/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/170807.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, August 7, 2017, Vol. 18, No. 155 Headlines B E L I Z E BELIZE: S&P Affrims 'B-/B' Sovereign Credit Rating, Outlook Stable C A Y M A N I S L A N D S APTOS (CAYMAN): S&P Affirms 'B-' Senior Secured Issue-Level Rating FALCON GROUP: S&P Affirms BB-/B ICR on $100MM Loan, Outlook Stable P U E R T O R I C O ERGON CARIBBEAN: Sept. 6 Plan Confirmation Hearing LA HABICHUELA: Unsecureds to Get 15% for 60 Months Under Plan PUERTO RICO: Creditors Panel Opposes Committee Reconstitution Bid PUERTO RICO: Oversight Board to Probe Debt, Fiscal Crisis PUERTO RICO: Retirees Panel Objects to Additional Appointments - - - - - =========== B E L I Z E =========== BELIZE: S&P Affrims 'B-/B' Sovereign Credit Rating, Outlook Stable ------------------------------------------------------------------ Belize 'B-/B' Sovereign Credit Ratings Affirmed; Outlook Remains Stable 03-Aug-2017 14:04 EDT On Aug. 3, 2017, S&P Global Ratings affirmed its long-term foreign and local currency sovereign credit ratings of 'B-' and short-term foreign and local currency sovereign credit ratings of 'B' on Belize. The outlook on both long-term ratings remains stable. S&P also affirmed its transfer and convertibility assessment at 'B-'. OUTLOOK S&P said, "The stable outlook reflects our view that Belize's fiscal adjustment plan, along with the lower debt service burden and modest economic recovery, would allow for a reduction of the fiscal deficits in the next two years, albeit not at the pace agreed upon under the debt restructuring recent agreement. This reduction of the country's financing needs would balance the risks related to a high debt burden and weak external liquidity. "We could lower the ratings over the next two years if Belize fails to capitalize on the short-term fiscal benefits of the debt rescheduling and reverses the trend of fiscal consolidation. This could lead to renewed liquidity pressures and higher likelihood that the government will delay future interest payments on its commercial debt. "We do not expect an upgrade over the next two years. Belize's very weak institutional and economic profile weighs on the rating, and improvement would depend on establishing a track record of more effective economic decision-making, supporting a sounder debt payment culture, or a meaningful improvement in economic prosperity. Alternatively, a consistent reduction in fiscal deficits that results in a sharp decline in its debt burden beyond our expectations, coupled with a reduction in its external vulnerabilities, could have a positive impact on the ratings. RATIONALE "The ratings reflect our appraisal of Belize's large fiscal and external imbalances, alongside other economic risks, including the country's vulnerability to external shocks and natural disasters. The ratings also incorporate our assessment of Belize's weak institutions and the absence of monetary and exchange-rate flexibility. Flexibility and performance profile: Lower fiscal deficits and debt service payments could help stabilizing Belize's financial and external profiles. We expect that adjustment measures and some pickup in growth will improve the fiscal metrics over the forecast. "However, we assume that the country will miss its fiscal targets and that net general government debt will remain over 80% during 2017-2019. "External vulnerability is significant in the context of a fixed exchange-rate regime that also constrains monetary policy flexibility. Belize's general government deficit was 4.4% of GDP in fiscal-year 2016-2017, below our previous projection and the 7.5% deficit of fiscal-year 2015-2016. We expect progress in lowering the fiscal deficit over the coming years. Various tax measures put in place this year, including higher excises or import duties on selected products and some changes in the general sales tax, combined with further cuts in capital spending, should reduce the fiscal deficit (and change in general government debt) toward 2.4% of GDP during 2017-2020. Hence, we have improved our assessment of fiscal performance and flexibility. "In March 2017, the government reached a restructuring agreement with private external bondholders on its US$526 million so-called "superbond." The restructuring entailed a reduction in the interest rate on the bonds (which was scheduled to step up to 6.767% in August 2017) and pushed back the beginning of principal repayments to February 2030 from February 2019 in the original amortization schedule. In addition, the agreement advanced the final maturity date to February 2034 instead of February 2038. As part of the agreement, Belize is committed to achieve a primary surplus equal to at least 2% of GDP in the fiscal years 2018-2019 to 2020-2021. Under the agreement, if Belize fails to meet its surplus targets, interest payments will