/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180803.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, August 3, 2018, Vol. 19, No. 153 Headlines A R G E N T I N A COMPANIA GENERAL: S&P Affirms 'B-' Credit Rating, Outlook Negative TRANSPORTADORA DE GAS: S&P Affirms 'B+' Ratings, Outlook Stable B A R B A D O S OZONE WIRELESS: Owes BDS$8 Million to Over 50 Creditors B R A Z I L BRAZIL: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable ENTRE RIOS: Fitch Affirms 'B' LT IDR, Outlook Stable LOCALIZA RENT: Fitch Affirms 'BB' LT IDR, Outlook Stable OI SA: To Formally Call for General Shareholders' Meeting OI SA: Lisbon Judge Declines to Validate Restructuring Plan PAMPA CALICHERA: S&P Alters Outlook to Pos. & Affirms 'B-' ICR C O L O M B I A COLOMBIA TELECOMUNICACIONES: Fitch Ups IDR to BB+, Outlook Stable M E X I C O SONORA STATE: Moody's Affirms 'Ba3' Issuer Ratings, Outlook Stable TLAQUEPAQUE: Moody's Hikes Issuer Ratings to 'Ba1/A1.mx' P U E R T O R I C O BREAST CANCER INSTITUTE: Unsecureds to Recoup 3% Paid in 60 Months CLINICA SANTA ROSA: Disclosures OK'd; Plan Hearing on Sept. 20 HUMANA HEALTH: S&P Withdraws 'B+' Rating METROPISTAS: Moody's Affirms 'B1' Rating on $435MM Secured Notes PUERTO RICO ELECTRIC: Challenges Remain Despite Restructuring Deal STAR READY MIX: Unsecureds to Recoup 9.6% from $100K Carve Out V E N E Z U E L A PETROLEOS DE VENEZUELA: Insurer Files Chapter 15 in New York - - - - - ================= A R G E N T I N A ================= COMPANIA GENERAL: S&P Affirms 'B-' Credit Rating, Outlook Negative ------------------------------------------------------------------ S&P Global Ratings affirmed its 'B-' ratings on Compania General de Combustibles S.A. (CGC) after S&P received new information on the organizational structure that prompted it to revise its group analysis on the company. The outlook remains negative. S&P said, "The affirmation follows the correction of our group rating methodology on CGC because of new information we received. At the same time, we continue to monitor the company's operating and financial performance that currently benefits from increased cash flow generation stemming from higher production and the positive impact of the Argentine peso's sharp depreciation on CGC's operations. For more details about credit fundamentals, please refer to our most recent article, "Compania General de Combustibles 'B-' Ratings Affirmed Despite Improved Operating Performance, Outlook Remains Negative", published May 23, 2018. "Based on previous information we received from the issuer, we considered an incorrect ultimate parent for the company under the group's structure. We originally took into consideration that all the holding companies above CGC were shell entities with no operations or operating subsidiaries other than CGC. Following the receipt of updated information, we acknowledged that an intermediate holding company, Corporacion America International S.A.R.L (CAI) that ultimately controls CGC, holds either directly or indirectly controlling interests in various other businesses, mainly related to airport operations. "We now assess CGC as a non-strategic subsidiary of the CAI group, with no ratings impact for our group rating methodology. This is despite our belief that CGC is important to the group's growth strategy and the company benefitting from an enhanced financial flexibility and credit access stemming from being part of the group. We acknowledge that the current group analysis isn't static and may change over time, with potential credit impact on CGC. For example, if CGC completes its sizable capex plan and strengthens its growth prospects, we could see clearer signs of potential financial support to it from the group under hypothetical scenarios where it might need it. That could lead to CGC's upgrade." TRANSPORTADORA DE GAS: S&P Affirms 'B+' Ratings, Outlook Stable --------------------------------------------------------------- S&P Global Ratings affirmed its 'B+' foreign and local currency ratings on Transportadora de Gas del Sur S.A. (TGS). At the same time, S&P affirmed its 'B+' rating of the company's seven-year senior unsecured notes for $500 million. The company's SACP remains at 'bb'. The outlook remains stable. The ratings on TGS reflect S&P's expectation that despite its solid current and projected credit metrics and adequate liquidity position, the 'B+' sovereign rating on Argentina limits TGS's credit quality because the company won't be able to withstand a sovereign stress scenario. The sovereign stress scenario includes high inflation, sharp currency depreciation and GDP drop, and frozen rates for utilities. In turn, TGS's 'bb' SACP reflects the company's conservative leverage as seen in debt to EBITDA below 2.0x, and S&P's expectation of relatively stable financial and operating performance in the next two years with an EBITDA generation of $450 million-$550 million and EBITDA margin close to 50%. The regulated natural gas transportation business generates approximately 60% of the company's EBITDA. TGS received a 230% rate adjustment in the last year and a half through the Integral Tariff Review (ITR) to compensate for frozen tariffs between 2002 and 2015. In addition, under the ITR, the regulated gas transportation segment will continue to incorporate annual rate adjustments in line with inflation. This scheme eliminates the players' dependence on discretionary rate adjustments from the government to cover their operating and investment needs. Nevertheless, ITR has been in force only since 2017. The remaining 40% of TGS's EBITDA comes from the natural gas liquid (NGL) production segment, which depends on international prices and volumes sold. The ratings on TGS also incorporate the May 2018 $500 million issuance that the company used to pre-pay a $192 million bond with the 2020 maturity and to fund capital expenditures (capex) that includes the construction of a pipeline and a conditioning plant. The pipeline's construction has started, and it will have a capacity of 37 million cubic meters per day (MMm3/d). The pipeline will transport the gas produced in the country's Vaca Muerta field to a conditioning plant with an initial capacity of 5 MMm3/d. The construction will total around $250 million in the next two years. TGS will use the rest of the issuance proceeds, around $40 million, to finance a new 33-km pipeline that will allow to transport around 25 MMm3/d in the country's south. Both projects are likely to be completed by October 2019. Although S&P expects TGS's debt to EBITDA to remain moderate despite recent debt issuance, we continue to expect a shortfall in free operating cash flow until 2020. =============== B A R B A D O S =============== OZONE WIRELESS: Owes BDS$8 Million to Over 50 Creditors ------------------------------------------------------- Barbados Today reports that Ozone Wireless, Barbados' newest telecommunications provider, has revealed it is sending home 80% of its workforce and will suspend all debt payments in a bid to survive a multi-million-dollar debt. According to Barbados Today, the one-year-old company said it owed BDS$8 million (US$4 million) to over 50 creditors, and would therefore undertake a three-year debt re-profiling program. New head Dr Nicholas Kelly explained that the company had frozen all debt payments until January 2019, and would reduce its staff compliment from 60 to 12 employees, Barbados Today relates. In addition, its Manor Lodge office will be closed effective Aug. 3, Barbados Today adds. =========== B R A Z I L =========== BRAZIL: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. KEY RATING DRIVERS Brazil's ratings are constrained by the structural weaknesses in its public finances and high government indebtedness, weak growth prospects, a challenging political environment and corruption- related issues that have weighed on effective economic policy making and hampered the progress on reforms. The ratings are supported by Brazil's economic diversity and entrenched civil institutions, with its per capita income higher than the 'BB' median. The country's capacity to absorb external shocks is underpinned by its flexible exchange rate, low external imbalances, robust international reserves position, a strong net sovereign external creditor position, deep and developed domestic government debt markets, and a low share of foreign currency debt in total government debt. Brazil is experiencing a mild economic recovery in 2018, with the economy expected to grow by 1.5% in 2018 (below the current 'BB' median of 3.5%). The disruptive May truckers' strike, tighter external financing conditions and the continued policy and political uncertainty related to the election cycle are constraining the rebound. Fitch expects that supportive external demand and some easing of political and policy uncertainties should underpin a gradual economic recovery in 2019-20, with growth averaging around 2.5%. Downside risks to Fitch's forecasts include a further worsening in the external financing conditions and/or an election outcome that is less conducive for reforms or leads to a deterioration in the overall policy environment. Brazil will hold presidential and congressional elections in October. The political environment remains challenging amid an unpredictable and fragmented election race. The race remains wide open among numerous candidates and it is unclear which two will advance to a likely runoff vote in late October. In Fitch's view, there is uncertainty about the pace, scope and quality of policy adjustments after the elections. The leading presidential candidates are proposing varied options for the fiscal policy adjustment. Another uncertainty relates to the congressional base of the winner, which will be important in ensuring good governability and supporting progress on important reforms that will be needed to improve the outlook for public finances and growth. Brazil's fiscal deficits remain large and are expected to decline only gradually, increasing its vulnerability to shocks. A higher than expected recovery in revenues is aiding the government's efforts to meet its public sector primary deficit target in 2018 despite the non-passage of several fiscal measures that were intended to support fiscal performance this year. However, Fitch forecasts that the general government deficit will remain elevated at around 8% of GDP in 2018, which is significantly worse than the current 'BB' median of 3% of GDP. The general government debt burden is expected to reach 77.5% of GDP in 2018 (higher than the current 'BB' median of 49%) and will continue to rise during 2019-2020 and beyond on current policy settings. The prepayments of loans by BNDES (a development bank) to the country's treasury, amounting to BRL130 billion (around 2% of GDP) in 2018 will reduce the pace of the debt increase this year. While additional one-off transactions that ease the pace of debt escalation cannot be ruled out during the forecast period, such factors alone will not be sufficient to improve the underlying challenging outlook for the debt trajectory. Brazil's medium-term fiscal consolidation path will depend on how successful the next administration will be in tackling the fiscal challenges, including the rising social security deficits, high spending rigidities, and constrained flexibility to cut discretionary spending. A social security reform (which was shelved by the Temer administration earlier in the year) along with several other spending measures will be important for making the spending cap (an important fiscal anchor) viable and credible over the medium term. Similarly, without fiscal adjustments and/or materialization of sizeable non-recurrent revenues, the government will likely face challenges in meeting the current 'Golden Rule' (that limits government borrowing to fund capital spending) in 2019 and beyond. Brazil's macroeconomic environment is being supported by moderate inflation and low current account deficits. The IPCA inflation rate was well below the 4.5% inflation target in early 2018, but it jumped sharply to 4.4% in June from 2.9% in May, largely reflecting the supply disruptions related to the truckers' strike. However, inflation expectations for 2018-2019 remain well anchored around the targets. After cutting interest rates by a cumulative 775 bps since late 2016, the central bank halted its monetary easing cycle in May. Brazil's current deficit has moderated significantly since the peak in 2014, reaching 0.5% of GDP in 2017. Fitch forecasts the current account deficit will remain below 1% of GDP in 2018 (lower than the current 'BB' median of 2.4%) and will likely be fully financed by foreign direct investment flows. While the BRL depreciation and volatility in recent months due to the changing external environment and certain domestic factors prompted the central bank to intervene in the FX market by offering FX swaps, which currently stand at over USD65 billion, it has not conducted FX sales in the spot market. SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Brazil a score equivalent to a rating of 'BBB-' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to rated peers, as follows: -- Public Finances: -1 notch, to reflect Brazil's rapidly worsened general government debt burden, which is expected to continue increasing during the forecast period. Fiscal flexibility is constrained by the highly rigid spending profile and a heavy tax burden that makes adjustment to shocks difficult. -- Structural Features: -2 notches, to reflect Brazil's challenging political environment and corruption-related issues that have hampered timely progress on reforms to improve confidence in the medium-term trajectory of public finances. In addition, the Ease of Doing Business Indicator is weaker than the 'BB' median, reflecting structural constraints to growth. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. RATING SENSITIVITIES The main factors that, individually or collectively, could trigger positive rating action are: -- Improvement in the political environment that facilitates the implementation of credible policy initiatives to address medium term public debt sustainability; -- Fiscal consolidation and improved prospects for debt stabilization; -- Improved growth outlook amid continued macroeconomic stability. The main factors that, individually or collectively, could trigger negative rating action are: -- A sustained inertia related to fiscal reform and rapid growth in the government debt burden that threatens medium term public debt sustainability; -- Deterioration in the sovereign's domestic and/or external market access conditions; -- Erosion of international reserves buffer and the broader external balance sheet. KEY ASSUMPTIONS -- Fitch assumes that China (an important trading partner for Brazil) will be able to manage a gradual slowdown and is forecast to grow at 6.6% in 2018 and 6.3% in 2019. Argentina's economy will underperform in 2018-2019, with growth forecast to average 1.2% during this period. -- Fitch assumes that Brazil will maintain international and domestic market access even if there is a return of higher international financial volatility and further domestic confidence shocks. Fitch has affirmed Brazil's ratings as follows: -- Long-Term Foreign-Currency IDR at 'BB-'; Outlook Stable; -- Long-Term Local-Currency IDR at 'BB-'; Outlook Stable; -- Short-Term Foreign-Currency IDR at 'B'; -- Short-Term Local-Currency IDR at 'B'; -- Country Ceiling at 'BB'; -- Issue ratings on long-term senior unsecured foreign-currency bonds at 'BB-'; -- Issue ratings on long-term senior unsecured local-currency bonds at 'BB-'. ENTRE RIOS: Fitch Affirms 'B' LT IDR, Outlook Stable ---------------------------------------------------- Fitch Ratings has affirmed the Province of Entre Rios (Entre Rios), Argentina's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B'. The Rating Outlook is Stable. The issue rating on Entre Rios' senior unsecured bond issuance totaling USD500 million is also affirmed at 'B'. The affirmation of ratings of the Province of Entre Rios is based on the fiscal performance in line with Fitch's expectations. Operating margin should reach levels close to 4% until 2020. In 2017, operating margin was 4.3%. These margins do not consider the pension deficits, which have been recently financed in part by the national government. The ratings are based on the province's average debt metrics when compared with local and international peers and short term needs to refinance debt. KEY RATING DRIVERS Institutional Framework: Weak/Stable Fitch considers Argentina's institutional framework to be Weak, given the country's structural challenges, including its complex and unbalanced fiscal regime with weak equalization funding with federal transfers being updated with much delays. Fitch will monitor the implementation of several corrective measures on tax and federal revenue distribution and their potential impact on the province's public finances. Debt, Liabilities and Liquidity: Weak/Stable Direct debt reached ARS26.5 billion or USD1 billion, in March 2018 and considers new credit loans to refinance existing debt. Debt service consumed the equivalent of 5.8x the operating balance in 2017, translating into payback, or direct debt/current balance, equivalent to 27.2 years, thus, compatible with peers in the same rating category. Liabilities due in 2018 (floating debt) of ARS6.3 billion corresponded to a high 11.5% of operating revenue. Gross cash positions were ARS5.1 billion in March 2018, matching in full short-term obligations. Fitch notes that the province had outstanding transitory credit lines such as treasury bonds and unified funds (FUCO) of ARS3.3 billion. The province faces a growing pension deficit partially funded (around 20%) by the nation through annual agreements. As common with other provinces, Entre Rios does not prepare updated actuarial reports. Entre Rios allocated around ARS4 billion in 2017 to the pension fund, net of federal transfers. If these allocations were considered in the financial profile of the province, operating margin would be negative. Fiscal Performance: Weak/Stable According to Fitch's calculation, Entre Rios posted an operating margin of 4.3% in 2017 (3.0% in 2016), which was better than expected, thus, also explaining the Stable trend. Under an environment of high inflation, revenue tends to increase faster than expenditure, benefiting fiscal performance in the short term. According to Fitch sensitivities, based on Entre Rios's premises and excluding the pension burden, operating margin should be close to 4% in 2020 considering the ongoing efforts to increase tax collections and control pressures in headcount. Economy: Weak/Stable With a relatively well developed agricultural sector, Entre Rios is located in the central eastern region of Argentina. Entre Rios' GDP of USD12 billion corresponds to roughly 1% of the national GDP. Entre Rios presents below-average income of around USD7,000 per capita. The local economy is heavily influenced by agricultural-related activities, mainly soy and poultry, and was negatively affected by a severe draught in 2017. The slow recovery of the Brazilian economy should have a positive impact in the local economy, considering that Brazil is an important trade partner. Management and Administration: Neutral/Stable The stable trend reflects management's efforts to control operating expenditure despite the fact that Entre Rios does not prepare updated actuarial reports. Notwithstanding the capability to adjust local pension systems, Fitch believes that the political cost associated with such changes to be unbearable. Therefore, Fitch does not expect Entre Rios to engage in such changes absent a broader, nationwide initiative. RATING SENSITIVITIES Positive Rating Actions: Entre Rio's IDR is not constrained by the sovereign. An upgrade of the sovereign IDR, accompanied by sustainable improvement in the economy, could lead to an upgrade in Entre Rios' rating. Negative Rating Actions: A downgrade of Argentina's IDR will lead to a negative rating action. Any deterioration in the province's capacity to refinance existing debt should lead to a negative rating action. Any change in the rating of the province will impact the bond rating in the same direction. FULL LIST OF RATING ACTIONS Fitch has affirmed Entre Rio's ratings as follows: -- Long-Term Foreign and Local Currency IDR at 'B'; Outlook Stable; -- USD500 million 8.75% senior unsecured notes at 'B'. LOCALIZA RENT: Fitch Affirms 'BB' LT IDR, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed Localiza Rent a Car S.A.'s long-term, foreign-currency Issuer Default Rating at 'BB', its long-term, local-currency IDR (LT LC IDR) at 'BBB-' and its National Scale rating at 'AAA(bra)'. The Rating Outlook is Stable. Localiza's ratings continue to reflect its prominent business position within the competitive car and fleet rental industry in Brazil, strong operational efficiency, track record of solid financial profile, robust liquidity and well-spread debt amortization schedule. Its large scale results in strong bargaining power with automobile manufacturers, enabling Localiza to better capture economies of scale. The company is more than two times bigger than its closest competitors. On the other hand, Localiza's market-share oriented strategy resulted in aggressive growth, funded primarily through debt, higher than expected leverage levels and recurring negative FCF generation. Despite the recent increase in leverage, Localiza's financial profile continues to reflect a capital structure consistent with the current IDRs -- for a capital intensive industry -- and robust financial flexibility. Its sizable pool of unencumbered vehicles bolsters its access to funding during selective debt markets, being a key factor in the ratings. Additionally, Localiza's business model allows the company to adjust operations to economic cycles at its discretion -- as seen in the past -- enhancing its financial flexibility. Localiza has the lowest financing cost among its competitors and wide access to local capital markets. Fitch expects Localiza to remain committed to a sound credit profile. As EBITDA increases and growth slows down, Localiza's leverage should revert closer to historical levels. According to the agency's projections, adjusted net debt/ EBITDAR and FFO- adjusted leverage will remain below 3.5x and 1.5x, respectively, in the long term. For 2018, Fitch forecasts EBITDA of BRL1.6 billion, capex of BRL5.7 billion, negative FCF of BRL919 million, adjusted net debt/ EBITDAR of 3.2x and a FFO-adjusted leverage ratio of 1.4x. KEY RATING DRIVERS Robust Competitive Position: Localiza has a leading and prominent business position within the car and fleet rental industry in Brazil, underpinned by large scale, proven operating expertise, national footprint and a strong used car sale operation. As of June 2018, Localiza's fleet of 193,893 vehicles, being 145,837 in rent a car (RaC) and 48,056 in fleet management (GTF), secured market shares of 32% in RaC (market leader), and 8.4% in GTF (second). As a result, the company has strong bargaining power with automobile manufacturers and is able to better capture economies of scale. At year-end 2018 and 2019, Localiza's own fleet should be at around 202,000 and 213,000 vehicles, respectively. Solid Operating Performance: Localiza has solid margins and a positive operating track record in both rentals and used car sales, despite its sector of operation being considered of moderate to high risk. Compared with its main peers, Localiza's maintenance costs per operating vehicle, utilization rate, operating fleet (as a percentage of average total fleet) and selling cost per vehicle are consistent and competitive. Fitch forecasts cost levels per vehicle to be historically consistent in 2018 and 2019. Additionally, RaC utilization rate should improve marginally, reaching approximately 75% in 2018 and 76% in 2019, from 74% in 2017, while fleet utilization rate should be stable, at 97%. Likewise, RaC operating fleet should reach 84% of average total fleet for the same period. Additionally, solid operating performance during the past years helped to mitigate margin pressure due to tariff decline. Negative FCF: For 2018, Fitch forecasts FFO of BRL5.3 billion, working capital needs around BRL282 million and capex of BRL5.7 billion, leading to a negative FCF of BRL919 million, which compares positively with 2017's negative FCF of BRL1.5 billion. Fitch also expects slightly negative FCFs for 2019 and 2020. As economies of scale kick in, margins should improve slightly, reaching 35% in 2018 and 37% in 2019 for RaC and 64% for GTF for the same period. Positive used car sales performance should remain, although margins tend to be affected by lower levels of RaC vehicles depreciation. Market-Share Strategy Pressures Leverage: Localiza's market-share oriented strategy, to enhance and consolidate its business position, resulted in higher than expected leverage levels and recurring negative FCF generation. However, Fitch expects Localiza to remain committed to a sound credit profile. As EBITDA increases and growth slows down, Localiza's leverage should revert closer to historical levels. According to Fitch's projections, adjusted net debt/EBITDAR and FFO-adjusted leverage will remain below 3.5x and 1.5x, respectively, in the long term. In the last 12 months ended June 30, 2018, these ratios were 3.5x and 1.4x, respectively. Capital Intensive Industry: The capital-intensive nature of the rental industry, which demands sizable and regular investments to grow and renew the fleet, pressures the financial profile of the companies in the sector. Therefore, lower funding costs and strong access to credit markets are key competitive advantages. Localiza's strategy to operate with a modern fleet allows it to postpone fleet renewal, if needed, while its strong sales channel helps it to maximize sales prices. As a result, the proceeds from car sales have largely funded fleet renewal, due to the significant discounts for new vehicles obtained from auto manufacturers. Main risks for this industry are escalation of competition, constrained credit markets, rising interest rates and severe reduction of economic activity -- affecting mainly employment levels, disposable income, business and leisure traveling and corporate confidence. DERIVATION SUMMARY Localiza's ratings reflect its robust performance and leadership position in the Brazilian fleet and car rental industry. The company has a stronger competitive position and is more than two times bigger than its closest domestic peers, such as Ouro Verde Locacao e Servico S.A.'s (FC and LC IDRs BB-), Companhia de Locacao das Americas (National Scale Rating AA[bra]) and Movida Participacoes S.A (National Scale Rating A+[bra]). As a result, it has strong negotiating power with automobile manufacturers and is better able to capture economies of scale. JSL S.A. (FC and LC IDRs BB) -- a leading logistic player in Brazil -- has a similar market leadership position but worse margins and weaker profitability. Additionally, Localiza's competitiveness is strengthened by its financial profile, which is underpinned by an adequate capital structure and good financial flexibility due to the value and the quality of its fleet, robust cash holdings and a well spread debt amortization schedule. As a result, Localiza has the lowest financing cost among its peers and wide access to local capital markets. Compared to Localiza, JSL and Movida have higher leverage and weaker financial flexibility. Localiza financial profile also compares favorably to those of Locamerica and Ouro Verde. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer -- Average Operating Fleet growth, in 2018 and 2019, of 29% and 9% for car rentals and of 21% and 7% for fleet management, respectively; -- Utilization rate around 75% and 76% for car rentals in 2018 and 2019, respectively; -- Average ticket for car rentals declining 2.0% in 2018 and increasing 1.5% in 2019; -- Average ticket for fleet management stable in 2018 and increasing 1% in 2019; -- Fleet capex of BRL 5.7 billion in 2018 and BRL6 billion in 2019; -- Dividend payout of 27%. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action Positive rating actions for the FC IDR are limited by Brazil's country ceiling of 'BB'. The inherit risk of the Brazilian fleet and car rental industry and the current strong growth strategy of Localiza limit the upward rating potential of the company's 'BBB-' LC IDR. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Change in management's commitment to a strong liquidity position; -- Aggressive price competition leading to long periods declining margins; -- Increase in FFO-adjusted leverage to more than 1.5x on sustained basis; -- Increase in net adjusted debt/EBITDAR to more than 3.5x on sustained basis; -- A further negative rating action on Brazil's sovereign ratings and country ceiling could result in negative rating action for the company's foreign-currency IDR. LIQUIDITY Robust Liquidity Profile: Localiza's liquidity profile continues to reflect its high financial flexibility and strong cash holdings. Fitch expects the company to remain with a ratio of cash and equivalents/short-term debt above 2.0x and a well-spread debt amortization schedule. Likewise, Localiza's financial flexibility should remain underpinned by the company's sizable pool of unencumbered vehicles and its wide access to local debt markets. As of June 2018, the company had total adjusted debt of BRL7.1 billion, including BRL868 million of rental obligations, short- term debt of BRL397 million and cash and cash equivalents of BRL1.7 billion. At the same date, fleet market value was approximately of BRL7.7 billion, which covered total adjusted net debt in 1.5x. Historically, the estimated market value of Localiza's vehicle fleet has been around 2.0x the value of its net debt, allowing Localiza to monetize these assets as needed. Additionally, Localiza's business model enables the company to adjust operations to economic cycles at its discretion -- as seen in the past -- further enhancing its financial flexibility. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Localiza Rent a Car -- Long-term, FC IDR at 'BB'; Outlook Stable; -- Long-term, LC IDR at 'BBB-'; Outlook Stable; -- Long-term National Scale Rating at 'AAA(bra)'; Outlook Stable; -- 6th, 7th, 10th, 11th, 12th and 13th senior unsecured debenture issuances at 'AAA(bra)'. OI SA: To Formally Call for General Shareholders' Meeting --------------------------------------------------------- Gram Slattery at Reuters reports that Oi SA, Brazil's largest fixed-line telecom firm, is about to formally call for a general shareholders' meeting as the company pushes ahead with its aggressive restructuring plan. A source with direct knowledge of the matter told Reuters the firm plans to file a formal invite for the meeting to officially approve a BRL4 billion (US$1.07 billion) capital injection into the firm this week or next. At the meeting, likely to take place in September, 30 days after the invite, Oi's new slate of shareholders will also try to reach a decision on the structure of a new board of directors, Reuters discloses. Oi buckled under BRL65 billion of debt in 2016, filing for bankruptcy protection, Reuters recounts. Creditors approved a plan in December in which they would become the company's top shareholders via a debt-to-equity swap, Reuters notes. That conversion process was completed late last week, Reuters relays. According to Reuters, by quickly calling a shareholders' meeting, the firm would show its commitment to rapidly emerge from the bankruptcy process, which has hamstrung the company by limiting capital spending and caused it to lose market share. As reported in the Troubled Company Reporter-Latin America on June 4, 2018, Fitch Ratings affirmed Oi S.A.'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'D', and National Long-Term Rating and local debentures rating at 'D (bra)'. Fitch has also affirmed the existing ratings for Oi's senior notes as the debt exchange process is still underway. OI SA: Lisbon Judge Declines to Validate Restructuring Plan ----------------------------------------------------------- Gram Slattery and Ana Mano at Reuters report that Brazilian telephone carrier Oi SA said on Aug. 1 that a judge in Lisbon had decided against validating the company's restructuring plan in Portugal for now, adding that the decision will not keep the plan from going into effect. In a securities filing, Oi said a judge determined that there are outstanding appeals related to the firm's restructuring of BRL65 billion (US$17.4 billion) in debt that must be resolved before the Portuguese court signs off on the plan, Reuters relates. Oi added that the decision was rooted in formalities, not on the merits of the restructuring plan, which was approved by the company's creditors in December, Reuters states. The firm also said it would appeal the decision, Reuters notes. Creditors in Oi, Brazil's largest fixed line carrier, approved the restructuring plan in December, turning U.S. hedge funds such as Goldentree Asset Management LP and York Capital Management Global Advisors LLC into significant shareholders, and diluting the stake of major Portuguese shareholder Pharol SGPS SA, Reuters recounts. The plan has been formally recognized in courts in Brazil and the United States, Reuters discloses. As reported in the Troubled Company Reporter-Latin America on June 4, 2018, Fitch Ratings affirmed Oi S.A.'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'D', and National Long-Term Rating and local debentures rating at 'D (bra)'. Fitch has also affirmed the existing ratings for Oi's senior notes as the debt exchange process is still underway. PAMPA CALICHERA: S&P Alters Outlook to Pos. & Affirms 'B-' ICR -------------------------------------------------------------- S&P Global Ratings revised its outlook on Sociedad de Inversiones Pampa Calichera S.A. (Pampa Calichera) to positive from stable. S&P also affirmed its 'B-' issuer credit and issue-level ratings on the company. The positive outlook reflects the improved prospects for Sociedad Qu°mica y Minera de Chile S.A. (SQM; BBB+/Stable/--), which has resulted in better-than-expected dividends to Pampa Calichera so far in 2018 and the likely high payout for the remainder of the year and in 2019. In addition, Pampa Calichera extended its maturity profile, which reduced refinancing risk until early 2020. The positive outlook further incorporates that the higher lithium prices have led to a recovery in SQM's stock price in 2017, following three years of much lower prices. The latter improved Pampa Calichera's loan-to-value metrics, which S&P currently estimates at about 25%, and widened the cushion for its financial covenants. However, the company maintains a very aggressive financial policy. For instance, due to recent positive trends, Pampa Calichera has increased its leverage during the first half of the year to buy SQM stock to pursue arbitrage operations. S&P believes leverage -- measured as debt to EBITDA -- is still very high (about 7.0x by year-end). Also, interest coverage is tight, because despite better prospects, there's risk that SQM's dividends could be lower than in S&P's base-case scenario. Two factors pose uncertainty to S&P's assumptions for SQM's dividends -- and consequently for Pampa Calichera's coverage ratios -- that could result in additional volatility and weaker ratios than in its base-case scenario: -- SQM has announced an ambitious investment plan of $525 million for the next three years, and the company is working on securing financing for about $750 million in 2018. This would move SQM much closer to its target leverage (net-debt-to equity below 1.5x) and the debt to capitalization financial covenant (maximum of 1.2x), to which its dividend policy is tied. Minor deviations from S&P's base-case assumptions could make the dividend payout fall to 60% or 50%, which would cause Pampa's net interest coverage to fall below 1.5x in 2019. -- After Nutrien sells its 24% stake in SQM, the new shareholder on the company's board could lead to a revised dividend policy. S&P said, "Our 'B-' corporate credit rating on Pampa Calichera reflects an eight-notch negative ratings differential relative to SQM's stand-alone credit profile (SACP). SQM is the sole asset for Pampa Calichera and its related parties and their stake in the company is approximately 32%. The notching differential reflects the deep structural subordination of Pampa Calichera relative to SQM's distributions, which it doesn't control. The main factors constraining our rating on Pampa Calichera include its cash-flow reliance on a single asset, the latter's vulnerability to commodity price volatility, Pampa Calichera's limited influence on SQM's board, the aggressive financial policy, the very high leverage, and low interest coverage that could fall below 1.5x in 2019. "In our analysis, we follow a consolidated approach (including holding companies above Pampa Calichera), given that the dividends the company receives are the main payment source for its debt. In addition, cross-default clauses exist among the companies in the group. Thus, we incorporate the debt at Pampa Calichera and at its holding company--Oro Blanco --and the sister company, Potasios de Chile S.A. We also consider dividends that Pampa Calichera and Potasios receive from SQM. Pampa Calichera has a direct 25.089% stake in SQM (following the acquisition of 5.3 million of SQM-B shares in the past few months) and Potasios has a 6.907% stake." =============== C O L O M B I A =============== COLOMBIA TELECOMUNICACIONES: Fitch Ups IDR to BB+, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has upgraded Colombia Telecomunicaciones S.A. ESP's (ColTel) Long-term Foreign and Local-Currency Issuer Default Ratings (IDRs) to 'BB+' from 'BB'. Fitch has also upgraded CoTel's senior unsecured 2022 bond rating to 'BB+' from 'BB' and its hybrid bond to 'BB-' from 'B+'. The Rating Outlook is Stable. The upgrade reflects capitalization by ColTel's shareholders on its former payment liability to Patrimonio Autonomo Receptor de Activos of Empresa Nacional de Telecomunicaciones (PARAPAT) and the effect on ColTel's balance sheet and cash flow generation going forward. Telefonica S.A.'s (TEF) 2017 sizable cash injection and the government's assumption of its portion of the liability strengthened ColTel's balance sheet resulting in a material debt reduction. This capitalization also freed approximately COP500 billion per year previously destined to service PARAPAT that will now contribute to the company's CFFO expected performance and deleveraging strategy. The consolidation of leading telecom fixed operations in Bucaramanga and Barranquilla since 4Q17, following the termination of the PARAPAT operation agreement will contribute to improved EBITDA performance during the projection period. Fitch believes that towers and real estate properties that came from PARAPAT can be monetized and proceeds can be used to reduce indebtedness. The Stable Outlook reflects Fitch's expectation that ColTel's financial strategy will focus on reducing total debt in 2018 and 2019, which will improve the company's adjusted net leverage metric of 2.2x by 2020. KEY RATING DRIVERS Strong Market Position ColTel is one of the leading providers of mobile data services in Colombia, with a national subscriber market share of 28.5% as of March 2018, behind Claro (53.1%), the biggest player by market share. For this same period, ColTel is also the third largest BBI service provider, with a 19.2% of subscriber market share and the fourth pay-TV provider with a market share of 10%. The company is expected to maintain its strong mobile footprint and to increase modestly its fixed business subscriber base, mainly in broadband and pay-tv, as it deploys its capex strategy aimed at increasing its network coverage and penetration. Capitalization Strengthens ColTel's Credit Profile The 100% pay down of the PARAPAT COP 4.8 trillion liability in September 2017 achieved a material debt reduction that strengthened its capital structure by significantly reducing its adjusted net leverage metric to 3x as of March 2018, below the average 5.3x leverage metric posted in 2014-2016. The capitalization also freed approximately COP 500 billion per year previously destined to pay associated interest payments that can now be used for investments or debt reduction. It also led to the consolidation of TeleBucaramanga and Metrotel, which will boost EBITDA by 5% per year. Furthermore; the acquisition of towers and real estate properties though this process is positive, as these assets can be monetized to accelerate deleveraging. Operating Cash Flow to Improve Fitch expects ColTel's EBITDA to increase to an average of COP1.8 trillion per year over the 2018-2020 period, up from COP1.5 trillion in 2017. EBITDA margin is expected to improve to 33.6% in 2020 from 31.5% in 2017 as a result of the expansion of its service portfolio and stronger ARPU performance, the consolidation of Metrotel and Telebucaramanga and the incorporation of cost efficiencies that should improve the cost as percentage of revenues ratio by 300 basis points by 2020. ColTel intends to use part of the increased operational cash flow expansion to fund capex in order to expand its LTE and FTTH networks in support of improved ARPU performance. For the next few years, Fitch expects ColTel to increase its fixed business revenue to an average of approximately COP2.1 trillion per year from COP1.8 trillion in 2017. This will contribute to close to 38% of total consolidated revenues, while the mobile operation will account for approximately 62% of total revenues as wireless/LTE portfolio continues to grow. FCF Projection Outperforms Previous Base Case Coltel's annual FCF generation is expected to average approximately COP430 billion for the next couple of years, which is above Fitch's previous projection of COP106 billion per year. The expected FCF improvement is driven by the projected EBITDA growth and lower capex intensity (capex/revenues) of 16% during 2018-2020, less than previous capex intensity forecast of 20%. The lower projected capex cash outlay is explained by capex optimization initiatives that focus on higher ARPU services such as mobile data and FTTH and capex savings to connect new subscribers to its FTTH network in 2018-2020. Deleveraging Trend Expected Fitch expects Coltel to pay debt by COP338 billion in 2018 and COP 846 billion in 2019 and to substitute part of that debt with longer tenor instruments in order to increase average life from approximately 3.7 years as of March 2018 to between seven and 10 years. This financial strategy would result in net debt reductions of approximately COP 544 billion in 2018 and COP 435 billion in 2019. This in conjunction with the expected EBITDA improvement would reduce the adjusted net leverage metric from 3x in March 2018 to 2.2x by 2020, outperforming Fitch's 2017 forecast of 2.5x as of that date. DERIVATION SUMMARY ColTel's 'BB+' rating reflects its relatively more concentrated service portfolio given its weaker fixed business operation compared to its peers UNE EPM Telecomunicaciones S.A. (BBB/Stable) and Telefonica Moviles Chile S.A. (BBB+/Stable), companies that boast a more balanced subscriber base per business segment with stronger fixed internet and TV operations. On the other hand, ColTel's credit profile is stronger than Axtel (BB-) and VTR Finance (BB-) given their less diversified operations and weaker financial profiles. Fitch expects ColTel's capital structure to improve by reaching an adjusted net leverage ratio of 2.2x by 2020, closer to the expected leverage performance for UNE EPM but above Telefonica Moviles Chile's leverage metric (below 2x) given its conservative capital structure. ColTel's capital structure is considered stronger than Axtel and VTR, given their projected leverage metric is close to 4x. KEY ASSUMPTIONS -- Core Revenues grow at an average of 5.5% year in 2018-2020, driven by 4.7% mobile average growth and 6.7% fixed revenue growth; -- EBITDA averages COP1.8 trillion during the projection period; -- Moderate EBITDA growth and debt prepayments in 2018 and 2019 allow for the adjusted net leverage metric to improve to 2.2x in 2020; --C apex, including licenses, of COP2.6 trillion in 2018-2019 as indicated by the company; -- No dividend payments during the rating horizon. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- The strengthening of the fixed operation in support of EBITDA generation leads to a market share improvement in its fixed business; -- The company registers an adjusted net leverage metric below 2x on a sustained basis. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- Sustained profitability deterioration due to competitive pressures and slow growth in its non-traditional business segments; -- Negative FCF generation; -- Adjusted net leverage above 3x on a sustained basis. LIQUIDITY ColTel's liquidity has improved after the capitalization process that paid the PARAPAT liability and cured the piercing of the 2022 bond leverage covenant (below 3.75x) affording the company increased financial flexibility by allowing it to contract additional debt if needed. ColTel posted a CFFO of COP878 billion as of LTM March 2018 and cash balances including short-term investments of COP73 billion, resources more than sufficient to meet short-term debt obligations of COP435 billion as 1Q18. ColTel reported COP555 billion in available lines of credit (COP374 billion with local banks and COP181 billion with international banks) that further bolster its liquidity position. The capitalization by the shareholders in September 2017 substantially improved the capital structure and liquidity of ColTel by reducing the total amount of adjusted debt and associated PARAPAT's interest payable. The leverage metric stood at 3.1x as of March 2018, well below adjusted leverage metrics above 5x posted before the capitalization was held. Going forward ColTel's financial strategy will seek to reduce its adjusted net leverage metric close to 2x by prepaying debt in 2018 and 2019 and to improve the average life of its financial debt to over seven years from the current three years, further strengthening its liquidity position. FULL LIST OF RATING ACTIONS Fitch has upgraded ColTel's rating as follows: -- Long-term, foreign-currency IDR to 'BB+' from 'BB'; Outlook Stable; -- Long-term, local-currency IDR to 'BB+' from 'BB'; Outlook Stable; -- 2022 senior notes to 'BB+' from 'BB'; -- Subordinated notes to 'BB-' from 'B+'. =========== M E X I C O =========== SONORA STATE: Moody's Affirms 'Ba3' Issuer Ratings, Outlook Stable ------------------------------------------------------------------ Moody's de Mexico affirmed the issuer ratings of the State of Sonora at Ba3 (Global Scale, local currency) and A3.mx (Mexico National Scale) and changed the outlook to stable from negative. RATIONALE FOR THE STABLE OUTLOOK The change in the outlook to stable from negative reflects the state's stabilizing debt levels and its reduced cash financing needs, which will likely remain contained over the next 12-18 months thanks to ongoing cost control efforts. Moody's estimates that Sonora's cash financing deficit will fall to -1.5% in 2018 from -2.3% in 2017. While the deficit may widen somewhat in 2019, it will remain much smaller than -4% to -5% deficits reported in 2015-2016. These improved results put the state's financial performance back on a more stable footing following a period of deterioration in previous years, and reflect the administration's ability to contain growth in current and capital spending. Moody's expects contained deficits will help limit financing needs, leading to further a tapering in the state's level of net direct and indirect debt (NDID) in 2018 and 2019. RATIONALE FOR THE AFFIRMATION OF THE Ba3/A3.mx RATING The affirmation of Sonora's Ba3/A3.mx ratings reflects 1) financial deficits that are now smaller than the median for Ba3 rated peers, 2) declining but still high debt levels, 3) relatively high own-source revenues, 4) weak liquidity and 5) significant levels of unfunded pension obligations. Sonora has been able to curb growth in current spending to rates that have remained below revenue growth over the past two years through the successful implementation of austerity measures. Outlays for materials and general services fell in 2017, and current spending growth has remained broadly in line with revenue growth in the first quarter of 2018. In addition, the state recently carried out a restructuring of its public debt that will modestly reduce its debt service costs. The improvement in performance is helping to reduce financial pressure, and Moody's expects the state's level of NDID to total revenues will continue to gradually decline, falling to 40.3% at the end of 2018 from a peak of 45.3% in 2016. Nonetheless, due to a buildup of long-term debt contracted in previous periods, Sonora's total indebtedness will remain significantly higher than the 25.7% median level for Ba3 rated Mexican states. Sonora continues to benefit from a relatively high level of own- source revenue, which equaled 12.1% of total revenue in 2017, compared with the 5.4% median for Ba3 rated states. The state has a relatively prosperous economy within the Mexican market, with a GDP per capita equal 142% of the national average in 2016, providing a broad tax base. Nonetheless, the state's low liquidity remains its main credit challenge. Cash and equivalents were equal to 0.3x current liabilities in 2017, and the state frequently uses short-term loans to meet temporary liquidity needs. In addition, Sonora has significant levels of unfunded pension liabilities which equaled 105% of total revenue in 2015, according to the latest available actuarial study. WHAT COULD CHANGE THE RATING UP OR DOWN Given the stable outlook, it is unlikely that the issuer rating will change in the medium term. However, if the state's financial performance exceeds expectations and results in an improvement in its liquidity position, and if it implements reforms that substantially reduce its unfunded pension liability, this could result in upward pressure on the issuer rating. Conversely, a large deterioration in Sonora's financial performance and liquidity, or further increases in its level of indebtedness, would exert downward pressure on the issuer ratings. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. The period of time covered in the financial information used to determine State of Sonora's rating is between January 1, 2013 and December 31, 2017 (source: Issuer Financial Statements). TLAQUEPAQUE: Moody's Hikes Issuer Ratings to 'Ba1/A1.mx' -------------------------------------------------------- Moody's de Mexico (Moody's) upgraded the issuer ratings of the Municipality of Tlaquepaque to Ba1/A1.mx (Global Scale, local currency/Mexico National Scale) from Ba2/A2.mx. The outlook remains stable. RATINGS RATIONALE The upgrade reflects a consistent improvement in the municipality's credit profile in recent years, especially in its operating results and liquidity position, which Moody's expects will be sustained in 2018 and 2019. Tlaquepaque's gross operating balance (GOB) climbed to 10.7% of operating revenue in 2017, up from 3.1% in 2015. Operating results improved thanks to controls in current spending in recent years combined with new efforts to boost own-source revenue, which rose 44% in 2017. The municipality also benefited from strong increases in non-earmarked federal transfers. While operating expenses will likely pick up this year, Moody's estimates that Tlaquepaque's own-source revenue growth will remain solid through next year thanks to ongoing efforts to improve collections of property taxes, and that the municipality will continue to report operating surpluses in 2018 and 2019, albeit somewhat smaller than the surplus observed in 2017. Improved financial results have also supported gains in Tlaquepaque's liquidity position. After posting deficits between 2013-15, the municipality posted financial surpluses equal to 13% of total revenue in 2016 and 6.1% in 2017. As a result, its cash and equivalents averaged 1.0x current liabilities in 2016-2017, up from 0.5x in 2015, leaving it better positioned to absorb unexpected shocks. Moody's estimates Tlaquepaque will continue to post cash financing surpluses in 2018 and 2019, as capital spending will remain contained, supporting a rise in its liquidity to above 2.0x current liabilities next year, solidly in line with Ba1 rated peers. While Tlaquepaque's level of indebtedness remains higher than its peers, its net direct and indirect debt (NDID) continues to steadily fall, declining to 33.5% of operating revenue in 2017 from 54.9% five years earlier. The municipality's strengthened liquidity has precluded the need to contract short-term loans, and there are currently no plans to contract new long-term loans. As a result, Moody's estimates that Tlaquepaque's NDID will fall to 27.1% of operating revenue by the end of 2019. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectation that Tlaquepaque's operating and financial results will remain positive, supporting adequate liquidity, and that debt levels will continue to fall, although they will remain higher than peers. WHAT COULD CHANGE THE RATING UP OR DOWN If Tlaquepaque is able to sustainably raise its own-source revenues to substantially higher levels while achieving higher than expected GOBs and liquidity, this could result in upward pressure on its ratings. Conversely, if spending rises more than expected, resulting in operating deficits and increased cash financing needs that weaken liquidity or lead to increased debt, this could put downward pressure on the ratings. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. The period of time covered in the financial information used to determine Municipality of Tlaquepaque's rating is between January 1, 2013 and December 31, 2017 (source: Issuer Financial Statements). ==================== P U E R T O R I C O ==================== BREAST CANCER INSTITUTE: Unsecureds to Recoup 3% Paid in 60 Months ------------------------------------------------------------------ Vidal Rosario Leon and Breast Cancer Institute PSC filed a consolidated disclosure statement in support of their proposed plan of reorganization. Class 14 under the plan consists of any allowed general unsecured non-priority claim that is not previously listed or provided treatment, including the deficiency claims of BPPR, Adilia Cardona, SBA and PR Farm Credit. Debts under this class are estimated at $1,729,900.13. Members of this class will receive 3% payment of their allowed claims in equal monthly installments to be paid within 60 months. This class is impaired. Funding of the plan will be from the continued operations of the Debtors. The Debtors will also continue to collect on their accounts receivable from the Medical Insurance Companies in order to fund the Plan, along with the collection of withholdings from medical insurance companies paid to Puerto Rico Department of Treasury or Hacienda. The Debtors will sell or surrender real and personal properties not necessary for the reorganization process in full satisfaction of the secured claims or as agreed with such creditor. A full-text copy of the Disclosure Statement is available at: http://bankrupt.com/misc/prb17-11745-1-40.pdf About Breast Cancer Institute Breast Cancer Institute, PSC, which conducts business under the name Advance Breast Center, is a healthcare company that provides breast imaging, mammography, diagnostic imaging, stereotactic biopsy, radiology services. It is based in Cavey, Puerto Rico. Breast Cancer Institute sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-01524) on March 22, 2018. In the petition signed by Vidal Rosario Leon, president, the Debtor disclosed $4.06 million in assets and $14.67 million in liabilities. Judge Brian K. Tester presides over the case. C. Conde & Assoc. is the Debtor's bankruptcy counsel. CLINICA SANTA ROSA: Disclosures OK'd; Plan Hearing on Sept. 20 -------------------------------------------------------------- Bankruptcy Judge Edward A. Godoy approved Clinica Santa Rosa Inc.'s disclosure statement referring to a plan under chapter 11 filed on June 4, 2018. Acceptances or rejections of the Plan may be filed in writing by the holders of all claims on/or before 14 days prior to the date of the hearing on confirmation of the Plan. Any objection to confirmation of the plan must be filed on/or before 14 days prior to the date of the hearing on confirmation of the Plan. A hearing for the consideration of confirmation of the Plan will be held on Sept. 20, 2018 at 9:30 A.M. at the United States Bankruptcy Court, Southwestern Divisional Office, MCS Building, Second Floor, 880 Tito Castro Avenue, Ponce, Puerto Rico. About Clinica Santa Rosa Clinica Santa Rosa, Inc., engaged in a healthcare business, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 16-09033) on Nov. 14, 2016. The petition was signed by Fernando Alarcon Ocasio, president. At the time of the filing, the Debtor estimated assets at $1 million to $10 million and liabilities $10 million to $50 million. The Debtor is represented by Antonio I. Hernandez Santiago, Esq. The U.S. Trustee for the District of Puerto Rico appointed Edna Diaz De Jesus and the Patient Care Ombudsman for Clinica Santa Rosa. HUMANA HEALTH: S&P Withdraws 'B+' Rating ---------------------------------------- S&P Global Ratings said it withdrew its 'B+' ratings on Humana Health Plans of Puerto Rico Inc. (HHPPR) and its 'BBB' ratings on Humana Insurance of Puerto Rico Inc. (HIPR). S&P said, "We placed both ratings on CreditWatch with negative implications on Oct. 5, 2017, due to the uncertainty regarding the impact of Hurricanes Irma and Maria on both health insurers. Since then, we have taken a negative rating action on HHPPR due to underperformance and weakened capitalization." S&P said, "Although we have received limited information while awaiting second-quarter 2018 statutory filings, we believe there is ongoing uncertainty in Puerto Rico regarding the impact of these weather events, which appear to be hampering business conditions, potentially adding to operational, capital and earnings, and liquidity strain. If confirmed by additional evidence, we believe the resulting impact to ratings could have been a one-notch downgrade on HHPPR and a two-notch downgrade on HIPR." METROPISTAS: Moody's Affirms 'B1' Rating on $435MM Secured Notes ---------------------------------------------------------------- Moody's Investors Service affirmed the B1 rating assigned to Metropistas' $435 million 6.75% amortizing Senior Secured Notes due 2035. As part of the same rating action, Moody's changed the rating outlook to stable from negative. As of July 2018, the Notes have an outstanding balance of approximately $418.5 million. Outlook Actions: Issuer: Metropistas Outlook, Changed To Stable From Negative Affirmations: Issuer: Metropistas Senior Secured Notes, Affirmed B1 RATINGS RATIONALE Moody's's affirmation and outlook stabilization reflects Metropistas' strong performance following a short-lived impact from Hurricane Maria. Despite a demanding economic context, Metropistas' traffic grew 5% in the first two quarters of 2018 compared to the same period in 2017, while revenues grew by 13%, supported by toll increases and robust traffic trends. Metropistas has proven to be a unique and highly resilient asset providing an essential and critical service as a primary way of entry to San Juan, the capital city of the Commonwealth of Puerto Rico (Ca negative). Traffic trends have been largely immune to Puerto Rico's economic performance as measured by the Commonwealth's GNP. Similarly, the island's declining population has not materially affected traffic trends. In 2017 Metropistas implemented bi-directional tolling that allowed to recapture traffic and further supported revenue growth. The overall poor conditions of alternative free routes also support Metropistas' traffic as well as reconstruction works that boosted traffic increase of heavy vehicles (that represent approximately 4% of total traffic) of 20% in the first 6 months of 2018 compared to 2017. The underlying credit quality of Metropistas also considers the long term of the concession which matures in 2061 following a 2016 amendment to extend the concession by 10 years. The regulatory environment is also supportive. The concession allows for an annual toll increase of US CPI +1.5% that does not require any further approval from the government and that has been implemented without disruption. Solid project finance features, including a 12-month Debt Service Reserve Account and a 12-month Major Maintenance Account are also incorporated in its rating. Moody's calculates that Metropistas's Debt Service Coverage Ratio ("DSCR" annuity based) will reach 1.57x by the end of 2018. Moody's also expects this ratio to continue improving, even under scenarios of flat traffic growth, given its expectation of continuous toll increases and de-leveraging of the asset. RATING OUTLOOK Its outlook change to stable from negative incorporates its expectation that traffic will remain resilient to Puerto Rico's weak economic conditions and operating environment. WHAT COULD CHANGE THE RATING UP/DOWN Confirmation of sustained traffic performance would support a rating upgrade as would a Moody's projected DSCR of 1.6x. Negative pressure could develop if traffic trends shift such that Moody's projected DSCR falls below 1.3x on a sustained basis. ABOUT METROPISTAS Metropistas operates the PR-22 and the PR-5 toll-roads in San Juan under a concession from the Puerto Rico Highway and Transportation Authority (C negative). In August 2013, Metropistas issued $435 million (original face value) of 6.75% Senior Secured Notes due 2035 with quarterly debt service payments. The Notes also rank pari passu with a bank loan due in 2022 that amortizes on a cash sweep basis and has an outstanding balance of $307.4 million as of June 2018. PUERTO RICO ELECTRIC: Challenges Remain Despite Restructuring Deal ------------------------------------------------------------------ Karen Pierog at Reuters reports that a preliminary deal with owners of more than US$3 billion of Puerto Rico Electric Power Authority (PREPA) bonds, announced late on July 30, puts the bankrupt utility on a tentative path toward transformation and privatization, but more challenges remain. The restructuring agreement announced by a bondholders group largely made up of mutual funds and the utility would exchange existing bonds for new debt and link future payments to the island's economic recovery, Reuters discloses. Puerto Rico's federal oversight board chairman Jose Carrion called the deal "a milestone" in the debt restructuring process aimed at transforming and privatizing PREPA into "a modern, world-class utility", Reuters notes. Sinking under a debt load of US$9 billion, PREPA filed for bankruptcy in July 2017, Reuters recounts. Its financial and operational problems were compounded by Hurricane Maria, which slammed into the island in September, decimating an electric grid already struggling due to poor rate collection, heavy management turnover and lack of maintenance, Reuters relays. According to Reuters, the territory's oversight board said unlike previous proposed deals with creditors, the new agreement links future debt payments to Puerto Rico's economic recovery and minimizes risk to rate payers by setting a fixed annual transition charge. The preliminary agreement lays out several potential events that could result in its termination, including the dismissal of the bankruptcy case, Reuters states. The oversight board, as cited by Reuters, said that in addition to finalizing the deal, it seeks to reach debt restructuring agreements with insurers and fuel line lenders. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Youngis the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by Puerto Rico and other instrumentalities. White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative Capital LP. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed an official committee of retirees and an official committee of unsecured creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. STAR READY MIX: Unsecureds to Recoup 9.6% from $100K Carve Out -------------------------------------------------------------- Star Ready Mix, Inc., submits a disclosure statement in support of its proposed plan of reorganization dated July 24, 2018. Under the plan, holders of allowed general unsecured claims in Class 3 will be paid on the Effective Date approximately 9.6% from a $100,000 carve out to be reserved for this class from the sale of the Debtor's assets. Cash proceeds from the sale of the Debtor's assets are estimated at $1,600,000. As per Debtor's public adjusters, the Debtor will receive not less than $250,000 from its insurance claim due to the damages caused to its properties by Hurricane Maria. Moreover, on the Effective Date, the Debtor estimates that the net cash in its debtor-in-possession bank accounts resulting from the collection of accounts receivable, will be approximately $50,000. Therefore, total funds to make the plan payments will be approximately $1,900,000 sufficient to make the said payments. A full-text copy of the Disclosure Statement is available at: http://bankrupt.com/misc/prb18-04185-11-5.pdf About Star Ready Mix Inc. Star Ready Mix, Inc., is a fee simple owner of commercial properties located in Cidra and Gurabo, Puerto Rico, having a total appraised value of $3.72 million. The commercial properties consist of buildings for office, storage, laboratory and operations. Star Ready Mix sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-04185) on July 24, 2018. It previously sought bankruptcy protection on May 23, 2011 (Bankr. D.P.R. Case No. 11-04254). In the petition signed by Victor M. Diaz Morales, president of the Board of Directors, the Debtor disclosed $4,360,208 in assets and $6,915,084 in liabilities. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Insurer Files Chapter 15 in New York ------------------------------------------------------------ Declan Bush at Latin Lawyer reports that the provisional liquidators for an insurer owned by Venezuela's state-owned oil company PDVSA have filed for Chapter 15 recognition of its Bermudian reorganization in New York, seeking to gain access to British pounds in the insurer's US bank accounts. As reported in the Troubled Company Reporter-Latin America on March 19, 2018, Moody's Investors Service downgraded Petroleos de Venezuela, S.A.(PDVSA)'s ratings to C from Ca. Moody's also lowered the company's baseline credit assessment (BCA) to c from ca. *********** 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 * * *