/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/171222.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 Friday, December 22, 2017, Vol. 18, No. 254 Headlines A N T I G U A & B A R B U D A ANTIGUA & BARBUDA: Getting US$29MM to Rehabilitate After Hurricane A R G E N T I N A CONCESION RUTA: S&P Cuts to 'BB+' then Withdraws Sr. Notes Rating MASTELLONE HERMANOS: Fitch Hikes IDR to B, Outlook is Stable B R A Z I L BRAZIL: DBRS Aligns Issuer Ratings at BB ODEBRECHT SA: Marcelo Odebrecht Gets Early Prison Release TEGMA GESTAO: Moody's Hikes CFR to B1 on Improved Liquidity D O M I N I C A N R E P U B L I C DOMINICAN REP: Medina Signs Bourse Rules Amendment Bill Into Law DOMINICAN REP: Industries to Snub 'Secretive' Electricity Pact P U E R T O R I C O BEBE STORES: Delists Common Stock from Nasdaq KAMA MANAGEMENT: Needs More Time to Obtain Plan Confirmation SHORT BARK: Exclusive Plan Filing Period Extended Through March 7 V E N E Z U E L A PETROLEOS DE VENEZUELA: S&P Cuts 2024/2021 Notes Rating to 'D' VENEZUELA: Oil Industry Falling Apart - - - - - =============================== A N T I G U A & B A R B U D A =============================== ANTIGUA & BARBUDA: Getting US$29MM to Rehabilitate After Hurricane ------------------------------------------------------------------ Caribbean360.com reports that the Caribbean Development Bank (CDB) has approved US$29 million in funding to the Government of Antigua and Barbuda, to assist with recovery efforts after the passage of Hurricane Irma in September. The funds will be used to rehabilitate and reconstruct critical infrastructure in the transportation, education, water and sanitation, and agriculture sectors, according to Caribbean360.com. Hurricane Irma impacted the twin-island nation on September 6, 2017, making landfall in Barbuda as a Category five hurricane, the report notes. In Barbuda, Irma destroyed housing, crops, livestock and fishing vessels, and also severely impacted the island's water supply, the report relays. The Antigua State College was also affected by heavy winds and rains, while storm surges and flooding caused additional damage to many roads, the report relays. "The destruction caused by Hurricane Irma adversely impacted the lives of many citizens of Antigua and Barbuda. At CDB, we worked very closely with our in-country counterparts to develop the interventions captured in this project, which will support the Government's efforts towards a comprehensive and sustainable approach to the redevelopment process, as it aims to build back better," the report quoted Director of Projects at the Barbados- based CDB, Daniel Best, as saying. "We expect the project to significantly contribute to the restoration of livelihoods that were adversely impacted by the passage of the hurricane. The outcome for Antigua and Barbuda will not only be more resilient infrastructure but also more resilient institutions and people," Mr. Best said, the report relays. The project has several components. Planned infrastructure works include: reconstruction of 11 km of road, and repair of a bridge, along with associated drainage works; reconstruction and rehabilitation of education institutions in both Antigua and Barbuda and construction of teacher accommodation in Barbuda; rehabilitation of the desalination plant and water storage facilities in Barbuda; and the upgrade and rehabilitation of agriculture and fishing infrastructure, the report notes. Additional components include a redevelopment plan and policies for Barbuda, capacity building initiatives and engineering consultancy services, the report says. CDB had previously provided a US$200,000 Emergency Relief Grant and an Immediate Response Loan in the amount of US$750,000 for Antigua and Barbuda, in the aftermath of Hurricane Irma, the report relays. In addition, the Bank has approved a loan of US$11.8 million to assist the Government in meeting its financial obligations to external partners, the report discloses. This will allow the country to fulfill urgent financing requirements without diverting resources away from critical social or emergency recovery needs, the report says. ================= A R G E N T I N A ================= CONCESION RUTA: S&P Cuts to 'BB+' then Withdraws Sr. Notes Rating ----------------------------------------------------------------- S&P Global Ratings lowered the preliminary rating on Concesion Ruta al Mar's senior secured notes (due 2044) to 'BB+' from 'BBB- '. Subsequently, S&P withdrew the rating at the issuer's request. The outlook at the time of the withdrawal was stable. S&P said, "The downgrade on Ruta al Mar follows our revision of Bancolombia, a direct financial counterparty, which will provide Letters of Credit (LoC) to the transaction. "We expect that those LoCs will provide credit enhancements that diminish, in our view, particular risks within both the construction and operational phases. Thus, the rating on the project's debt is now limited by the issuer credit rating on Bancolombia. "At the moment of the withdrawal the outlook on the notes was stable and reflected our expectation that the construction of the road would evolve as projected, on time, and within budget. We also expected that operations of the Unidades Funcionales (functional units; UFs) that were already delivered would be managed effectively in the next 12 to 24 months, generating relatively stable cash flow." MASTELLONE HERMANOS: Fitch Hikes IDR to B, Outlook is Stable ------------------------------------------------------------ Fitch Ratings has upgraded Mastellone Hermanos Sociedad Anonima's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'B' from 'B-'. The senior unsecured notes are upgraded to 'B/RR4' from 'B-/RR4'. The Rating Outlook is Stable. The upgrade of Mastellone's ratings is due to the company's solid liquidity position and vastly improved credit metrics as a result of the USD35 million capital injection from Arcor SAIC's (B+/Positive) and Bagley Argentina S.A., Arcor's subsidiary, during 2017. This capital increase further solidifies Mastellone's position as a long-term strategic investment for Arcor. The upgrade also