become payable quarterly rather than semiannually. In addition, the government would submit a report to the national assembly to explain why the targets were missed and need to request International Monetary Fund technical assistance. "Although we anticipate the government will make progress in lowering the fiscal deficit over the coming years, we expect the government to miss these fiscal targets based on our forecasts for sluggish economic growth next year. In our opinion, the government has limited ability to cut spending substantially, given Belize's shortfall in basic infrastructure and the government's commitment to implement the third and final stage of the three-year wage increase agreement. In addition, the large informal sector and low per capita GDP growth prospects limit the ability to raise revenues. On the other hand, according to the government, resources were set aside at the central bank for the final compensation payment for the nationalized company Belize Telecommunication Ltd. (BTL)--estimated around US$90 million. Therefore, we do not expect additional significant pressures on the budget coming from this claim. "Fiscal discipline will be critical in reducing Belize's high general government debt burden, which we project at 85% of GDP in 2017, in net terms. This heavy debt burden is a credit constraint, particularly given Belize's narrow, open economy and fixed exchange regime. Belize's interest costs will average 9.6% of government revenues in 2017-2020, in line with the amended interest rate on the U.S. dollar bonds. "The composition of government debt, predominantly denominated in foreign currency and held by nonresidents, weighs on our debt assessment. The government has not tapped global capital markets since its restructuring in 2012. In our opinion, access to global capital markets will remain limited in the coming years given Belize's legacy of defaults. The government relies on shallow domestic capital markets, central bank financing, and financing from official creditors, though we expect lower funding from Venezuela through its Petrocaribe program. We assess Belize's contingent liabilities as limited. "Despite an expected further narrowing of Belize's current account deficit in 2017, to 7.3% of GDP from 9.4% in 2016 (based on a recovery in commodity exports and growth in tourism), Belize's external position is highly vulnerable. We expect Belize's gross external financing needs to average 146% of current account receipts (CAR) plus usable reserves in 2017-2020. We project foreign direct investment (FDI) will remain low in the near term because of the likely repatriation of the compensation payments in foreign currency for the nationalization of BTL, as has been observed in the past two years. As a result, we expect net FDI to remain stable at low levels (2% of GDP) in 2017-2019 given that there are no significant foreign investments in the pipeline. This will underpin an ongoing fall in international reserves. "We expect narrow net external debt to reach almost 74% of CAR in 2017. Belize's net external liabilities are, however, substantially larger than narrow net external debt. The country's external profile is vulnerable to a risk of marked deterioration in external financing caused by worsening financing conditions for the banking sector, as seen most recently with the loss of correspondent banking relations (CBRs), or a potential significant shift in FDI." The loss of CBRs in 2015-2016 hurt Belize's financial sector and the entire economy, as a result of higher transaction and compliance costs and restricted access to financial services for key economic sectors, including tourism and trade. While all banks eventually found replacement correspondents, their financial relationships are not as extensive, and the range of services is more limited than those previously provided. Belize's monetary flexibility is limited by its fixed exchange and lack of development of local currency capital markets. On the other hand, the currency peg fosters price stability, keeping price inflation low (just below 2% projected on average over 2017- 2020). Institutional and economic profile: -- Belize's weak institutional capacity, along with its history of debt defaults and low economic growth, continues to constrain S&P's ratings. -- S&P expects the economy to expand by 1.6% in 2017, after a contraction of 0.8% in 2016. -- Belize's weak rule of law limits prospects for an improvement of the business environment Belize's poor payment history influences S&P's ratings. -- In March 2017, Belize has completed its third debt restructuring in the last 10 years. Economic growth in Belize continues to be below that of peers. Falling primary output, damage caused by Hurricane Earl, the loss of CBRs, and the appreciation of the inflation-adjusted exchange rate underpin the estimated economic contraction in 2016 (-0.8%). S&P