has been
negative through the three historical years.
On a consolidated basis, Orazul has had gross leverage below 1.0x
since 2014 and a negative net leverage in 2014 and 2015, changing
to 0.4x net leverage as of year-end 2016. Going forward the
issuance planned will change the conservative capital structure
that had been seen over the past. With the planned USD$550 million
issuance, Fitch expects gross leverage to increase to
approximately 5.0x over the forecasted period.
FULL LIST OF RATING ACTIONS
Fitch rates the following:
Orazul Energy Egenor S. en C. por A. and Subsidiary:
-- Long-Term Foreign Currency Issuer Default Rating 'BB';
-- Long-Term Local Currency Issuer Default Rating of 'BB';
-- USD$550 million Senior unsecured proposed bond issuance of
'BB(EXP)'.
The Rating Outlook is Stable.
===============================
T R I N I D A D & T O B A G O
===============================
PRICESMART: US Currency Shortage Hurting Trinidad Operations
------------------------------------------------------------
Caribbean360.com reports that PriceSmart's once lucrative
operations in Trinidad and Tobago are under pressure.
The American warehouse chain, which has four membership clubs in
the capital, Port of Spain, is forecasting a major drop in sales
and its offerings in the twin-island republic in the coming
months, due to the unavailability of US dollars in the country,
according to Caribbean360.com.
It's a tough position for the company once fingered by the
Trinidad and Tobago Central Bank as the single largest user of
foreign exchange in the country, the report notes.
PriceSmart, in its first quarterly filing to the Unites States
Securities and Exchange Commission this year, highlighted its
challenges as it reported that it has been experiencing rough
headwinds in the T&T market, the report relays.
"From time to time, we have experienced a lack of availability of
US dollars in certain markets. This impedes our ability to convert
local currencies obtained through warehouse sales into US dollars
to settle the US dollar liabilities associated with our imported
products. In the second half of fiscal year 2016 and continuing
into fiscal year 2017, we are experi?encing this situation in
Trinidad," PriceSmart said, the report notes.
Noting that it was forced to take action to limit its exposure,
the company said it "had reduced US shipments to Trinidad during
the first three months of fiscal year 2017 by approximately 20 per
cent," the report discloses.
It said this was likely to continue into the second quarter, the
report notes.
PriceSmart said this reduction in shipments would lead to a major
loss in earnings, estimated to run into the millions, the report
relays. "These actions are likely to result in our Trinidad
subsidiary running out of certain merchandise, which could
negatively impact sales in Trinidad in the second and third fiscal
quarters by an estimated US$8 to $10 million," PriceSmart said.
PriceSmart Chief Financial Officer John Heffner said the company
was forced to become more creative in how it secured foreign
exchange at the height of the US cash crunch, the report relays.
"A lot of effort on the part of my team to source incremental hard
currency . . . . is not just US dollars. We actually go after
euros, Canadian dollars and other things that we can translate
into US," Heffner told analysts in a conference call assessing the
situation, the report notes.
The company's Chief Executive Officer Jose Luis Laparte suggested
the challenges facing the company were a reflection of the
economic woes facing Trinidad and Tobago, the report relays.
"The whole Trinidad market has been a little challenging, not only
because of the liquidity issues, but more than anything the whole
economy is having challenges," he noted, the report adds.
=================
V E N E Z U E L A
=================
VENEZUELA: Staves Off Default, but Low Oil Prices Pose a Threat
---------------------------------------------------------------
Clifford Krauss at The New York Times reports that Venezuela has
put off a reckoning on its tens of billions of dollars in debt,
but its ability to avoid a disastrous default will probably
require much higher oil prices than appear likely in the next year
or two, financial experts say.
With its oil production and international reserves falling at an
accelerating rate, the government is juggling as fast as it can to
pay for imported food and medicines while meeting its short-term
bond payments, according to The New York Times. Even as the
country has slashed imports, its reserves have declined by half
over the last two years, to $10.4 billion, the report notes. Most
of that sum is in gold and is pledged as security for many of the
government's creditors, which include international institutional
investors and everyday Venezuelans, the report relays.
"The probability of default is rising," said Stuart Culverhouse,
head of sovereign and credit research at Exotix Partners, a
London-based investment bank that trades Venezuelan bonds on
behalf of clients, the report discloses. "So far their
willingness to pay has been pretty firm, surprisingly so given the
political situation. But you have to ask how long that can
continue when they are probably spending more on debt service than
imports," Mr. Culverhouse added.
Complicating the picture is the escalating political turmoil
challenging President Nicolas Maduro, who needs to shore up his
popularity if he is to retain power in the elections scheduled for
next year, the report relays. Consumers have to endure long lines
for food and other necessities, and hunger is spreading, the
report notes. With Venezuela's refineries in disrepair, even
gasoline is in short supply, the report discloses. A monthly
inflation rate of 20 percent is shrinking the value of paychecks.