reflects the expected improvement in Mastellone's operating performance because of improved operating performance and the expectation of the continuation of the Macri government's pro-business economic policies following the recent election. More than 90% of Mastellone's sales were made in Argentina during 2017 and the company is highly reliant upon producers of raw milk in the country. KEY RATING DRIVERS Shareholder Support: Fitch factors into Mastellone's rating the financial support from Arcor and Bagley. In December 2015, the two paid USD50 million for a 20.2% stake in Mastellone. Later in that year they increased their participations to 25%. This stake was increased to 38.4% in early 2017 based on a USD35 million capital increase from Arcor and Bagley and further transactions with the Mastellone family. Arcor has a call option for the outstanding corporate stock of Mastellone starting in 2020 and is expected to continue to increase its stake in the company. Low Leverage: The company's credit metrics are strong for the 'B' rating category. Fitch expects gross leverage to decline to 2.5x by 2018 from 3x in 2016 due to increased EBITDA related to price increases, low volume growth, and improved operating efficiencies. The company opened a new dry plant in Trenque Lauquen in 2017 after a total investment of about USD22 million. Fitch expects Mastellone to generate positive FCF despite increased investments in process automation, productivity, packaging, and capacity. Geographical Concentration: Mastellone generates most of its sales in Argentina. Sales outside Argentina as of Sept. 30, 2017 were about 7% in Brazil and Paraguay domestic markets and 1% from exports. The company is exposed to double-digit inflation in Argentina and other direct and indirect sovereign-related risks, including devaluation. Exposure to Currency Risk: Mastellone's debt is USD-denominated and creates currency risk, as company sales are mainly in Argentine pesos. The company has not entered into any agreements to hedge its debt exposure to devaluation risk. Volatility of Raw Milk Production: Mastellone's business is divided between sales to the Argentine and Brazilian and Paraguay domestic markets and exports; the excess between raw milk supply and domestic sales is exported. A shortage of raw milk production could lead to interruption of the company's export and foreign business or an increase in production costs. Strong Business Position: Mastellone is the largest dairy company and the leading processor of dairy products in Argentina. It is first in the fluid milk market regarding physical volume with a market share of approximately 66%. The company maintains the first- and second-place market position in most of its product lines. Its strong market shares allow it to benefit from economies of scale in the production, marketing, and distribution of products. Mastellone purchases about 16% of raw milk production in Argentina, which provides it with a degree of negotiating power. DERIVATION SUMMARY Mastellone is the largest dairy company and the leading processor of dairy products in Argentina. The concentration of Mastellone's operations in Argentine (B/Positive) is a constraining factor for the rating, as is its size. Mastellone displays a weaker position in terms of scale, product diversification, profitability and geographical diversification compared to its international peers such as Fonterra Co-operative Group Limited (A/Stable), Nestle SA (AA/Stable), Sigma Alimentos, SA de C.V. (BBB/Stable) or to Arcor (B+/ Positive) in Argentina. Mastellone's gross leverage is low for the 'B' rating category and compares favorably with its peers. During 2016, the median gross leverage ratio was 5.1x for the 'B' rating category in Latin America. The 'B' rating relative to leverage levels of around 3x reflect the weak economic environment in Argentina and risks in that country such as high inflation. Industry risks also have resulted in a more conservative rating than leverage metrics would indicate. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer -- Revenues grow driven by domestic price increase above inflation in 2017; -- EBITDA margin close to 6% in 2018; -- Capex of around USD23 million in 2017; -- Debt/ EBITDA to 2.5x in FYE18. Key Recovery Rating Assumptions Fitch believes that a debt restructuring would likely occur under stressed economic conditions in Argentina and/or external shocks such as climatic events or lack of access to certain export markets Therefore, Fitch has performed a going-concern recovery analysis for Mastellone that assumes the company would be reorganized rather than liquidated. Key Going-Concern Assumptions -- Mastellone would have going-concern EBITDA of about ARS729 million. This figure is conservative at 40% below the company's LTM EBITDA of ARS1.2 billion, and takes into consideration factors such as climatic events, changes in raw material costs, sourcing and logistic issues, potential strikes or a shutdown of exports markets; -- A distressed multiple of 6.5x due to strong brand and dominant position the Argentina dairy business; -- A distressed enterprise value of ARS4.3 billion (after 10% of administrative claims); -- Total debt of ARS3.5 billion. The recovery performed under this scenario resulted in a recovery level of 'RR1', consistent with securities historically recovering 91%-100% of current principal and related interest. Because of the Fitch's 'RR4' soft cap for Argentina, which is outlined in its criteria, Mastellone's Recovery Rating has been capped at 'RR4', reflecting average recovery prospects. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Sustained gross leverage of 3.0x or lower could lead to an upgrade of the LC IDR -- Sustained gross leverage of 3.0x or lower plus an upgrade of the 'B' Country Ceiling of Argentina could lead to an upgrade of the FC IDR and senior unsecured notes -- Increased ownership above 50% in Mastellone by Arcor and Bagley could result in positive rating actions on the LC IDR, FC IDR and senior unsecured notes Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A downgrade of Argentina's country ceiling rating; -- Weak liquidity; -- Debt to EBITDA above 4x. LIQUIDITY Mastellone liquidity is strong. The company reported cash and equivalents and short-term investments of about ARS1.6 billion compared to short-term debt of ARS155 million as of Sept. 30, 2017. The total debt of ARS3.5 billion as of the same date is mainly composed of the 12.625% senior unsecured notes (USD200 million) due on July 3, 2021. The notes are callable at 50% of the outstanding principal on July 3, 2018. =========== B R A Z I L =========== BRAZIL: DBRS Aligns Issuer Ratings at BB ---------------------------------------- DBRS Inc., in late November 2017, downgraded the Federative Republic of Brazil's Long-Term Local Currency - Issuer Rating from BB (high) to BB and maintained the Negative trend. DBRS has also downgraded Brazil's Short-Term Local Currency - Issuer Rating from R-3 to R-4 and changed the trend from Negative to Stable. The rating action reflects the application of DBRS's updated Rating Sovereign Governments methodology; it does not reflect a change in DBRS's view of Brazil's underlying credit fundamentals. The rating action does not have any impact on Brazil's Long-Term Foreign Currency - Issuer Rating (BB with a Negative trend), Brazil's Short-Term Foreign Currency - Issuer Rating (R-4 with a Stable trend), or on the rating drivers as explained in DBRS's last rating report on Brazil. On October 10, 2017, DBRS requested comments on an update to its sovereign methodology. Following the conclusion of that comment period, the final methodology was published on November 27. As noted in the October 10 press release, the updated methodology revises the approach used to determine whether a differential between foreign and local currency issuer ratings is warranted. As a result of the methodology change, DBRS expected that there would be only a limited number of cases among its existing sovereign ratings where local and foreign currency issuer ratings would differ. Consequently, the October 10 press release indicated that these refinements might have an impact on the ratings of Argentina, Brazil, Colombia, Mexico, and Turkey, most likely affecting the local currency issuer rating. The alignment of Brazil's Long-Term Foreign and Local Currency - Issuer Ratings at BB and Short-Term Foreign and Local Currency - Issuer Ratings at R-4 reflects the application of the updated sovereign methodology and DBRS's view that a differential between the foreign and local currency issuer ratings is no longer warranted. As the macroeconomic fundamentals and financial sophistication of emerging market countries have improved over recent decades, the basis for differentiating the risk between these two issuer ratings has diminished. Brazil is unlikely to face material constraints in terms of its access to foreign exchange given the low stock of public debt issued in foreign currency and the adequate level of international reserves. Risks associated with the larger stock of local currency debt appear to be at least as high as that of foreign currency debt, particularly with a sizable portion of local currency debt indexed to inflation or interest rates. Moreover, DBRS sees no evidence that there is any material difference in the willingness or capacity of the Brazilian government to pay either local currency or foreign currency debt on time and in full. Accordingly, DBRS considers the risk of default on Brazil's foreign and local currency debt to be approximately equal. The ratings are: Debt Rated Action Rating Trend ---------- ------ ------ ----- Issuer Rating Short-term Local Currency Trend Change R-3 Stb Long-Term Local Currency Downgraded BB Neg Short-term Local Currency Downgraded R-4 Stb ODEBRECHT SA: Marcelo Odebrecht Gets Early Prison Release --------------------------------------------------------- Luciana Magalhaes and Samantha Pearson at The Wall Street Journal report that Marcelo Odebrecht, heir to Latin America's biggest construction empire, was released from jail after serving 2 1/2 years of what was originally an almost two-decade sentence for corruption, sparking public outrage and concerns the billionaire tycoon may reassert control over the family business. Television images showed Odebrecht's former chief executive en route by private plane from the southern city of Curitiba to his mansion in Sao Paulo, where he will serve another 71/2 years under house arrest after agreeing to testify in exchange for a lighter sentence, according to The Wall Street Journal. Odebrecht admitted last year to paying almost $800 million in bribes for contracts across Latin America, a key part of a scandal-first unearthed by the so-called Car Wash investigation- that continues to shake up politics in countries from Colombia to the Dominican Republic, the report notes. As Mr. Odebrecht headed home in time for the Christmas holidays, in neighboring Peru, President Pedro Pablo Kuczynski was facing possible impeachment over his links to the Brazilian company, the report relays. Mr. Kuczynski has denied wrongdoing. Once dubbed "prince of the contractors" by Brazilian newspapers, Mr. Odebrecht was the first high-profile businessman to be imprisoned in the Car Wash probe, raising hopes for an end to Brazil's entrenched culture of impunity for the rich and powerful, the report says. The report notes that Mr. Odebrecht, first imprisoned in June 2015, was sentenced to more than 19 years in jail in March last year. But after a plea deal his sentence was reduced to 10 years and prosecutors agreed to allow him to leave prison this month and go home, the report relays. He will spend the next 21/2 years confined there with an ankle monitor, the report discloses. For the following 21/2 years he will be permitted to leave home during the day, and for the rest of his sentence he must only stay at home on weekends and public holidays, the report notes. Brazilians took to social media in displeasure, with scores commenting that "crime pays", causing the magnate's name to trend on Twitter for much of the day, the report relays. The report notes that while his release has caused indignation among