said, "We expect that GDP will increase by 1.6% in 2017 and 2% in 2018 based on agriculture and tourism growth. On the other hand, fiscal tightening may further disrupt the economic activity "We project Belize's per capita GDP will be US$4,667 in 2017, and per capita growth remains below that of its peers with a similar level of development. Domestic industry is small, constrained by relatively high-cost labor and energy and a small domestic market (estimated population of 376,000). In addition, Belize is vulnerable to natural disasters. The authorities failed to take advantage of periods of stronger economic growth to improve the country's physical infrastructure, which is very deficient. "Although risks to political stability will remain low in the coming four years, we find Belize's institutions to be weak. Policy choices under successive governments have weakened the capability and willingness to maintain sustainable public finances. Governments have shown limited capacity to reduce the high cost of doing business. Prime Minister Dean Barrow, of the centre-right United People's Party, is serving his third and final five-year term (2015-2020). Fiscal imbalance and debt overhang are key challenges for the government. Belize's repeated debt restructurings influence our ratings. "In accordance with our 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 agreed that the fiscal performance assessment had improved. All other key rating factors were unchanged. 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. The weighting of all rating factors is described in the methodology used in this rating action. RATINGS LIST Ratings Affirmed Belize Sovereign Credit Rating B-/Stable/B Transfer & Convertibility Assessment B- Senior Unsecured B- Short-Term Debt B ========================== C A Y M A N I S L A N D S ========================== APTOS (CAYMAN): S&P Affirms 'B-' Senior Secured Issue-Level Rating ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issue-level rating on Atlanta, Ga.-based point of sale (POS) and business software solutions provider Aptos (Cayman) L.P., following its plan to issue an incremental $83 million add-on to its first-lien term loan and draw approximately $15 million on its revolver, which will be upsized by $10 million to a $25 million facility. Aptos will use proceeds to fund an acquisition. S&P said, "In our view, this transaction does not materially change Aptos' credit profile. We expect pro forma leverage to be in the low-7x area at close, and remain in that range through fiscal 2018 ending Sept. 30, 2018, with only modest EBITDA contribution from the acquisition. The recovery rating is '3' indicating our expectation of meaningful (50%-70%; rounded estimate: 55%) recovery in the event of a default. "The 'B-' corporate credit rating and outlook on Aptos are unchanged. The stable outlook reflects our expectation that Aptos will achieve modest top-line and EBITDA growth over the next 12 months, while maintaining positive free cash flow generation and adequate liquidity. Liquidity remains adequate, in our view, with cash of about $10 million and roughly $10 million of availability under the company's $25 million revolving credit facility expiring 2021 at transaction close. The company's net leverage financial maintenance covenant on its term loan and revolving credit facility will be reset as a result of this transaction, and we expect the company to maintain over 20% cushion over the next 12 months." For the latest rationale, see S&P's research update on Aptos, published on June 28, 2017. RATINGS LIST Aptos (Cayman) L.P. Corporate Credit Rating B-/Stable/-- Affirmed Ratings Aptos (Cayman) L.P. Senior Secured* B- Recovery Rating 3 (55%) *$83 mil 1st-lien term loan add-on and $10 mil revolver upsize. FALCON GROUP: S&P Affirms BB-/B ICR on $100MM Loan, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings said it has affirmed its 'BB-/B' long- and short-term issuer credit ratings on trade finance provider Falcon Group Holdings (Cayman) Ltd. The outlook is stable. S&P said, "The affirmation follows Falcon's recent finalization of a $100 million five-year term loan transaction with KKR Credit. In our view, this new loan enables Falcon to expand and diversify funding sources, support international growth, and broaden its client and product base." Falcon continues to fund the majority of its transactions through nonrecourse refinancing with a range of banks shortly after origination. However, the KKR Credit loan, an updated $150 million securitization transaction with Natixis, and Falcon's own balance sheet resources provide additional capacity to finance new business. We note from Falcon's latest accounts that the securitization facility has become fully consolidated, adding $16.7 million in debt to its balance sheet as of Jan. 31, 2017. S&P said, "We follow the revised accounting treatment when