/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180110.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, January 10, 2018, Vol. 19, No. 7 Headlines B R A Z I L BANCO BMG: Moody's Affirms B1 LT Global FC Deposit Rating REDE D'OR: Fitch Assigns BB+(EXP) Rating to BRL500MM Sr. Bonds OI SA: Judge OKs Restructuring, Shareholders Meeting Not Needed C H I L E CHILE: Seeks to Boost Good But Insufficient Trade Ties With Cuba D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: To Call for Tenders for Oil, Natural Gas in 1H E C U A D O R ECUADOR: To Probe Legality of Debt Under Ex-President Correa J A M A I C A FLY JAMAICA: To Meet With GCAA on Increase Cancellations P U E R T O R I C O SEASTAR HOLDINGS: Case Summary & 20 Largest Unsecured Creditors SEASTAR HOLDINGS: Files for Chapter 11 to Sell to Silver Airways SEASTAR HOLDINGS: Seeks to Honor Codeshare Agreements TOYS R US: Claims Filing Deadline Set for April 6 V E N E Z U E L A PETROLEOS DE VENEZUELA: Oil Production Drops to Lowest Level - - - - - =========== B R A Z I L =========== BANCO BMG: Moody's Affirms B1 LT Global FC Deposit Rating --------------------------------------------------------- Moody's Investors Service affirmed Banco BMG S.A.'s (BMG) long- term global scale ratings, including its B1 local- and foreign- currency deposit ratings; and the foreign currency senior debt ratings, as well as the long-term national scale deposit rating of Baa3.br. At the same time Moody's changed the outlook on BMG's ratings to negative, from stable. The following ratings and assessments will be affirmed; outlook negative: Issuer: Banco BMG S.A. -- Long-term global foreign currency deposit rating B1; negative outlook -- Long-term global local currency deposit rating of B1; negative outlook -- Long-term Brazilian national scale Deposit Rating to Baa3.br; negative outlook -- Short-term Brazilian national scale Deposit Rating, at BR-3 -- Long-term Counterparty Risk Assessment of Ba3(cr) -- Baseline Credit Assessment of b1 -- Adjusted Baseline Credit Assessment of b1 -- Long-term foreign currency senior unsecured debt of B1; negative outlook -- Senior Unsecured MTN Program (foreign currency) of (P)B1 -- Subordinate debt (foreign currency) of B2 -- Short-term global local and foreign currency deposit rating, at NP -- Short-term Counterparty Risk Assessment, at NP(cr) -- Short-term Senior Unsecured MTN Program (foreign currency), at (P)NP RATINGS RATIONALE The change in outlook to negative from stable reflects the challenges BMG continues to face to improve earnings generation and capitalization, while it refocus its strategy towards a predominantly payroll credit card banking business. Moody's acknowledges BMG's leading position in this market segment, as well as the better risk profile of payroll credit card operations relative to riskier commercial lending. However, its business model has yet to prove capable of generating sustainable earnings, while the reliance on one line of business will likely reduce revenue diversification, potentially exposing the bank's earnings to volatility. In the first 9 months of 2017, the bank's operating results were very close to breakeven, improving from the large negative result in the same period of previous year. A combination of lower loan loss provisions and operating expenses, and a one-off gains supported the slightly positive bottom line results. In 2018, higher yields from better asset mix, and lower cost of funds derived from a lower average policy interest rate will benefit the bank's profitability, but more relevant improvements would depend on a consistent decline of credit costs and in operating expenses. The modest earnings generation, in turn, continues to hinder internal capital replenishment under Moody's measure, which assesses tangible common equity in relation to risk weighted assets (TCE / RWAs). At 6.1% as of 3Q2017, the capital ratio remains weak, because it deducts the large stock of deferred tax assets (DTAs). As a result, a sustainable expansion of the TCE / RWA capital metric will be associated with the necessary improvement in earnings generation, which will allow for the realization of DTAs as well as lower dividends payouts and capital distribution to shareholders as compared to prior years. At the same time, the affirmation of BMG's ratings takes into consideration the improved and more predictable risk profile of payroll credit card loans, which represented 72% of total loans in September 2017, up from 57% a year before, and is expected to further increase in the next year. Also, asset risk pressures are expected to ease with the declining outstanding volume of the riskier non-core loans and problematic corporate exposures. BMG's reliance on market funds and large institutional depositors has consistently declined, offset by growing share of more granular deposits from individuals., which are however, sourced from brokers. While the risks arising from wholesale funding concentration have reduced significantly, the bank's reliance on third-party funding providers exposes it to market volatility. Conversely, BMG has been able to extend funding tenors, and hold adequate amount of liquid assets, therefore better managing duration in its balance sheet. WHAT COULD MAKE THE RATING GO UP/DOWN BMG's ratings could be downgraded if its profitability and capitalization ratios deteriorate. Sustainable core earnings generation would be key to stabilize its ratings. Also, downward pressure on its financial profile could arise from a higher reliance on market funds or on large investors, as well as by a reduction in its liquid resources. Given the negative outlook, Moody's do not anticipate upward pressures on BMG's ratings at this time. REDE D'OR: Fitch Assigns BB+(EXP) Rating to BRL500MM Sr. Bonds -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+(EXP)' rating to the proposed senior unsecured bonds up to BRL500 million due in 7 or 10 years to be issued by Rede D'Or Finance S.a. r.l., which is a wholly owned subsidiary of Rede D'Or Sao Luiz S.A. (Rede D'Or) and is incorporated in the Grand Duchy of Luxembourg. The notes will be unconditionally and irrevocably guaranteed by