Brazilians, his plea deal was essential as it allowed prosecutors to uncover the entire corruption scheme," said Senator Alvaro Dias, who plans to run for president next year for the Podemos Party. "His freedom is the price we had to pay," he added. His release has also caused concern over the direction of the privately-held company as it battles to rebuild its reputation, the report notes. In June, Odebrecht executives told The Wall Street Journal the company plans to take its businesses public and distance the group from its founding family, the report relays. Emilio Odebrecht, Marcelo's father and the company's chairman, has reinforced this message, announcing his own imminent resignation and vowing to prevent any relative from returning as chief executive of the holding company, the report notes. But father and son fell out over the terms of the younger man's settlement with prosecutors, according to one person close to the family, the report says. The prospect of a bitter family feud has left investors nervous about the young magnate's intentions, the report relays. Lawyers for the younger Mr. Odebrecht said he declined to comment on their relationship or his plans. Under the plea deal, the 49- year-old is banned from taking any position at the company until 2025, the report notes. But with his house a short drive away from the company's base in Sao Paulo, local media have reported executives lining up to visit their former boss, the report discloses. Ricardo Carvalho, head of Brazilian Corporates at Fitch Ratings in Brazil, said Mr. Odebrecth's release was creating a lot of noise around the company, and "noise is the last thing this company needs" as it faces further challenges, including possible fines in other Latin American countries, the report relays. Fitch currently rates Odebrecht's construction arm, Engenharia e Construcao S.A., as CC, denoting a very high credit risk, the report adds. About Odebrecht SA Construtora Norberto Odebrecht SA is a Latin American engineering and construction company fully owned by the Odebrecht Group, one of the 10 largest Brazilian private groups. Construtora Norberto is the world's largest builder of hydroelectric plants, of sanitary and storm sewers, water treatment and desalination plants, transmission lines and aqueducts. The Group's main businesses are heavy engineering and construction based in Rio de Janeiro, Brazil, and Braskem S.A., its chemicals/petrochemicals company, based in Sao Paulo, Brazil. As of May 5, 2009, the company continues to carry Standard and Poor's BB Issuer Credit ratings, and Fitch Rating's BB+ Issuer Default ratings and BB+ Senior Unsecured Debt ratings. * * * As reporter in the Troubled Company Reporter-Latin America on Dec. 2, 2016, The Wall Street Journal related that Marcelo Odebrecht, the jailed former head of Brazilian construction giant Odebrecht SA, agreed to sign a plea-bargain agreement in connection with Brazil's largest corruption probe ever, according to a person close to the negotiations. The move could roil the nation's political class yet again. The testimony of the former industrialist, which is part of the deal, has the potential to implicate numerous politicians who allegedly took kickbacks from contractors as part of a years-long graft ring centered on Brazil's state-run oil company, Petroleo Brasileiro SA, known as Petrobras, according to The Wall Street Journal. TEGMA GESTAO: Moody's Hikes CFR to B1 on Improved Liquidity ----------------------------------------------------------- Moody's America Latina Ltda. upgraded Tegma Gestao Logistica S.A.'s ("Tegma") ratings to B1 from B2 (global scale) and to Baa2.br from Ba1.br (national scale). The outlook for the ratings is stable. Ratings upgraded: Issuer: Tegma Gestao Logistica S.A. - Corporate Family Ratings: to B1 from B2 (global scale) / to Baa2.br from Ba1.br (national scale) - BRL 200 million senior unsecured debentures due in 2018 and 2019: to B1 from B2 (global scale) / to Baa2.br from Ba1.br (national scale) The outlook for the ratings is stable. RATINGS RATIONALE The upgrade reflects primarily Tegma's improved liquidity profile following liability management initiatives carried-out during 2017 and the company's strengthened credit metrics coming from cost- saving initiatives and material debt reduction. It also incorporates the marked improvement in automotive production in Brazil in the last year, as well as Moody's view that the company's enhanced financial flexibility will help it withstand potential future volatility in the Brazilian automotive market without major deterioration in its current credit profile. Moody's expect Tegma's operating performance to continue improving in 2018 due to the recovery in Brazil's automotive industry and cost saving initiatives including reduced labor, divestiture of non-profitable units and focus on higher capacity utilization rates. For 2017, ANFAVEA (Brazil's auto producers association) forecasts auto production to increase 25%, and likely by another 10% in 2018 with the pick-up in domestic demand derived from stable unemployment, higher disposable income and lower interest rates in Brazil. Tegma will benefit both from higher transported volumes and from higher distances of transportation, and its profitability will likely return to pre-recession levels of around 10% by the end of 2018. In the LTM ending September 2017, Tegma's revenues increased 10% relative to 2016 after an accumulated decline of 41% in 2014-16, while operating margin returned to 8.7% after reaching a bottom of 4.8% in 2015. In addition, leverage and interest coverage improved further with the amortization of BRL 63 million in debt during 2017, providing the company more financial flexibility to withstand the industry's cyclicality. At the end of September 2017, Tegma's adjusted leverage declined to 1.9 times from a peak of 3.4 times in 2015, while interest coverage (measured by adjusted EBIT/interest expense) increased to 2.6 times from 1.1 times in the same period. With the amortization of additional BRL 67 million in debentures in February 2018, Tegma's leverage will decline further to 