assessing Falcon's financial risk profile. "We had previously assumed a $150 million benchmark debt issue in our financial projections for Falcon. Therefore, the KKR Credit loan and the consolidation of the securitization facility do not materially affect our expectations for Falcon's debt and cash flow metrics. Under our revised forecasts for 2017-2018, we project gross debt at the lower end of 3x-4x of adjusted EBITDA, with funds from operations at the middle of the 20%-30% range of gross debt. These metrics remain commensurate with our significant financial risk profile assessment. We understand that Falcon's internal policy is to maintain at least $40 million in cash and liquid assets on its balance sheet at all times, and we recognize $30 million of this sum as surplus cash in our debt leverage metrics. "The ratings on Falcon continue to reflect our view of its niche position in the global trade finance market and the leverage and debt servicing profiles resulting from its funding strategy. Founded in 1994, it specializes in financing midsize corporate clients through short-term transactions that are generally too bespoke or too small to be a focus for many bank competitors. We expect that Falcon will continue to generate relatively predictable, recurring cash flows from its asset-light and low- cost business model. We consider that barriers to entry into this market are relatively low, but Falcon's track record and established client and counterparty relationships would be difficult to replicate." Falcon reported a gross profit margin of 2.6% in the financial year ending Jan. 31, 2017, down from 3.0% the previous year. The slowdown in global trade, weaker economic growth in some Gulf Cooperation Council (GCC) countries, combined with increased U.S.$ libor interest rates, led to a 25% reduction in Falcon's revenues. Nevertheless, credit losses were minimal and Falcon remained profitable, continued to invest in its franchise, and maintained a low risk appetite. S&P said, "We think that Falcon's earnings and activity levels will grow modestly in 2017-2018, as trade volume recovers and GCC countries benefit from more stable prices. We also expect that recent geographical expansion and new product investments will start to contribute to Falcon's bottom-line results in the medium term. "Our stable outlook on Falcon reflects our expectation that the company will successfully operate in the currently difficult global environment and expand organically by broadening the range of its trade finance services and widening its geographic spread. If Falcon revises its established financing strategy, we expect it to maintain leverage and debt servicing metrics consistent with the current ratings. "We could lower the ratings if Falcon introduces a more aggressive financial policy, such as by raising materially more debt (including securitized debt) than we assume, with no mitigating factors. We could also lower the ratings if we thought that Falcon had materially increased its risk appetite, particularly if it weakened its underwriting criteria or expanded in noncore, riskier business areas in an uncontrolled manner. "A positive rating action is unlikely in the next 12 months. In the longer term, we could raise the ratings if Falcon executes its growth and financing strategy successfully, benefiting its franchise, revenue base, and financial metrics. In addition, we would consider whether Falcon is continuing to enhance its corporate governance and internal controls as it grows." ====================== P U E R T O R I C O ====================== ERGON CARIBBEAN: Sept. 6 Plan Confirmation Hearing -------------------------------------------------- The Hon. Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico has conditionally approved Ergon Caribbean Corp.'s disclosure statement dated July 24, 2017, referring to the Debtor's plan of reorganization. A hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan and of objections as may be made to either will be held on Sept. 6, 2017, at 2:00 p.m. Objections to the final approval of the Disclosure Statement and the confirmation of the Plan must be filed on or before 10 days prior to the date of the hearing on confirmation of the Plan. Acceptances or rejections of the Plan may be filed in writing by the holders of all claims on or before 10 days prior to the date of the hearing on confirmation of the Plan. About Ergon Caribbean Corp. Ergon Caribbean Corp. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 17-00366) on Jan. 25, 2017. The petition was signed by Juan Gabriel Pla, president. At the time of the filing, the Debtor estimated assets and liabilities of less than $500,000. Carmen D. Conde Torres, Esq., at C. Conde & Assoc. serves as the Debtor's bankruptcy counsel. LA HABICHUELA: Unsecureds to Get 15% for 60 Months Under Plan ------------------------------------------------------------- La Habichuela, Inc., filed with the U.S. Bankruptcy Court for the District of Puerto Rico an amended disclosure statement explaining its plan of reorganization, dated July 28, 2017. Class 4 under the plan consists of the General Unsecured Commercial Creditors & Unsecured Tax deficiencies of the Puerto Rico Treasury Department. This class will get a prorated monthly disbursement of 15% of claim for 60 months from the effective date of the plan. The funding of the plan will come from the savings since filing the petition for relief and continuation of operations of the three restaurants. A full-text copy of the Amended Disclosure Statement is available at: http://bankrupt.com/misc/prb15-09171-11.pdf About La Habichuela, Inc. La Habichuela, Inc, based in Carolina, Puerto Rico, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 15-09171) on November 19, 2015. Francisco R. Moya Huff, Esq. serves as bankruptcy counsel. In its petition, the Debtor estimated $164,372 in assets and $1.23 million in liabilities. The petition was signed by Francisco Cabello Dominguez, secretary. PUERTO RICO: Creditors Panel Opposes Committee Reconstitution Bid ----------------------------------------------------------------- BankruptcyData.com reported that the Commonwealth of Puerto Rico's official committee of unsecured creditors filed with the U.S. Bankruptcy Court an objection to the ad hoc group of general obligation (GO) bondholders' motion to reconstitute the official committee of unsecured creditors. The objection asserts, "The Trustee has ably fulfilled its statutory duties by appointing a diverse and representative Committee comprised of trade creditors, unions representing current employees, and tax refund creditors. Each of the Committee members remains unpaid and is dedicated to working diligently to protect and maximize the recoveries of all general unsecured creditors. The Committee's members have one other thing in common: they are undoubtedly unsecured creditors. By contrast, the GO Group has been arguing for years that it holds secured claims, and it does so again in the first paragraph of this Motion where it requests to be appointed to the unsecured creditors' committee. The GO Group fails to cite a single case where a court appointed a creditor holding only secured claims (or a creditor arguing that it is 'fully secured') to an unsecured creditors' committee because no such case exists. While the Committee does not disagree with the basic premise that an unsecured bondholder owed several billion dollars could be selected by the Trustee to sit on an unsecured creditors' committee, the Trustee refused to appoint the GO Group to the Committee because it insists that it holds fully secured claims, rather than unsecured claims. The GO Group is, therefore, the architect of its own predicament. The relief requested by the GO Group is simply premature. If, in the future, they concede that they are unsecured creditors, or the Court makes that determination for them, it may be appropriate for Trustee to add representation from the Commonwealth Bondholders to the Committee. That cannot happen, however, as long as the question remains in doubt regarding whether the Commonwealth's general obligation bonds are fully secured by all available resources." About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are onboard as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at: https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., Franklin Advisers, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $3.5 billion in COFINA Bonds and over $2.9 billion in other bonds issued by Puerto Rico and other instrumentalities, including over $1.8 billion of Puerto Rico general obligation bonds ("GO Bonds"). White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC, Monarch Alternative Capital LP, Senator Investment Group LP, and Stone Lion Capital Partners L.P. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed a nine-member Official Committee of Retirees and a seven-member Official Committee of Unsecured Creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. PUERTO RICO: Oversight Board to Probe Debt, Fiscal Crisis --------------------------------------------------------- The Financial Oversight and Management Board for Puerto Rico, created by Congress under the bipartisan Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), announced Aug. 2 its intention to commence a comprehensive investigation of Puerto Rico's debt and its relationship to the fiscal crisis. Consistent with the Procedures for Conducting PROMESA Investigation, adopted by the Oversight Board on May 26, 2017, the investigation will include a review of the fiscal crisis and its contributors, and an examination of Puerto Rico's debt and its issuance, including disclosure and selling practices. The Oversight Board will conduct this investigation pursuant to the