Rede D'Or and will rank pari passu with its existing unsecured debt. The issuance's net proceeds will be used for general corporate purposes, including the repayment of indebtedness, capital expenditures and/or to increase liquidity. Fitch currently rates Rede D'Or's Long-Term Foreign Currency Issuer Default Rating (IDR) 'BB+'/Negative, and LT Local Currency IDR 'BBB-'/Stable. Rede D'Or's ratings reflect its strong competitive position in the fragmented hospital industry in Brazil, its prominent business scale, modest leverage, strong liquidity and the defensive nature of its business fundamentals across economic cycles. The company's recent operating performance has proven resilience to the economic downturn. The increasing imbalance between available supply of hospitals and demand for these services is also a positive consideration, as is the ability of the company to pass along rising costs to its clients. Among the company's main challenges is its ability to efficiently manage working capital needs, since counterparties are facing more cash flow pressure. The company's strong business scale and bargaining power mitigate some of this risk. The need for constant investment in technology and equipment renewal, as well as potential regulatory issues, are seen as manageable risks. Fitch expects Rede D'Or to continue to cautiously manage its strong business growth (organic and inorganic) and dividends distribution in a manner that results in solid leverage metrics. Fitch's base case scenario forecasts around BRL1billion-BRL1.5 billion in acquisitions during the next three years, and net adjusted leverage ratios of slightly above 2.0x. The ratings also reflect Fitch's expectation that Rede D'Or will remain disciplined in maintainlng a robust liquidity position as part of its proactive liability management strategy to mitigate refinancing risks. The Rating Outlook for the Foreign Currency rating remains Negative and mirrors Fitch's Negative Outlook for the Brazilian sovereign (FC IDR BB). Rede D'Or's FC IDR is capped by Brazil's Country Ceiling of 'BB+', as it operates only in Brazil. KEY RATING DRIVERS Leading Business Position: Rede D'Or is the largest private hospital networks in Brazil's fragmented and underdeveloped hospital industry. The company owns 35 hospitals, manages one and has three under construction. The company has solid business positions and large scale operations in its key markets: Rio de Janeiro, Sao Paulo, Brasilia and Recife. Business scale is a key issue in this industry and supports Rede D'Or's ratings, as it allows for lower fixed-costs and provides significant bargaining power with counterparties and the medical community in general. Geographic Concentration: Geographic concentration in the states of Rio de Janeiro and Sao Paulo is partially mitigated by robust economic activity in these regions compared with other parts of Brazil, as well as the strength of the health insurance companies. Since early 2015, there is a new regulatory framework for the Brazilian hospital industry that allows foreign-interest ownership, which could increase competition in the long term. Nevertheless, Rede D'Or's strong brand and large business scale in the cities in which it operates are competitive advantages, and it will be difficult for new entrants to replicate its position in the medium term in these key markets. Focused on Growth: Rede D'Or is expected to continue to pursue both organic and inorganic growth. The company has an aggressive track record of acquisitions. From 2010 to September 2017, Rede D'Or acquired 21 hospitals, adding 2,900 operating beds. Since 2015, Rede D'Or has had two new shareholders, HPT Participacoes SA (Carlyle Group), which provided a capital injection of BRL1.8 billion, and Pacific RDSL Participacoes (GIC Group). Solid Profitability: Rede D'Or has been efficient in increasing profitability through economies of scale and achieving synergies from its acquisitions. The company's net revenue grew 118% between 2013 and the LTM period ended Sept. 30, 2017, while average operating beds expanded by 44% to 5,200. During this period, the company's occupancy rate ranged from 77% to 81%, while its EBITDAR margin expanded to 27% from 19%. Rede D'Or's operating margin is among the highest of its hospital peers globally. Negative FCF: Rede D'Or's challenge is to effectively increase its FCF, which compares poorly to other investment-grade peers. Nevertheless, Fitch believes the company has flexibility to reduce dividends or to carefully manage acquisitions in order not to jeopardize its credit metrics. Per Fitch's calculations, the company's pro forma EBITDAR substantially increased to BRL2.7 billion in the LTM 2017 from BRL777 million in 2013. While its funds from operations (FFO) were BRL1.6 billion during the LTM, its CFFO was only BRL634 million due to high working capital requirements, which is a business characteristics. FCF generation has been historically negative, averaging negative BRL410 million between 2013 and 2016. During the LTM, FCF was negative BRL1.1 billion, pressured by BRL979 million of dividend distributions. Under Fitch's base case scenario, Rede D'Or's CFFO, EBITDAR and FCF for 2017 are expected to be approximately BRL600 million, BRL2.8 billion and negative BRL1.1 billion, respectively. Modest Leverage: The mix of equity and profitability gains has been supporting Rede D'Or's deleveraging process. Until 2014, most of Rede D'Or's growth was financed through debt. The company's FFO adjusted leverage reached 3.4x as of the LTM, while its net adjusted debt/EBITDAR ratio was 2.4x for the same period. These ratios compare with averages of 4.2x and 3.8x, respectively, between 2012 and 2015. Fitch's base case scenario considers the company continuing to benefit from improvements in operating cash flow generation and being able to maintain net adjusted leverage ratios of around 2.2x over the next three years. DERIVATION SUMMARY Rede D'Or has a relatively better business risk profile than its peer in the Brazilian healthcare industry - Diagnostico da America S.A., rated 'AA+(bra)', due to the much lower competitive pressure it faces. In terms