International financial experts say that the global oil price will
have to rise about $15 a barrel -- to $70 -- to substantially
improve the financial situation for the government and Petroleos
de Venezuela, its state-owned oil company, better known as PDVSA,
the report notes. With United States oil production rising, and
the commitment of the Organization of the Petroleum Exporting
Countries to extend production cuts in question, few energy
experts expect prices of more than $65 a barrel over the next year
unless political violence causes a serious oil disruption in the
Middle East, the report relays.
The external bond debt of the government and PDVSA amounts to
roughly $60 billion, most of which has been incurred since
President Hugo Chavez took power nearly two decades ago and
installed a socialist-inspired government, the report discloses.
But that tells only a piece of the story, since the country has
additional liabilities with international lending institutions,
the report relays.
China appears to have quietly stopped making new project loans
guaranteed by oil shipments last year, the report notes.
All told, the Venezuelan government and the state oil company owe
$8.5 billion in payments this year, and at least an additional
$7.9 billion in 2018 -- amounts that economists say will further
erode international reserves that form the last defense against
default, the report says.
Venezuela said it would make the nearly $3 billion in payments.
Those are mostly related to PDVSA's April 5.25 percent note, which
requires a combined interest and principal payment of $2.5
billion, and institutional investors said the PDVSA payment had
been made, the report notes. Normally that would be an easy
stretch for an oil company with some of the largest reserves in
the world, the report relays.
But PDVSA is but a shadow of its old self. The company's cash is
running out, its oil fields are losing pressure, critical
equipment at its ports and processing plants is in disrepair, and
it is unable to pay billions of dollars it owes to the
international oil service companies critical to its operations,
the report relays.
Once one of the premier oil exporters, Venezuela now produces
roughly two million barrels a day, down by more than a million
barrels over the last two decades, the report discloses. Experts
say they expect another 10 percent decline in production this
year, the report says.
Since last November, Venezuela has gotten some relief; oil prices
have gradually risen after OPEC cut its oil production by more
than a million barrels a day, to the lowest levels in a year, the
report relays. Venezuela has been one of the leading members of
the cartel pushing for the production cuts, the report notes. Its
recent output, as estimated by the Middle East Petroleum and
Economic Publications, is about 60,000 barrels a day above the
production target Venezuela agreed to last year, the report
relays. Such figures suggest that the country may be cheating a
bit on its commitments.
"They still have rabbits in their hat," said Walter Molano, head
of research and chief economist at BCP Securities, based in
Greenwich, Conn, the report notes. "They will do everything they
can to keep on servicing their debt with the hope that oil
production turns around and oil prices go up," he added.
PDVSA has turned to Citgo, its American-based refinery and gas
station subsidiary, for relief, the report notes. In recent
years, Citgo has borrowed several billion dollars, using its three
refineries and pipeline assets as collateral, with the money going
to Caracas, the report relays. PDVSA pledged about half of
Citgo's equity to bondholders, and the rest to secure a loan from
Rosneft, the Russian oil giant, the report notes.
Late last year, Venezuelan oil officials began to consider
transferring control of a Venezuelan oil field around San Felix to
Citgo to increase Citgo's valuation and raise its creditworthiness
for more borrowing, the report recalls. But at the moment,
financial analysts say, Citgo is not in a position to borrow much
more for its parent company, the report notes.
"Citgo has been used as a cash cow," said Diego Ferro, co-chief
investment officer at Greylock Capital Management, a New York-
based hedge fund that invests in distressed, high-yield bonds,
including Venezuela's, the report notes. "They are trying to get
any cash that they can. And over the next year and a half until
elections, they will go to more absurd ways of monetizing things,"
Mr. Ferro added.
Still, Venezuelan bonds have been a lucrative trade for some
investors, the report relays. When oil prices dipped below $30 a
barrel in February 2016, the April 2017 PDVSA bonds sold at 36
cents to the dollar, the report notes. Those who held the bonds
to maturity will gain a return of nearly 114 percent on principal,
according to Nomura, which trades Venezuelan bonds for clients,
the report says.
"While they are able to muddle through, your exposure to Venezuela
is going to outperform almost everything else in the emerging-
market bond universe," said Siobhan Morden, Nomura's head of Latin
America fixed-income strategy, the report notes. "However, you
have to be very careful to have an exit strategy. You're looking
at an advanced stage of cash-flow stress," he added.
As reported by The Troubled Company Reporter-Latin America
S&P Global Ratings, on Feb. 28, 2017, affirmed its 'CCC' long-term
foreign and local currency sovereign credit ratings on the
Bolivarian Republic of Venezuela. The outlook on both long-term
ratings remains negative. S&P also affirmed its 'C' short-term
foreign and local currency sovereign ratings. In addition, S&P
affirmed its 'CCC' transfer and convertibility assessment on the
sovereign.
***********
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.
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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, Julie Anne L. Toledo, Ivy B.
Magdadaro, and Peter A. Chapman, Editors.
Copyright 2017. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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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 * * *