1.5 times. Tegma's liquidity also improved during 2017 following two refinancing initiatives that lengthened its debt amortization schedule. On June 2017, Tegma raised BRL 50 million in new credit lines due 2019 and 2020 and used proceeds to pay short term debt, and later on September 2017 the company announced the extension of a BRL 50 million debt maturity from 2018 to 2020 and 2021. As a result, the current cash position of BRL 145 million covers upcoming debt maturities through June 2019. In addition, Moody's expect Tegma to continue generating modestly positive free cash flow, based on low capex needs and prudent dividend distribution. While Moody's acknowledge that Tegma will likely increase its dividend pay-out to historical levels of 50-60% of net income, Moody's expect the outflows to continue to match the company's cash generation, thus avoiding refinancing risk from mid-2019 onwards. The B1/Baa2.br ratings continue to reflect Tegma's leading position as the largest logistics company for the automotive industry in Brazil, supported by medium and long-term contracts and longstanding relationships with its client base. The ratings also consider the company's "asset-light" business model, which entails relatively stable cash flows and more flexible operations in face of market downturns. On the other hand, Tegma's high revenue concentration in the cyclical automotive industry, its small size relative to global peers and track record of high dividend distributions constrain the ratings. The stable outlook reflects Moody's expectations that Tegma will maintain leverage and profitability near current levels, while prudently managing debt amortizations, capex and dividend distributions to preserve its liquidity profile. A rating upgrade would require clear signs of a sustained long term recovery in Brazil's automotive market and business environment, and in Tegma's operations, with revenues returning to pre-recession levels. In addition, an upgrade would require the maintenance of operating margins near its historical levels of 10% and adjusted leverage below 2.0x on a sustained basis. The maintenance of an adequate liquidity profile would also be required for an upgrade. The ratings could be downgraded if the outlook for Brazil's economy and for the automotive industry worsens or if the company's operations deteriorate, with declining revenues and operating margins. Quantitatively, the ratings could be downgraded if FCF turns negative or if total adjusted debt to EBITDA increases to above 3.0x without prospects of improvement. A deterioration in the company's liquidity profile derived from large shareholders distribution or increased refinancing risk would also result in a downgrade of the ratings. Tegma is a logistics company, primarily focused on supply chain management and products for the automotive industry mainly in Brazil. In the LTM ended September 2017, Tegma transported approximately 740 thousand vehicles representing approximately 27% of Brazil's light vehicle sales. Tegma also provides delivery services, warehousing, inventory management and control and other logistic solutions to the consumer product segment. In the same period, Tegma reported consolidated net revenues of BRL 1.0 billion (USD320 million) with adjusted EBITDA margin of 18.2%. The principal methodology used in these ratings was Global Surface Transportation and Logistics Companies published in May 2017. Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings. While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Medina Signs Bourse Rules Amendment Bill Into Law ---------------------------------------------------------------- Dominican Today reports that Dominican Republic President Danilo Medina signed into Law an amendment the country's regulation of the Bourse, to regulate, supervise, develop and promote efficiency and transparency. The bill 249-17 repeals all legal provisions, regulations and any previous rule contrary to the provisions of the new legislation, according to Dominican Today. "The purpose is to protect the rights and interests of the investing public, minimize systemic risk, promote healthy competition and preserve confidence in the securities market, establishing the conditions for the information to be truthful, sufficient and timely, in order to contribute with the economic and social development of the country," says the bill's motivation, the report notes. The law applies to all individuals and companies that carry out activities, operations and transactions in the Dominican Republic's securities market, with public offer values that are offered or negotiated in the national territory, the report relays. As reported in the Troubled Company Reporter-Latin America on Nov. 20, 2017, Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. DOMINICAN REP: Industries to Snub 'Secretive' Electricity Pact --------------------------------------------------------------- Dominican Today reports that Herrera and Santo Domingo Province industries Association president Antonio Taveras disclosed that despite their being convened to sign the Electricity Pact in the National Palace, they won't sign it. Mr. Taveras said they will not attend because they affirm the document is deficient, legitimizes the highly compacted sector and curtails the possibility of new competitors, among others disputes, according to Dominican Today. Earlier, the business leader slammed the pact's commission, describing as "secretive" the manner in which measures are adopted, the report notes. "The country has a strong problem of institutionalism," Mr. Taveras said. There's a high politicization of the distributors that deepen the sector's problems, the report notes. "Government agencies work with five, six times the payroll they need," Mr. Taveras said, adding that "If the problem of the Edes is not resolved we can have several Punta Catalinas (power plant), but we cannot solve this," notes the report. As reported in the Troubled Company Reporter-Latin America on Nov. 20, 2017, Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. ====================== P U E R T O R I C O ====================== BEBE STORES: Delists Common Stock from Nasdaq --------------------------------------------- Walter Parks, president, chief operating officer, and chief financial officer of bebe stores, inc. has filed a Form 25 with the Securities and Exchange Commission notifying the voluntarily removal from listing or registration of the Company's common stock, par value $0.001 per share, on The Nasdaq Stock Market LLC. About bebe stores inc. Based in Brisbane, California, bebe stores inc. (NASDAQ: BEBE) -- http://www.bebe.com/-- is a women's retail clothier established in 1976. The brand develops and produces a line of women's apparel and accessories, which it markets under the Bebe, BebeSport, and Bebe Outlet names. Manny Mashouf founded bebe stores, inc. and has served as chairman of the Board since the Company's incorporation in 1976. Mr. Mashouf became the chief executive officer starting February 2016. He previously served as the Company's CEO from 1976 to February 2004 and again from January 2009 to January 2013. Mr. Mashouf is the uncle of Hamid Mashouf, the Company's chief information officer. The Company operated brick-and-mortar stores in the United States, Puerto Rico and Canada. The Company had 142 retail stores before ending all retail operations in the U.S. by May 27, 2017. As of July 1, 2017, the Company had no remaining stores and had fully impaired, all of its remaining long-lived assets at its corporate offices and distribution center because of the shut-down of its operations. bebe stores reported a net loss of $138.96 million on $0 of net sales for the fiscal year ended July 1, 2017, compared to a net loss of $27.48 million on $0 of net sales for the fiscal year ended July 2, 2016. As of Sept. 30, 2017, bebe stores had $30.87 million in total assets, $39.21 million in total liabilities and a total shareholders' deficit of $8.34 million. The report from the Company's independent registered public accounting firm Deloitte & Touche LLP, in San Francisco, California, for the year ended Dec. 31, 2016, included an explanatory paragraph stating that the Company has incurred recurring losses from operations and negative cash flows from operations and expects significant uncertainty in generating sufficient cash to meet its obligations and sustain its operations, which raises substantial doubt about its ability to continue as a going concern. KAMA MANAGEMENT: Needs More Time to Obtain Plan Confirmation ------------------------------------------------------------ Kama Management, Inc. requests the U.S. Bankruptcy Court for the District of Puerto Rico to extend the time to obtain confirmation of its plan of reorganization. The Debtor filed its proposed plan of reorganization on June 15, 2017. The Court entered an order to schedule the confirmation hearing for December 20 at 9:00 a.m. However, the Debtor asserts that it will not be able to confirm the present plan due to the fact that the plan has to be confirmed with the approval of secured creditor Condado LLC. The Debtor and Condado have not been able to acquiesce in language and treatment to Condado. Although Condado LLC will be paid in full, the Debtor avers that the amount to be paid is yet to be determined. Therefore, the Debtor requests a rescheduling of the confirmation hearing to address the language and treatment to be proposed and approved by Condado and be able to confirm an amend plan. About Kama Management Inc. Kama Management Inc. filed a Chapter 11 petition (Bankr. D.P.R. Case No. 16-08008), on October 5, 2016. The Petition was signed by Alberto Perez Pujals, president. At the time of filing, the Debtor had no assets and had total debts of $1.45 million. The Debtor is represented by Maria Soledad Lozada Figueroa, Esq., at Lozada Law & Associates, LLC. SHORT BARK: Exclusive Plan Filing Period Extended Through March 7 ---------------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware, at the behest of Short Bark Industries, Inc., and its debtor-affiliates, has extended the Debtors' exclusive period to file and solicit acceptances of a Chapter 11 Plan up to and including March 7, 2018 and May 7, 2018, respectively. The Troubled Company Reporter has previously reported that the Debtors asked for an additional period of 120 days to file and to solicit acceptances of a plan. The Debtors claimed that if the exclusivity period to solicit is not extended as requested, the Debtors' efforts to reorganize will be compromised. The Debtors said that no harm or prejudice will inure to the creditors of the Debtors if the exclusivity period is extended. According to the Debtors, the Chapter 11 cases are sufficiently large and complex and involve a number of competing interests and parties, which the Debtors and their professionals are tasked with managing and addressing. While the sale of substantially all of the Debtors' assets has been completed, the Debtors still have a number of issues they must address that could be part of a Chapter 11 plan filed in the Court. At the very least, it would still too early to determine if a plan is likely or feasible, so the Debtors needed the additional time that this extension gives them in order to continue exploring their options. The Debtors believed that they have been making good faith progress toward a resolution of this case. The Sale was obviously a critical milestone in this case and resulted in, among other things, a resolution with the Official Committee of Unsecured Creditors that provided for certain funds to be set aside for unsecured creditors. The Debtors assured the Court that extending the exclusive period to file a plan will further the interests of the Debtors and their estates by enabling the Debtors to potentially negotiate with its creditors to achieve a consensual plan as well as continue to develop a path towards resolution of these Chapter 11 cases. About Short Bark Industries Short Bark Industries, Inc. -- http://www.shortbark.com/-- provides military apparels for the Department of Defense, law enforcement industry. The company's manufactured items in the military category include military MOLLE, medium and large