of business scale, they both have sound bargaining power with the healthcare providers and insurance companies in Brazil and a strong brand in the industry. Relevance of its business where it operates is a key competitive advantage when discussing payments and pricing with counterparties. Rede D'Or faces higher technological risk but Fitch considers it to be manageable at this time. Both companies are showing an aggressive growth strategy. From a financial risk perspective, Rede D'Or shows lower leverage and greater financial flexibility, considering its ability to manage FCF generation, reducing growth or dividends distribution. On a global basis, the dynamics of the hospital industry in Brazil as well as the regulatory model are quite different compared to those in others countries, which means such a comparison is not really appropriate. On a financial basis, Rede D'or's operating margins and financial metrics look quite sound compared to others rated hospitals within Fitch's global universe. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: -- BRL1.4 billion in acquisitions up to 2019; -- EBITDAR margins of around 28%; -- Continued high working capital needs, pressuring CFFO; -- Capex of BRL800 million in 2017 and an average BRL1.3 billion to 2019; -- Dividends of 25% of net income. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action: Because of Rede D'Or's strong growth strategy, which has pressured FCF, Fitch does not expect a positive rating action in the medium term. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action: -- EBITDAR margins declining to below 24%; -- Deterioration of sound liquidity position, with cash/short- term debt ratio below 1.0x on consistent basis, leading to refinancing risk exposure; -- Net adjusted leverage consistently above 2.7x; -- A change in management's strategy with regard to its conservative capital structure could also lead to a downgrade, as could deterioration in the company's reputation and market position. LIQUIDITY Robust Liquidity: Rede D'Or has a track record of keeping strong cash balances, with an average coverage of cash/short-term debt of 2.3x during the last three years. As of Sept. 30, 2017, the company had BRL6.9 billion of debt, of which BRL679 million is due in the short term. In Fitch's view, Rede D'Or's cash on hand (BRL2.9 billion) is sufficient to support debt amortization until to mid-2020. Fitch expects that Rede D'Or will remain disciplined as to its liquidity position and will maintain its proactive approach in liability management to avoid exposure to refinancing risks. FULL LIST OF RATING ACTIONS Fitch has assigned the following expected rating: Rede D'Or Finance S.a. r.l. -- Senior unsecured notes 'BB+(EXP)' due in 7 or 10 years. Fitch currently rates Rede D'Or as follows: -- Long-Term Foreign Currency IDR at 'BB+'; -- Long-Term Local Currency IDR at 'BBB-'; -- National Long-Term rating at 'AAA(bra)'. The Rating Outlook is Stable. Rede D'Or's FC IDR is constrained by Brazil's 'BB+' Country Ceiling, and its Negative Outlook follows Fitch's Negative Outlook for Brazil's sovereign rating (FC IDR BB). Rede D'Or operates only in Brazil. The company does not have stand-by credit facilities abroad. OI SA: Judge OKs Restructuring, Shareholders Meeting Not Needed --------------------------------------------------------------- Reuters reports that the judge overseeing the restructuring process of Brazilian telecom company Oi SA approved a massive debt restructuring plan and called a proposed shareholders meeting "absolutely unnecessary." In the decision, Judge Fernando Viana gave the official go-ahead to Latin America's largest ever in-court debt reorganization. On Dec. 20, a majority of Oi creditors approved a plan to restructure BRL65 billion ($20.1 billion) of debt, putting an end to a year and a half of negotiations, according to Reuters. The plan upset major shareholders, however, as it hands up to 75 percent of the company to creditors that include distressed debt funds, such as Aurelius Capital Management, and severely dilutes equity, the report notes. Earlier, Bratel Brasil SA, a subsidiary of Oi investor Pharol SPGS SA, said it was calling for a general shareholders meeting on Feb. 7 and that it believed the restructuring process had violated company statutes, the report notes. Judge Viana, however, said such a meeting could add uncertainty to the restructuring, the report relays. "The convocation of the general shareholders meeting is absolutely unnecessary to validate the creditors' sovereign decision," he wrote, the report says. "On the contrary, a convocation of shareholders . . . would again bring about the instability that was strongly rejected by the judiciary throughout this whole judicial recuperation process," he added the report notes. A Pharol representative did not have an immediate comment about the judge's decision, the report adds. About Oi SA Headquartered in Rio de Janeiro, and operating almost exclusively within Brazil, the Oi Group provides services like fixed-line data transmission and network usage for phones, internet, and cable, Wi-Fi hot-spots in public areas, and mobile phone and data services, and employs approximately 142,000 direct and indirect employees. As reported in the Troubled Company Reporter-Latin America on Jan. 9, 2018, Egan-Jones Ratings Company withdrew the 'D' foreign currency and local currency senior unsecured ratings on debt issued by Oi SA and the D ratings on the Company's commercial paper on Sept. 26, 2017. On Nov. 9, 2017, Gram Slattery and Leonardo Goy at Reuters report that the head of Brazil's telecommunications watchdog, Anatel, demanded that debt-laden carrier Oi SA submit its latest restructuring proposal to the regulator before officially filing it with a bankruptcy court. Anatel head Juarez Quadros told reporters in Brasilia that the regulator, an Oi creditor due to billions of dollars in unpaid regulatory fines, would wait for the country's solicitor-general to give an opinion on the company's proposal before deciding whether or not to vote for it, according to Reuters. On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the 'Brazilian Bankruptcy Law'), Oi S.A. and certain of its subsidiaries filed for recuperao judicial (judicial reorganization) in Brazil. On June 21, 2016, OI SA and its affiliates Telemar Norte Leste S.A. and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15 proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N. Shah, as foreign representative, signed the petitions. Coop and PTIF are also subject to proceedings in the Netherlands. The Chapter 15 cases are assigned to Judge Sean H. Lane. In the Chapter 15 cases, the Debtors are represented by John K. Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP, in New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida. On July 22, 2016, the New York Court recognized the Brazilian Proceedings as foreign main proceedings with respect to the Chapter 15 Debtors, and granted certain additional related relief. ========= C H I L E ========= CHILE: Seeks to Boost Good But Insufficient Trade Ties With Cuba ---------------------------------------------------------------- EFE News reports that Chilean President Michele Bachelet met with Cuban leader Raul Castro and hailed the increase in trade ties between her country and the communist island, which at present show positive results but are still not living up to their potential, particularly in the investments field. Pres. Bachelet was welcomed to the Palace of the Revolution, Cuba's seat of government, where she met with Castro, who is also in the final stretch of his mandate and due to hand over power to his designated successor in April, according to EFE News. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: To Call for Tenders for Oil, Natural Gas in 1H ------------------------------------------------------------------ Dominican Today reports that Energy and Mines Minister Antonio Isa Conde disclosed that tenders will be called in the first half of 2018, for the exploration and exploitation of oil and natural gas. He said in the first half, Energy and Mines will call for two tenders in the first three months, including a bidding on exploration on land in Azua (south), while in the next three months it will be doing the same offshore, specifically in Bahia Ocoa (southwest) for gas, according to Conde. Electricity Pact The report notes that the official, interviewed by Hector Herrera Cabral Telesistema Channel 11, also stated disappointment with the Herrera Industries Association's refusal to sign off on the Electricity Pact, which in his view "their objection was nothing more than methodological, to finally refuse to sign The document." 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. ============= E C U A D O R ============= ECUADOR: To Probe Legality of Debt Under Ex-President Correa ------------------------------------------------------------- Reuters reports that Ecuador's comptroller's office said it will open an audit of debt contracted in the last five years of the government of former President Rafael Correa to determine the legality of the operations and the use of the funds. The move follows a report by the comptroller's office revealing that some documentation relating to debt operations had been declared secret and that official reports on public debt had excluded some of the operations. President Lenin Moreno, a former Correa protege, since his election last year has criticized the ex-president's handling of the economy and is seeking to unwind some Correa-era reforms. Correa says such efforts constitute a "coup" by Moreno, according to Reuters. A team of economists, lawyers and businessmen will analyze debt operations carried out between January 2012 and May 2017 and will present recommendations in April, then report notes. Comptroller Pablo Celi said Correa and former Finance Ministry officials had been notified about investigation, the report relays. Shortly after taking office last May, Moreno said that total public debt was $42 billion dollars, plus additional liabilities including some associated with payments to oil services companies, the report says. I have just learned of a supposed preliminary report on the audit of the debt and a commission that includes several haters of the (Citizen's Revolution)," Mr. Correa said via Twitter, referring to his political movement, the report discloses. During a later speech in the city of Guayaquil he described the probe as "persecution." The former president is leading a campaign for the "No" vote in a Feb. 4 referendum on constitutional reforms include a measure to prohibit indefinite re-election, a measure Correa created that allowed him to run for a second term, the report relays. Correa himself in 2008 commissioned a team of experts to study the country's prior debt operations. The experts concluded that several debt operations were "illegitimate," leading his government to declare a default, the report adds. As reported in the Troubled Company Reporter-Latin America on Jan. 9, 2018, Egan-Jones Ratings Company, on Oct. 12, 2017, raised the foreign currency and local currency senior unsecured ratings on debt issued by the Republic of Ecuador to B+ from B. EJR also upgraded the ratings on the Company's commercial paper to B from C. Ecuador is a country straddling the equator on South America's west coast. ============= J A M A I C A ============= FLY JAMAICA: To Meet With GCAA on Increase Cancellations --------------------------------------------------------- RJR News reports that the management of Fly Jamaica Airways has been summoned to a meeting with officials of the Guyana Civil Aviation Authority (GCAA) following reports of an increase in flight cancellations and delays in recent weeks. According to News Source Guyana, GCAA Director General Egbert Field said the meeting is likely to take place, according to RJR News. In recent days, scores of passengers have been left stranded as Fly Jamaica cancelled a number of flights and delayed others, the report notes. It's reported that problems started just before the Christmas holidays as both of the airline's planes went out of service for maintenance, the report relays. New Source Guyana reports that Fly Jamaica leased another aircraft to clear the backlog of flights but