authority granted to it by Congress and the President under PROMESA. The Oversight Board has been specifically given the authority by Congress under PROMESA to conduct an investigation into Puerto Rico's debt and its connection to the current fiscal crisis. The Oversight Board considers this investigation an integral part of its mission to restore fiscal balance and economic opportunity and to promote Puerto Rico's reentry to the capital markets pursuant to its responsibilities under PROMESA. The Board proposes to form a special committee of the Oversight Board for the purpose of appointing an independent investigator to carry out such investigation. The Oversight Board will make its findings public. "As we develop the parameters of the investigation and progress in the appointment of the independent investigator, we will be providing more information," said Oversight Board Executive Director Natalie Jaresko. Contact: Jose Luis Cedeno Tel: 787-400-9245 E-mail: jcedeno@forculuspr.com info@forculuspr.com Board's Contact Information: E-mail: comments@oversightboard.pr.gov Web site: www.oversightboard.pr.gov About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are onboard as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at: https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., Franklin Advisers, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $3.5 billion in COFINA Bonds and over $2.9 billion in other bonds issued by Puerto Rico and other instrumentalities, including over $1.8 billion of Puerto Rico general obligation bonds ("GO Bonds"). White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC, Monarch Alternative Capital LP, Senator Investment Group LP, and Stone Lion Capital Partners L.P. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed a nine-member Official Committee of Retirees and a seven-member Official Committee of Unsecured Creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. PUERTO RICO: Retirees Panel Objects to Additional Appointments -------------------------------------------------------------- BankruptcyData.com reported that the Commonwealth of Puerto Rico and its official committee of retired employees of the Commonwealth of Puerto Rico's filed with the U.S. Bankruptcy Court separate objections to the motion seeking appointment of additional committee of government employees and active pension plan participants or, in the alternative, reconstitution of the retiree committee. The committee's objection explains, "Both a motion to direct the appointment of an additional committee and a motion to change the membership of an existing committee require the movant to demonstrate that any existing committee as a whole, or in part, does not adequately represent creditors' interests." The Commonwealth also objected to the ad hoc group of general obligation bondholders' motion to reconstitute the statutory committee of unsecured claimholders. This objection asserts, "The Motion should be denied. Primarily, as the U.S. Trustee put it in denying the reconstitution of the UCC to include Constitutional Debtholders, creditors asserting secured claims or full priority over other unsecured claims have no place on an existing or separate statutory committee of unsecured claimholders." Finally, the Commonwealth objected to the ad hoc municipalities committee's motion requesting the appointment of an additional committee of municipalities. This objection argues, "The Commonwealth's critical need for all its components to work together means its components cannot square off against each other like lone rangers with each fighting for its independent glory at the expense of one another. This may sound obvious, but the numerous pending requests for separate statutory committees for different entities and groups show it is not so obvious. Creation of new committees to focus on one group, entity, or issue, rather than the integrated enterprise, imperils the Commonwealth's survival, just as one would expect when a committee arms itself to pursue one parochial interest at the expense of others." About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are onboard as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at: https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., Franklin Advisers, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $3.5 billion in COFINA Bonds and over $2.9 billion in other bonds issued by Puerto Rico and other instrumentalities, including over $1.8 billion of Puerto Rico general obligation bonds ("GO Bonds"). White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC, Monarch Alternative Capital LP, Senator Investment Group LP, and Stone Lion Capital Partners L.P. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed a nine-member Official Committee of Retirees and a seven-member Official Committee of Unsecured Creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *