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/raid1/www/Hosts/bankrupt/TCRLA_Public/180814.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 Tuesday, August 14, 2018, Vol. 19, No. 160 Headlines B R A Z I L JBS SA: Suspends Supplier After Animal Cruelty Claims JBS SA: Importing More Corn From Argentina D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Dominicans Have to Pay to Enter Their Country DOMINICAN REPUBLIC: 'Lack of payment' Halts Work to Widen Road P U E R T O R I C O KONA GRILL: Jim Kuhn Promoted to President and CEO KONA GRILL: Incurs $1 Million Net Loss in Second Quarter NATIONAL STORES: August 16 Meeting Set to Form Creditors' Panel T R I N I D A D & T O B A G O CARIBBEAN AIRLINES: Urged to Increase Fleet of Planes PETROLEUM CO: Workers 'at Risk' From Wrong Salary Info TRINIDAD & TOBAGO: New Lottery Tax Worries Legal Vendors V E N E Z U E L A VENEZUELA: To Cut 5 Zeroes From Currency, Postpones Redenomination - - - - - =========== B R A Z I L =========== JBS SA: Suspends Supplier After Animal Cruelty Claims ----------------------------------------------------- Ana Mano at Reuters reports that Brazil's JBS SA, the world's largest meat producer, said it had stopped using one of its suppliers after an animal rights group released a video showing alleged mistreatment of pigs. Animal rights group Mercy For Animals released video footage it said was shot in the United States showing workers beating piglets and ripping off their testicles without anesthesia, while female pigs were confined in very small metal cages, according to Reuters. Reuters could not independently confirm the authenticity of the video. JBS said in a statement that it suspended shipments from that supplier site and had started an investigation, without naming the company involved, the report relays. JBS said it does not condone or participate in any type of abuse involving animals, the report discloses. "The images presented in the video fall completely outside the company's standards," the JBS statement said, notes the report. Mercy For Animals, which describes itself as a non-profit organization dedicated to preventing cruelty to farmed animals, said in an email to Reuters that the video was shot at a facility owned by Tosh Farms LCC in Franklin, Kentucky, between December 2017 and March 2018, the report says. The report relays that Tosh Farms is among the 25 largest U.S. pig producers and is a supplier to JBS, according to Mercy For Animals. Tosh Farms did not immediately reply to a message and a call seeking comment. Mercy for Animals described the images as "shocking" and called on the parties allegedly responsible for the wellbeing of the animals to change their practices, the report adds. As reported in the Troubled Company Reporter-Latin America on May 22, 2018, Moody's Investors Service upgraded JBS S.A. (JBS)'s corporate family rating to B1 from B3. At the same time, the senior unsecured ratings of its wholly-owned subsidiary JBS USA Lux S.A. ("JBS USA") were upgraded to B1 from B2 and its senior secured ratings to Ba3 from B1. The outlook for all ratings is stable. JBS SA: Importing More Corn From Argentina ------------------------------------------ Ana Mano at Reuters reports that JBS SA is importing more corn from Argentina into Brazil for feed as rising local freight costs push up prices for the domestic crop, a person with knowledge of the matter said. JBS operations in Brazil had resorted to importing the grain earlier this year, at the end of the country's smaller first corn harvest, for feed in the southern state of Santa Catarina, where it operates several meat processing plants, according to Reuters. "To be importing corn in the middle of Brazil's second corn harvest is absurd," said the source, who spoke on condition of anonymity. The company's corn imports into Brazil so far this year will amount to about 120,000 tonnes, once two new shipments arrive at Imbituba port later this month, the source said, the report relays. "Corn imported from Argentina can arrive around 5 percent cheaper than the same product from Mato Grosso," the source said, highlighting the cost of shipping over long distances in Brazil from its main farm belt to its biggest meat plants, the report notes. The report relays that the state of Mato Grosso, part of Brazil's agricultural heartland, produces nearly one third of the country's corn. JBS did not immediately reply to a request for comment. Brazil consumes an estimated 5 million tonnes of corn per month, 30 percent of which goes to JBS, rival meatpacker BRF SA and privately owned Aurora Alimentos, the report says. Santa Catarina's proximity to Paraguay and Argentina gives local meat processors an incentive to source corn from abroad instead of buying from Brazil's main grains belt, the report notes. Additional corn imports this year cannot be ruled out if the situation persists, the source said, Reuters relays. Freight costs jumped in Brazil after the government set minimum shipping prices in response to the demands of striking truckers, whose protests in late May paralyzed major highways and dented economic growth, add the report. As reported in the Troubled Company Reporter-Latin America on May 22, 2018, Moody's Investors Service upgraded JBS S.A. (JBS)'s corporate family rating to B1 from B3. At the same time, the senior unsecured ratings of its wholly-owned subsidiary JBS USA Lux S.A. ("JBS USA") were upgraded to B1 from B2 and its senior secured ratings to Ba3 from B1. The outlook for all ratings is stable. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Dominicans Have to Pay to Enter Their Country ----------------------------------------------------------------- Dominican Today reports that in the first half this year, Internal Taxes (DGII) collected RD$1.1 billion from the tourist card that foreigners must buy, but since April 25, Dominicans who buy their air tickets abroad are paying for it. A December 4, 2017 executive order established the fee, which the airlines began to apply when the "General Rule 08-2018" took effect, with procedures related to the payment of the tourist card in the airfares, according to Dominican Today. What many people don't realize is that they can get the US$10.00 refunded in the DGII online or at its offices, and would take up to 10 days to reimburse, the report adds. As reported in the Troubled Company Reporter-Latin America on July 19, 2018, Fitch Ratings assigned a 'BB-' rating to Dominican Republic's USD1.3 billion bonds, maturing July 2028. The notes have a coupon of 6%. Proceeds from the issuance will be used for general purposes of the government, including the partial financing of the 2018 budget. DOMINICAN REPUBLIC: 'Lack of payment' Halts Work to Widen Road -------------------------------------------------------------- Dominican Today reports that the work to expand the Navarrete- Puerto Plata highway (north) have been halted for several weeks, which leads to frustration for the motorists in the region who have to brave the 40-kilometer stretch. Public Works minister, Gonzalo Castillo, said some technical aspects are being defined in order to continue, such as an overpass at the entrance to the town, Cofresi, according to Dominican Today. However, some workers who asked not to use their names on concern of being fired, told Diario Libre that the months-long stoppage stems from Public Works' failure to pay the contractors who widen the road to four lanes, the report relays. "That's something that everyone knows, but nobody wants to show their face, neither the Public Works engineers nor the contractors," they said, the report adds. As reported in the Troubled Company Reporter-Latin America on July 19, 2018, Fitch Ratings assigned a 'BB-' rating to Dominican Republic's USD1.3 billion bonds, maturing July 2028. The notes have a coupon of 6%. Proceeds from the issuance will be used for general purposes of the government, including the partial financing of the 2018 budget. ====================== P U E R T O R I C O ====================== KONA GRILL: Jim Kuhn Promoted to President and CEO -------------------------------------------------- Kona Grill, Inc.'s Board of Directors has appointed Jim Kuhn to succeed Berke Bakay as president and chief executive officer. Mr. Bakay was appointed as executive chairman of the Board of Directors and will remain with the Company in a strategic role. "Leading Kona Grill over the past six years has been a tremendous honor. We've doubled the number of restaurants, started franchising internationally and domestically and have positioned ourselves as a truly unique brand serving global cuisine in a contemporary ambiance," said Bakay. "Jim has done a remarkable job during his tenure with us at improving the profitability of our restaurants and I'm confident that Kona will thrive under his leadership. The executive chairman role will allow me to focus on strategic relationships with our franchise partners, landlords, investors and lenders while Jim will continue to focus on operations and lead the Company towards future success," he concluded. "I would like to thank James Jundt for his eight years of service as Chairman of the Board of Directors. James has served as a valuable mentor and friend over the years and we wish him well in his retirement," said Bakay. About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 45 restaurants in 22 states and Puerto Rico. Additionally, Kona Grill has two restaurants that operate under a franchise agreement in Dubai, United Arab Emirates, and Vaughan, Canada. Kona Grill incurred a net loss of $23.43 million in 2017 and a net loss of $21.62 million in 2016. As of June 30, 2018, Kona Grill had $85.02 million in total assets, $77.17 million in total liabilities and $7.85 million in ttoal stockholders' equity. The Company has incurred losses resulting in an accumulated deficit of $79.7 million, has a net working capital deficit of $7.6 million and outstanding debt of $37.8 million as of Dec. 31, 2017. The Company said in its 2017 Annual Report that these conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about its ability to continue as a going concern. KONA GRILL: Incurs $1 Million Net Loss in Second Quarter -------------------------------------------------------- Kona Grill, Inc. reported a net loss of $1 million on $42.34 million of revenue for the three months ended June 30, 2018, compared to a net loss of $4.32 million on $46.97 million of revenue for the three months ended June 30, 2017. For the six months ended June 30, 2018, the Company reported a net loss of $3.46 million on $84.36 million of revenue compared to a net loss of $7.70 million on $92.20 million of revenue for the same period during the prior year. As of June 30, 2018, Kona Grill had $85.02 million in total assets, $77.17 million in total liabilities and $7.85 million in total stockholders' equity. "Profitability significantly improved compared to the prior year quarter as cost-savings initiatives implemented earlier this year are taking hold. Four-wall margins improved 340 basis points to 14.3% as a percentage of revenue, our highest level in two years. For the first half of 2018, our adjusted EBITDA more than doubled compared to the same period last year. The higher profitability is a result of our continued focus on driving earnings as this is the key factor to meeting our bank covenants and the ultimate success of Kona Grill. In order to achieve higher profits, we strategically made adjustments to reduce the amount of promotionality within our restaurants," said Jim Kuhn, president and CEO of Kona Grill. "Given the changes we have made to both our happy hour and closing hours, we expect to see improved profitability on a lower overall sales base on a year-over-year basis. As we lap these changes in 2019, we expect to build same-store sales and further improve the profitability of the brand," he continued. "With cost-savings measures in place and sustainable, the focus for the remainder of 2018 is on execution and driving guests into our restaurants. We recently revamped our menu with a new design and layout, including the addition of 30 new menu items, and have recently implemented our new Konavore points-based loyalty program to drive guest frequency. These initiatives are framed around our mission to make every experience exceptional for our guests," he concluded. "We are also continuing to evaluate our underperforming restaurants and engage in discussions with our landlords regarding rent abatement, closing certain locations or strategic alternatives. As a result, we recently closed one of our underperforming restaurants. Our success in addressing these opportunities and issues will put us in a better long-term financial position," said Berke Bakay, executive chairman of Kona Grill. "We continue to engage in discussions with potential partners for franchising the Kona Grill brand, both domestically and internationally. We believe that a dual-strategy of both company-owned and franchised restaurants provides us with the best opportunity to grow the brand in the U.S. and we are working to solidify some deals in the second half of the year," he concluded. A full-text copy of the Quarterly Report as filed with the Securities and Exchange Commission is available for free at: https://is.gd/2NnF9q About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 45 restaurants in 22 states and Puerto Rico. Additionally, Kona Grill has two restaurants that operate under a franchise agreement in Dubai, United Arab Emirates, and Vaughan, Canada. Kona Grill incurred a net loss of $23.43 million in 2017 and a net loss of $21.62 million in 2016. As of June 30, 2018, Kona Grill had $85.02 million in total assets, $77.17 million in total liabilities and $7.85 million in ttoal stockholders' equity. The Company has incurred losses resulting in an accumulated deficit of $79.7 million, has a net working capital deficit of $7.6 million and outstanding debt of $37.8 million as of Dec. 31, 2017. The Company said in its 2017 Annual Report that these conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about its ability to continue as a going concern. NATIONAL STORES: August 16 Meeting Set to Form Creditors' Panel -------------------------------------------------------------- Andy Vara, Acting United States Trustee for Region 3, will hold an organizational meeting on August 16, 2018, at 10:00 a.m. in the bankruptcy case of Debtor J & M Sales, Inc. The meeting will be held at: The Doubletree Hotel 700 King Street Wilmington, DE 19801 The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' case. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About National Stores National Stores is a 344-store chain in 22 U.S. states and Puerto Rico. National Stores currently does business as Fallas, Fallas Paredes, Fallas Discount Stores, Factory 2-U, Anna's Linen's by Fallas, and Falas (spelled with single "l" in Puerto Rico). Fallas, which emplolys 9,800 people, is a discount retailer offering value-priced merchandise, including apparel, bedding and household supplies. The brands of National Stores are located in retail plazas, specialty centers, and downtown areas to serve the communities its customers and staff members call home. National Stores, Inc., and its affiliates sought Chapter 11 protection and Aug. 6, 2018, and announced that Hilco Merchant Resources, LLC, is conducting going-out-of-business sales for 74 stores. The lead case is In re J & M Sales Inc. (Bankr. D. Del. Lead Case No. 18-11801). J & M Sales estimated assets and debt of $100 million to $500 million as of the bankruptcy filing. The Hon. Laurie Selber Silverstein is the case judge. The Debtors tapped Katten Muchin Rosenman LLP as general bankruptcy counsel, Pachulski Stang Ziel & Jones LLP as bankruptcy co-counsel, Retail Consulting Services, Inc., as real estate advisor, Imperial Capital LLC, as investment banker, and Prime Clerk LLC as the claims and noticing agent. SierraConstellation Partners LLC is providing personnel to serve as chief restructuring officer and support staff. ================================ T R I N I D A D & T O B A G O ================================ CARIBBEAN AIRLINES: Urged to Increase Fleet of Planes ----------------------------------------------------- RJR News reports that a call is being made for Caribbean Airlines to increase its fleet of planes. Chief Secretary of the Tobago House of Assembly, Kelvin Charles, says the airline should consider wet leasing an additional aircraft to deal with the high demand for travel during the holiday period, according to RJR News. Mr. Charles highlighted the matter during the Tobago House of Assembly's news briefing last week, the report relays. "Therefore you ought to know that if you can't generate the capacity, that there out to be a lead time between when you can source a wet lease arrangement and you don't wait until (the) last minute. But it says a lot about the mindset of Caribbean Airlines as an institution," Mr. Charles said, the report adds. Caribbean Airlines Limited -- http://www.caribbean-airlines.com/ -- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. As reported in the Troubled Company Reporter-Latin America on November 2, 2015, RJR News said that Michael DiLollo, Chief Executive Officer of Caribbean Airlines Limited has quit after just 17 months on the job. The 48-year-old Canadian national, citing personal reasons, resigned with immediate effect. His resignation was accepted by the airline's board of directors. Mr. DiLollo was appointed Caribbean Airlines CEO in May 2014, following the sudden resignation of Robert Corbie in September 2013. In early February 2015, Larry Howai, then Finance Minister, told Parliament that unaudited accounts for 2014 showed the airline made a loss of US$60 million, inclusive of its Air Jamaica operations, and the airline planned to break even by 2017. Mr. Howai told the Parliament that a five-year strategic plan had been completed and was in the process of being approved for implementation. In an interview with the Trinidad & Tobago Guardian in early November 2015, Mr. DiLollo said CAL did not need a bailout just yet. Mr. DiLollo said the airline had benefited from extremely patient shareholders for years and he believed the airline was strategically positioned to break even in three years. PETROLEUM CO: Workers 'at Risk' From Wrong Salary Info ------------------------------------------------------ Carolyn Kissoon at Trinidad Express reports that OilfieldS Workers' Trade Union (OWTU) President General Ancel Roget has accused State-owned Petrotrin of putting workers' lives at risk by publishing inflated salaries in the media. Mr. Roget said the publication was totally false, malicious and dangerous and would encourage criminal acts against Petrotrin workers, according to Trinidad Express. As reported in the Troubled Company Reporter-Latin America on May 3, 2018, S&P Global Ratings revised its outlook on Petroleum Co. of Trinidad & Tobago Ltd (Petrotrin) to negative from stable. S&P said, "We also affirmed our 'BB' long-term corporate credit and senior unsecured debt ratings on the company. Additionally, we're keeping its SACP unchanged at 'b-'." TRINIDAD & TOBAGO: New Lottery Tax Worries Legal Vendors -------------------------------------------------------- Leah Sorias at Trinidad Express reports that Trinidad and Tobago Finance Minister Colm Imbert is "dead wrong" to believe the Government can earn $370 million annually from the ten per cent tax on lottery winnings over $1,000. This is the view of Allen Campbelle, president of the Electronic Lotto Agents Association of Trinidad and Tobago, according to Trinidad Express. The report relays that Minister of Communications and National Security, Stuart Young, told post-Cabinet news conference that the lottery tax law had been proclaimed and would be applied starting Aug. 12. "NLCB sales will drop because people will go to the illegal operators. Illegal operators, like the Chinese nationals who run the "Whe Whe", are not paying tax and they are not taxing your winnings. No police are arresting these illegal operators because the police themselves are playing," Mr. Campbelle said during an interview with the Express. ================= V E N E Z U E L A ================= VENEZUELA: To Cut 5 Zeroes From Currency, Postpones Redenomination ------------------------------------------------------------------ EFE News reports that the President of Venezuela postponed the redenomination of the country's currency from Aug. 4 to Aug. 20 and will cut five zeroes from the currency, rather than the three he had initially ordered. Venezuela is going through a period of hyperinflation, according to EFE News. "I announce that the economic, currency redenomination (. . .) will start definitively on Aug. 20," President Nicolas Maduro said during a speech broadcast on radio and television, the report relays. The report notes that President Maduro said that the new monetary system is "going to anchor (the bolivar) to the petro," the Venezuelan oil-backed cryptocurrency launched earlier by the government. President Maduro added without giving further details that officials from the Ministry for Popular Economy will explain later this week the scope of the measures, the report says. Despite the opposition's claim that the new banknotes have not yet arrived in the country, President Maduro Maduro said that the government already has them and that they will enter circulation on Aug. 20, the report discloses. The measures are part of the second redenomination that the country has implemented in 10 years, the report adds. As reported in the Troubled Company Reporter-Latin America on June 1, 2018, S&P Global Ratings, on May 29, 2018, removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC- /C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. S&P's transfer and convertibility assessment remains at 'CC'. *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 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 * * *