also encountered several delays with those flights as the Christmas and New Year travel season picked up, the report says. The problems have prompted passengers to take to social media, the report discloses. In an effort to address concerns, Fly Jamaica apologized for problems with its service, stating that it has been experiencing operational setbacks that have resulted in its schedule service being affected, the report relays. Fly Jamaica operates flights from Guyana to Kingston, Toronto and New York, the report notes. The airline recently received the green light to begin operations to Cuba, the report adds. ====================== P U E R T O R I C O ====================== SEASTAR HOLDINGS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: SeaStar Holdings, Inc. World Plaza Building, 9th Floor 268 Munoz Rivera Avenue San Juan, PR 00918 Type of Business: SeaStar Holdings, Inc. d/b/a Seaborn Airlines, is a U.S. Certified Air Carrier operating under Part 121 of the Federal Aviation Regulations and has been operating for more than 25 years. The Company's fleet consists of seven 34-seat Saab 3408Bs and one 15-seat Twin Otter Seaplane. Prior to the 2017 hurricanes, the Company operated 1,700 monthly flights to 12 Caribbean destinations transporting approximately 300,000 passengers each year. As of the Petition Date, SeaStar has 194 full-time employees and 68 part- time employees. The Company is headquartered in San Juan, Puerto Rico. Chapter 11 Petition Date: January 8, 2018 Affiliates that simultaneously filed Chapter 11 petitions: Debtor Case No. ------ -------- SeaStar Holdings, Inc. 18-10039 Seaborne Virgin Islands, Inc 18-10040 Seaborne Puerto Rico, LLC 18-10041 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Hon. Christopher S. Sontchi Debtors' Counsel: Adam G. Landis, Esq. Kerri K. Mumford, Esq. Travis J. Ferguson, Esq. LANDIS RATH & COBB LLP 919 Market Street, Suite 1800 Wilmington, DE 19801 Tel: 302-467-4400 Fax: 302-467-4450 E-mail: landis@lrclaw.com mumford@lrclaw.com ferguson@lrclaw.com Debtors' Restructuring Advisor: SONORAN CAPITAL ADVISORS LLC Debtors' Special Regulatory Counsel: STINSON LEONARD STREET LLP Debtors' Investment Banker: SEABURY CORPORATE ADVISORS LLC Debtors' Claims/ Noticing Agent: RUST CONSULTING/OMNI BANKRUPTCY Web site: https://is.gd/V163I6 SeaStar Holdings' Estimated Assets: $1 million to $10 million SeaStar Holdings' Estimated Liabilities: $10 million to $50 million The petitions were signed by Matthew Foster, chief restructuring officer. Full-text copies of the petitions are available for free at: http://bankrupt.com/misc/deb18-10039.pdf http://bankrupt.com/misc/deb18-10040.pdf http://bankrupt.com/misc/deb18-10041.pdf Debtors' List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Department of Treasury Taxes and Fees $1,382,724 FMS Debt Management Services PO Box 979101 Saint Louis, MO 63197-9000 Attn: FMS Debt Management Services Tel: (202)622-2000 Fax: (202)622-6415 GE Aviation Engine Service Trade Debt $1,372,391 GE Aircraft Engines 12845 Kenan Drive Building 400 Jacksonville, FL 32258 Attn: Gregory Ryan Tel: 954-292-5312 Email: GregJames.Ryan@ge.com Virgin Islands Port Authority Taxes and Fees $953,038 PO Box 30107 St Thomas, VI 00803-1707 Attn: Nycole Thompson, Esq. Tel: (340) 774-1629 ext. 6605 Fax: (340) 774-0025 Email: nthompson@viport.com Aerostar Airport Holdings, LLC Rent $638,855 PO Box 38085 San Juan, PR 00937-1085 Attn: Varlin Vissepo, Esq. Tel: (787) 289-7240 Fax: (787) 289-7241 Email: varlin.vissepo@aerostarairports.com U.S. Customs and Immigration Taxes and Fees $608,005 6650 Telecom Drive Indianapolis, IN 46278 Attn: Revenue Division Tel: 1-800-877-8339 Fax: (202) 325-4290 Transportation Security Taxes and Fees $552,538 Administration PO Box 530262 Atlanta, GA 30353-0262 Attn: Pamela Pak McMenamin Tel: (571) 227-3046 Fax: (571) 227-2904 Email: Pamela.McMenamin@tsa.dhs.gov Jetstream Aviation Capital, LLC Trade Debt $481,857 Tel: (305) 447-1920 Fax: (305) 447-1919 Animal Plant & Health Inspection Taxes and Fees $350,645 Service U.S. Department of Agriculture 1400 Independence Avenue S.W. Washington, DC 20250 Attn: Laura Penner Tel: (612) 336-3383 Fax: (612) 336-3563 Email: laura.a.penner@aphis.usda.gov C&L Aerospace Trade Debt $340,090 40 Wyoming Avenue Bangor, ME 04401 Attn: Martin Cooper Tel: (207) 217-6050 Fax: (207) 945-0992 Email: martin.c.@cla.aero McConnell Valdes LLC Trade Debt $310,594 PO Box 364225 San Juan, PR 00936-4225 Attn: Harry Cook, Esq. Tel: (787) 759-9292 Fax: (787) 759-9225 Email: hoc@mcvpr.com World Fuel Services, Inc. Trade Debt $257,624 9800 N.W. 41st Street Suite 400 Doral, FL 33178 Attn: Andres Roque Tel: (305) 428-8000 Fax: (305) 392-5621 Email: aroque@wfscorp.com Paradise Lending, LLC Trade Debt $214,261 Email: lmbuse@yahoo.com Puerto Rico Infrastructure Trade Debt $202,430 Financing Authority Email: leonardo.torres@afi.pr.gov Aviation Civile - AGA/AGO Trade Debt $196,354 Email: catherine.bertrand@ aviation-civile.gouv.fr Aviation Inventory Resources Leases $186,820 Worthington Aviation MTX $174,254 Ultimate Aircraft Solutions, LLC Trade Debt $148,530 Airport Aviation Services, Corp. Fraud $135,839 Email: jalgarin@mgicaribe.com Antigua & Barbuda Trade Debt $124,725 International Airport Email: gh.george@abairport authority.com VIPA PFC'S Taxes and Fees $113,290 Email: nthompson@viport.com SEASTAR HOLDINGS: Files for Chapter 11 to Sell to Silver Airways ---------------------------------------------------------------- SeaStar Holdings, Inc., owner of Caribbean carrier Seaborn Airlines, has sought Chapter 11 protection with plans to sell the business to an affiliate of Versa Capital for a credit bid of $5 million and $100,000 in cash, absent higher and better offers in a court-supervised auction. As part of an effort to gain control of SeaStar, Versa has purchased majority of SHI's outstanding equity from previous owner Montecito New York, LLC. Versa also acquired all rights and interest in the prepetition senior secured loan agreement, as well as the interests in five of seven aircraft lease agreements. Versa intends to merge SeaStar with a complimentary Versa portfolio company -- Silver