rucksacks, assault packs, IWCS, ACU, ABU, BDU, helmet covers, FROG, A2CU and more. It offers men and boys suits, over garments, bag, and coats. The company holds over 120,000+ square feet of manufacturing capacity with operations in Florida, Puerto Rico and Tennessee. Short Bark and EXO SBI, LLC, sought bankruptcy protection (Bankr. D. Del., Lead Case No. 17-11502) on July 10, 2017. The petitions were signed by Phil Williams, their CEO and chairman. The Debtors disclosed total assets of $10 million to $50 million and total liabilities of $10 million to $50 million. Bielli & Klauder, LLC, serves as lead bankruptcy counsel to the Debtors. The Debtors hired SSG Advisors, LLC, and Young America Capital, LLC, as investment banker. On July 18, 2017, the Office of the U.S. Trustee appointed an official committee of unsecured creditors. The Committee retained Lowenstein Sandler LLP, as counsel, Gellert Scali Busenkell & Brown, LLC, as Delaware counsel, and Teneo Restructuring and Teneo Capital LLC, as investment banker. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: S&P Cuts 2024/2021 Notes Rating to 'D' -------------------------------------------------------------- S&P Global Ratings lowered its issue-level ratings on Petroleos de Venezuela S.A.'s (PDVSA's) senior unsecured notes due 2024 and 2021 to 'D' from 'CC'. PDVSA hasn't been able to meet the coupon payment on its 2024 and 2021 notes within the 30-calendar-day grace period (or the bondholders hadn't received the funds by that date), constituting an event of default under S&P's methodology. Since October 2017, PDVSA has been using its stated 30-day interest payment grace period in an effort to garner enough dollars to meet its debt maturities. Given current sanctions on PDVSA and its already pressured liquidity position, S&P's uncertain about the company's ability to pay the rest of its debt maturities within the grace period. Additionally, the president of Venezuela, Nicolas Maduro, announced the formation of a government commission to restructure the sovereign's and PDVSA's external debt obligations. Given the highly constrained external liquidity situation for the sovereign and domestic entities, S&P would consider any restructuring of PDVSA's debt to be a distressed debt exchange and equivalent to default. VENEZUELA: Oil Industry Falling Apart ------------------------------------- Humberto Marquez at Caribbean360.com reports that corruption in the Venezuelan state oil industry, denounced by the government itself, and with former ministers and senior managers behind bars, is the latest evidence that, in the country with the largest oil reserves on the planet, the industry on which the economy depends is falling apart. There was a drop "in the production of crude oil, of a million barrels per day," economist Luis Oliveros, who teaches at the Metropolitan University, told IPS, according to Caribbean360.com. In December 2013, output stood at 2,894,000 barrels per day compared to 1,837,000 in November 2017, according to the Organization of the Petroleum Exporting Countries (OPEC), the report notes. By 2018 production could drop another 250,000 barrels per day at the current rate, and Venezuela, co-founder of OPEC in 1960 when it was the world's largest crude oil exporter, is becoming an almost irrelevant player in the global market, Mr. Oliveros said, the report notes. This despite the fact that it has the largest known deposit of liquid fossil fuels, the 55,000-sq-km southeastern Orinoco oil belt, with an estimated 1.4 trillion barrels of crude, mainly extra-heavy, including proven reserves of 270 billion barrels, according to Venezuelan estimates, the report relays. Oil is virtually Venezuela's only export product, the source of 95 percent of foreign exchange earnings, and by the middle of this decade it represented more than 20 percent of GDP, the report says. Most of the business is in the hands of the state-owned Petroleos de Venezuela (PDVSA), which has a few partnerships with transnational corporations, the report notes. President Nicolas Maduro started a purge on Nov. 28 within PDVSA, in the midst of the hail of corruption allegations and investigations, and asked the new management, led by a general new to the industry, Manuel Quevedo, to make an effort to raise production by one million barrels per day, the report discloses. The immediate target was to meet the quota assigned by OPEC for 2017-2018, of 1,970,000 barrels per day, said presidential adviser Al° Rodriguez, the report relays. "Merely to sustain the current production of 1.85 million barrels per day -- let alone increase it -- we need to inject between US$4-5 billion into the industry, and the evidence is that this money is not there," said Alberto Cisneros, CEO of the oil consulting firm Global Business Consultants, the report notes. With the economy in shambles, a four-digit inflation rate, different simultaneous exchange-rate systems for a currency that depreciates daily, shortages of food, medicines and essential supplies, and a foreign debt of more than US$100 billion, Venezuela does not have the resources that the industry needs, he told IPS, the report relays. Against this backdrop, the oil business "also suffers from management problems since PDVSA in 2003, after a strike against the government, dismissed 18,000 employees, half of its workforce," former deputy energy minister Victor Poleo (1999-2002) told IPS, the report notes. And corruption was dramatically exposed this December, when the Attorney General's Office sent 67 PDVSA executives and managers to prison for crimes ranging from falsification of production figures to embezzlement and undermining the country's sovereignty, the report relays. Among these were two former oil ministers of President Nicolas Maduro, in power since 2013, Eulogio del Pino and Nelson Mart°nez, who were also presidents of PDVSA and its U.S. subsidiary, Citgo, which they allegedly damaged when re-negotiating debts, the report notes. Moreover, the Public Prosecutor's Office is investigating Rafael Ramirez, a former oil minister and president of PDVSA between 2002 and 2014, and until last November Venezuelan ambassador to the United Nations, for his possible involvement in money laundering operations through the Banca Privada d'Andorra bank, the report discloses. According to the Spanish newspaper El Pais, which claims access to reports on which Andorran Judge Canolic Mingorance is working, people close to Ramirez received at least two billion euros (US$2.36 billion) in illegal commissions between 1999 and 2013, the report notes. PDVSA, a company born from the nationalization of the industry in 1975, and which for years boasted of being one of the top five oil companies in the world, is thus languishing under a cloud of accusations of corruption, incompetence and fraudulent management, the report relays. Production "is declining due to a lack of investment and maintenance, starting with the obsolete installations of Lake Maracaibo in the northwest, which produces no more than 450,000 barrels per day," the report quoted Mr. Cisneros as saying. Since 1914, more than 13,000 oil wells have been drilled there, and up to the 21st century, the lake basin produced more than one million barrels a day, the report notes. The report relays that the relatively new fields of the east provide the rest of the output, but the figure of 1.3 million barrels per day extracted in the Orinoco Belt, announced by del Pino in the middle of the year, has been questioned by the criminal investigation. Venezuelan expert Francisco Monaldi, at Rice University in the U.S. state of Texas, pointed out that exports are already below 1.4 million barrels per day (they stood at over 2.5 million at the beginning of the century), and less than 500,000 barrels per day were exported to the United States in November, the report notes. For a century, the United States was the biggest importer of Venezuelan oil, purchasing 1.5 million barrels per day, the report relays. And it is still the main source of revenue, as exports to China, which exceed 600,000 barrels per day, are used to pay off debts, the report says. In oil refining, "it is perhaps even worse" according to Cisneros, since the Venezuelan refineries, installed to process 1.3 million barrels per day, "worked a few years ago at 90 or 95 percent of their capacity and now are only working at a third, 30 or 35 percent. We do not even supply our fuel needs," which in part have to be imported, he pointed out, the report notes. To the decrease in the production of gasoline, lubricants and other derivatives are added distribution problems in the 1,650 service stations in this country of almost one million square kilometers, 31 million people and four million vehicles, the report notes. One of the problems is the absurdly low price of fuel in the country, the cheapest in the world, the report relays. One litre costs just one bolivar, which at the official exchange rate is equivalent to about 10 cents, but at the black market rate is equivalent to one-thousandth of a cent: with one dollar you could buy 100,000 liters, the report notes. The cost of selling half a million barrels of fuel each day at this low price is a loss of between US$12 billion and US$15 billion a year for PDVSA, the report says. In addition, there is a problem of smuggling to Colombia, Brazil and the Caribbean, which Venezuela partially curbs with controls and rationing that cause shortages and huge queues of vehicles at gas stations along the border, the report relays. PDVSA has paid back interest in arrears this year for its debt bonds, while a US subsidiary of Chinese company Sinopec -- a partner that has contributed more than US$50 billion in loans to Caracas -- sued the Venezuelan state-owned company before a US court, for US$21.5 million over unpaid bills, the report notes. The United States imposed sanctions on Venezuela that make it difficult to renegotiate the country's and PDVSA's debts, the report relays. "Sanctions and default make it more difficult for partners to invest in joint ventures. The Venezuelan oil industry seems to have entered a spiral of death," said Mr. Monaldi, the report notes. The report says Cisneros believes that a recovery of the industry "is possible with a different organizational scheme, such as Argentina's, which has a 'front company', Enarsa, and an operator, YPF (51 percent state-owned, 49 percent listed on the stock market)." To achieve that "there are two possibilities; one is that the current regime reacts with respect to the economy and oil, and another is that there is a political change and the country starts to take advantage of its human, economic and oil resources," he argued, the report relays. * * * As reported in the Troubled Company Reporter-Latin America, Robin Wigglesworth at The Financial Times related that Venezuela appeared to have made a crucial bond repayment in late October. The Latin American country and its state oil company PDVSA have failed to make several debt payments in recent weeks, the report noted. But the most important one was an $842 million instalment due Oct. 29 on a PDVSA bond maturing in 2020, which, unlike most of the other overdue debts, had no 'grace period' that allowed for 30 days to clean up any arrears without triggering a default, the report notes. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2017, Moody's Investors Service has withdrawn the Caa3 rating of the US$5 billion, 6.5% Government of Venezuela bond due on Dec.29, 2036 (ISIN USP97475AQ39). On Nov. 16, 2017, S&P Global Ratings lowered on Nov. 13, 2017, its long- and short-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela to 'SD/D' from 'CC/C'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications. S&P said, "At the same time, we lowered our issue ratings on Venezuela's global bonds due 2019 and 2024 to 'D' from 'CC'. Our issue ratings on the remainder of Venezuela's foreign currency senior unsecured debt remain at 'CC'. Finally, we affirmed our transfer and convertibility assessment on the sovereign at 'CC'." *********** 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, 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. 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