Airways, which is headquartered in Florida and offers flights within Florida and to the Bahamas, exclusively using Saab aircraft fleet. SeaStar's fleet consists of seven 34-seat Saab 3408Bs and one 15-seat Twin Otter Seaplane. Prior to the 2017 hurricanes, the Company operated approximately 1,700 monthly flights to 12 Caribbean destinations transporting approximately 300,000 passengers each year. As of the Petition Date, the Company has 194 full-time employees and 68 part-time employees. Prepetition Capital Structure The Company is party to an Amended and Restated Loan Agreement dated Sept. 15, 2017, pursuant to which the Debtors owe Versa's Volant SVI Funding, LLC, the amount of $6,004,815, secured by liens in substantially all of the Company's assets. The Debtors also owe $5,542,566 under a secured promissory note with Versa's Volant Leasing, security all of the obligations under five Saab leases. As of the Petition Date, the Company estimates that its unsecured debt aggregates approximately $11.2 million, consisting of trade debt, airline lease and maintenance obligations and governmental or regulatory obligations. SHI has 16 common equity holders and 1 preferred equity holder. As set forth above, Versa's Volant SVI, Inc., holds 80% of SHI's common stock and all of its preferred stock. Road to Bankruptcy Matthew Foster, chief restructuring officer of SHI, explains that the Company broadly expanded its operations in 2013 after American Eagle ended its regional Caribbean operations. This expansion came at a significant cost, resulting in the Company losing nearly $17 million on an operating basis from 2013 through 2015. On May 16, 2016, the Company engaged Seabury Corporate Advisors, LLC, the preeminent aviation consulting firm, to assist it in selling its assets or obtaining additional capital investments. The Company engaged in negotiations with one of the interested parties but no agreement was reached. The second week of September 2017 brought destruction and devastation to much of the Caribbean when Hurricane Irma struck. Several of the Company's destinations were almost completely destroyed and many others suffered significant damage. Only a week later, Hurricane Maria hit Puerto Rico, St. Croix and Dominica, leaving more destruction in its path. To date, much of the Caribbean is struggling to recover from these natural disasters; Puerto Rico, in particular, continues to suffer from significant structural damage, power outages and supply shortages occasioned by the one-two punch of Hurricanes Irma and Maria. The 2017 Hurricanes initially halted substantially all of the Company's flight operations. A few weeks following the 2017 Hurricanes, the Company assisted in relief efforts by flying stranded tourists or residents off of the devastated islands. Following Hurricane Irma, the Company operated relief flights to St. Maarten, St. Thomas and Tortola. Following Hurricane Maria, the Company added additional flights departing from Puerto Rico to provide necessary capacity for passengers leaving the island. The 2017 Hurricanes have resulted in a crippling decline in the Company's revenue and caused the Company to fall significantly behind on its obligations, including payments on the Volant leases, rent, and obligations to its other vendors and service providers. The failure to pay these obligations triggered numerous defaults under the Loan Agreement, which the Company acknowledged in the Forbearance Agreement and Lease Forbearance, which expired by their terms on Nov. 30, 2017. Notwithstanding these difficulties and the expiration of the forbearance agreements, neither Volant Funding nor Volant Leasing has exercised available remedies. In October 2017, the Company retained Landis Rath & Cobb LLP as restructuring counsel and, shortly thereafter, engaged Matthew Foster, as CRO, and his firm to provide restructuring advice. The Company has continued to consider its alternatives, working in good faith with Volant Funding to resolve the Company's cash-flow needs despite the negative effects of the 2017 Hurricanes on the Company's operations. With the expiration of the Forbearance Agreement and Lease Forbearance on Nov. 30, 2017, however, all of the obligations under the Loan Documents and Volant Leases are due and owing and the Company has no present ability to satisfy them. Ultimately, following a rigorous evaluation of all available options, the Company determined that filing for Chapter 11 protection, obtaining postpetition financing and pursuing an orderly sale of its assets in a controlled, court-supervised environment is the best available option for it and its stakeholders. The Company believes that the Chapter 11 process, including the proposed sale of its assets pursuant to the highest and otherwise best bid, will be seamless for its passengers, trading partners and vendors, result in minimal disruption to its operations, allow the company to strengthen its financial structure, and position it for significant future growth. Postpetition Facility and Sale In light of the foregoing, the continuing deterioration of its cash position and its present lack of realistic stand-alone restructuring options, the Company, in the exercise of its reasonable business judgment, determined that the most effective way to maximize value for the benefit of its stakeholders was to seek bankruptcy protection in order to sell substantially all of its assets through a sale pursuant to Section 363 of the Bankruptcy Code. In connection therewith, on Dec. 12, 2017 , the Company re-engaged Seabury to again market its assets. Seabury has begun preparing its marketing materials and will market the Debtors' assets postpetition. To ensure that it has sufficient funds to maintain the stability of its business and its going concern value, the Company has obtained authority to utilize Cash Collateral and to borrow approximately $10.19 million, including $4.19 million in new money -- Postpetition Facility -- from Volant Funding. In the exercise of its business judgment, the Company has determined that the Postpetition Facility is the best, and only, financing available to it and that the Postpetition Facility will provide it with the liquidity it requires to operate in these Chapter 11 Cases. Versa's SB Acquisition 2017, Inc., has agreed to serve as the Company's stalking horse purchaser in connection with the Sale. In connection therewith, the Company and the Stalking Horse Bidder entered into that certain Asset Purchase Agreement, dated Jan. 7, 2018. The Stalking Horse Bidder has agreed to purchase substantially all of the Debtors' assets, subject to higher or otherwise better bids, for an aggregate purchase price of $5,000,000 consisting of (a) a release of certain liabilities of the Company under the Amended Note and Postpetition Facility; (b) the assumption of certain liabilities, including certain liabilities related to assumed and assigned executory contracts and unexpired leases, and certain ordinary course of business liabilities; and (c) $100,000 cash. Additionally, the Stalking Horse Bidder presently intends to offer employment to substantially all of the Company's current employees with employment commencing as of, and only upon, the closing of the Sale. Because the Company is pursuing a competitive auction for its assets, the Sale process will seek additional bids that will ensure the Company obtains the highest and otherwise best offer for the Company's stakeholders. The Company believes, in the exercise of its business judgment, that the Sale structure will foster an open and competitive process and provide the best option to maximize value for all of its stakeholders. Indeed, given that the Company has limited cash and no realistic financing option other than the Postpetition Facility -- which itself depends on the Sale process moving forward as proposed -- the only alternative to the Sale would be conversion to Chapter 7 and liquidation. In the Company's view, liquidation would be exceedingly value destructive, as the Company would immediately lose its going concern value, eliminate jobs, and be required to try to monetize assets that have little or no value outside of their use by the Company as a going concern. A copy of the affidavit in support of the first-day motions is available for free at: http://bankrupt.com/misc/SeaStar_4_1st_Day_Affidavit.pdf The Purchaser can be reached at: Steven A. Rossum, CEO SB Acquisition 2011, Inc. c/o Silver Airways LLC 1100 Lee Wagner Blvd, Suite 200 Fort Lauderdale, FL 33315 E-mail: steve.rossum@silverairways.com The Purchaser's attorneys may be reached at: Howard Turner, Esq. Brian P. Hall, Esq. SMITH, GARNBRELL & RUSSELL, LLP Suite 3100, Promenade 1230 Peachtree Street, N.E. Atlanta, GA 30309-3592 E-mail: hturner@sgrlaw.com bhail@serlaw.com Attorneys for Versa's Volant SVI Funding, LLC: Bryan J. Hall, Esq. BLANK ROME LLP 1201 N. Market Street, Suite 800 Wilmington, DE 19801 - and - Rick Antonoff, Esq. BLANK ROME LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174-0208 Tel: (212) 885-5327 About SeaStar Holdings Based in Puerto Rico, SeaStar Holdings, Inc., d/b/a Seaborn Airlines, serves local passengers within the Caribbean and connecting traffic to numerous locations within or outside the United States through code share or interline arrangements with multiple airline partners. The Company's fleet consists of seven 34-seat Saab 34088s and one 15-seat Twin Otter Seaplane. The majority of the Company's inter-island flights are via the Saab fleet. The Seaplane serves as the primary air transportation between St. Croix and St. Thomas in the U.S. Virgin Islands. SeaStar Holdings, Inc., along with affiliates Seaborne Virgin Islands, Inc., and Seaborne Puerto Rico, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 18-10039) on Jan. 8, 2018. The Hon. Christopher S. Sontchi is the case judge. SeaStar Holdings estimated assets of $1 million to $10 million and debt of $10 million to $50 million as of the bankruptcy filing. Adam G. Landis, Esq., Kerri K. Mumford, Esq., and Travis J. Ferguson, Esq., at Landis Rath & Cobb LLP, serve as the Debtors' bankruptcy counsel. Sonoran Capital Advisors LLC is the Debtors' restructuring advisor. Stinson Leonard Street LLP is the special regulatory counsel. Seabury Corporate Advisors LLC is the investment banker. Rust Consulting/Omni Bankruptcy is the claims and noticing agent. SEASTAR HOLDINGS: Seeks to Honor Codeshare Agreements ----------------------------------------------------- SeaStar Holdings, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware for approval to honor their prepetition obligations under the Interline Agreements, Codeshare Agreements, and Clearinghouse Agreements and to continue performing and exercising their respective rights and obligations (whether prepetition or postpetition) under each Agreement in the ordinary course of business. In the ordinary course of business, the Debtors are party to and operate under bilateral interline agreements with American Airlines, United Airlines, Hahn Air, Delta Air Lines, jetBlue Airways, Cape Air, and Condor -- Interline Airlines -- and bilateral code share agreements with American Airlines, Delta Air Lines, jetBlue Airways, and Vieques Air Link. Although similar, the Interline Agreements and Codeshare Agreements provide the Debtors' customers -- and customers of the other participating airlines -- with different services. Most major airlines participate in interline and codeshare agreements with other airlines because of the tremendous operating efficiencies and consumer benefits obtained through their use. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, counsel to the Debtors, explain that the Debtors believe that the relief sought is not only essential to the success of the Debtors' Chapter 11 Cases, but immediately necessary in light of the nature of the Debtors' operations. Specifically, the Debtors' ability to rely upon and enforce the Clearinghouse Agreements is critical to the operations of the Debtors' business. The Debtors cannot afford the risk that any counterparty question the Debtors' willingness or ability to continue honoring the Clearinghouse Agreements. Even the slightest interruption in the Debtors' ability to seamlessly integrate their ticketing, passenger, and other services with those of the Interline and Code Share Agreements could be disastrous to the Debtors' business. Similarly, any delay or termination of the Clearinghouse Agreements could jeopardize the Debtors' revenue, reputation and ability to continue to operate within the airline industry. Moreover, according to Mr. Landis, if the Debtors are unable to continue operating under the Clearinghouse Agreements, it would be impossible for the Debtors to settle payment obligations to other airlines arising under the Interline Agreements and Code Share Agreements or to travel agencies responsible for selling tickets on the Debtors' airline. Thus, the assurance of uninterrupted participation under the Clearinghouse Agreements is critical to the Debtors' operations. About SeaStar Holdings Based in Puerto Rico, SeaStar Holdings, Inc., d/b/a Seaborn Airlines, serves local passengers within the Caribbean and connecting traffic to numerous locations within or outside the United States through code share or interline arrangements with multiple airline partners. The Company's fleet consists of seven 34-seat Saab 34088s and one 15-seat Twin Otter Seaplane. The majority of the Company's inter-island flights are via the Saab fleet. The Seaplane serves as the primary air transportation between St. Croix and St. Thomas in the U.S. Virgin Islands. SeaStar Holdings, Inc., along with affiliates Seaborne Virgin Islands, Inc., and Seaborne Puerto Rico, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 18-10039) on Jan. 8, 2018. The Hon. Christopher S. Sontchi is the case judge. SeaStar Holdings estimated assets of $1 million to $10 million and debt of $10 million to $50 million as of the bankruptcy filing. Adam G. Landis, Esq., Kerri K. Mumford, Esq., and Travis J. Ferguson, Esq., at Landis Rath & Cobb LLP, serve as the Debtors' bankruptcy counsel. Sonoran Capital Advisors LLC is the Debtors' restructuring advisor. Stinson Leonard Street LLP is the special regulatory counsel. Seabury Corporate Advisors LLC is the investment banker. Rust Consulting/Omni Bankruptcy is the claims and noticing agent. TOYS R US: Claims Filing Deadline Set for April 6 ------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia set April 6, 2018, at 5:00 p.m. (prevailing Eastern Time) as the last date and time for all entities and individuals to file a claim against Toys R US Inc. and its debtor-affiliates. The Court also set June 18, 2018, at 5:00 p.m. (prevailing Eastern Time) as deadline for all governmental units to file their claims against the Debtors. Each proof of claim must be filed, including supporting documentation, by electronic submission through Public Access to Court Electronic Records at http://ecf.vaeb.uscourts.govor, if submitted through non-electronic means by U.S. Mail or other hand delivery systems to be received by Prime Clerk at: Toys R US Inc. Claims Processing Center c/o Prime Clerk LLC 830 Third Avenue, 3rd Floor New York, NY 10022 About Toys "R" Us Toys "R" Us, Inc., is an American toy and juvenile-products retailer founded in 1948 and headquartered in Wayne, New Jersey, in the New York City metropolitan area. Merchandise is sold in 880 Toys "R" Us and Babies "R" Us stores in the United States, Puerto Rico and Guam, and in more than 780 international stores and more than 245 licensed stores in 37 countries and jurisdictions. Merchandise is also sold at e-commerce sites including Toysrus.com and Babiesrus.com. On July 21, 2005, a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts and Vornado Realty Trust invested $1.3 billion to complete a $6.6 billion leveraged buyout of the company. Toys "R" Us is now a privately owned entity but still files with the Securities and Exchange Commission as required by its debt agreements. The Company's consolidated balance sheet showed $6.572 billion in assets, $7.891 billion in liabilities, and a stockholders' deficit of $1.319 billion as of April 29, 2017. Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its Canadian subsidiary voluntarily filed for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No. 17-34665) on Sept. 19, 2017. In addition, the Company's Canadian subsidiary voluntarily commenced parallel proceedings under the Companies' Creditors Arrangement Act ("CCAA") in Canada in the Ontario Superior Court of Justice. The Company's operations outside of the U.S. and Canada, including its 255 licensed stores and joint venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing and CCAA proceedings. Grant Thornton is the monitor appointed in the CCAA case. Judge Keith L. Phillips presides over the Chapter 11 cases. In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland & Ellis International LLP serve as the Debtors' legal counsel. Kutak Rock LLP serves as co-counsel. Toys "R" Us employed Alvarez & Marsal North America, LLC as its restructuring advisor; and Lazard Freres & Co. LLC as its investment banker. It hired Prime Clerk LLC as claims and noticing agent. A&G Realty Partners, LLC, serves as its real estate advisor. On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an official committee of unsecured creditors. The Committee retained Kramer Levin Naftalis & Frankel LLP as its legal counsel; Wolcott Rivers, P.C. as local counsel; FTI Consulting, Inc. as financial advisor; and Moelis & Company LLC as investment banker. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Oil Production Drops to Lowest Level ------------------------------------------------------------ EFE News reports that production at state-owned Petroleos de Venezuela (PDVSA) fell by 100,000 barrels per day (bpd) to 1.7 million bpd in December, the lowest level since 1989, S&P Global Platts said in a report. Venezuela's oil industry had not performed so poorly since the December 2002 to February 2003 strike that paralyzed the energy sector, S&P Global Platts said, citing Organization of Petroleum Exporting Countries (OPEC) figures, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Dec. 22, 2017, 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'. *********** 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 2018. 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. . * * * End of Transmission * * *