/raid1/www/Hosts/bankrupt/TCRLA_Public/190103.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, January 3, 2019, Vol. 20, No. 2
Headlines
A R G E N T I N A
ALGODON GROUP: Subsidiary Sells $1.5 Million Convertible Note
ALGODON GROUP: Options to Buy 6.5M Shares Granted Under 2018 Plan
ARGENTINA: Bonds Are Losing Even After Record IMF Bailout
J A M A I C A
DIGICEL GROUP: CEO Dies Suddenly on Holiday
UC RUSAL: Appoints Independent Director as New Board Chairman
P A N A M A
PANAMA: IMF Estimated 3.7% Growth in 2018 First Half
P U E R T O R I C O
ARQUIDIOCESIS DE SAN JUAN: Seeks Plan Exclusivity Extension
ARQUIDIOCESIS DE SAN JUAN: Taps Susana Cintron as Special Counsel
HARAS STANTA: Seeks to Hire Carrasquillo as Financial Consultant
LUBY'S INC: Urges Shareholders to Vote on Director Nominees
T R I N I D A D & T O B A G O
TRINIDAD & TOBAGO: Challenges Continue
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A R G E N T I N A
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ALGODON GROUP: Subsidiary Sells $1.5 Million Convertible Note
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Algodon Group, Inc.'s wholly-owned subsidiary, Gaucho Group, Inc.,
has sold convertible promissory notes in the amount of $1,500,000
to accredited investors, of which a note for $7,300 was purchased
by Scott L. Mathis, CEO and director of Gaucho Group, and
chairman, president, CEO and director of Algodon Group, Inc. The
maturity date of the notes is Dec. 31, 2018, and at the option of
the holder, the principal amount of the note plus accrued interest
can be converted into Gaucho Group common stock at a 20% discount
to the share price in a future offering of common stock by Gaucho
Group. No general solicitation was used, no commissions were
paid, and Gaucho Group relied on the exemption from registration
available under Section 4(a)(2) and Rule 506(b) of Regulation D of
the Securities Act of 1933, as amended, in connection with the
sales. A Form D was filed with the Securities and Exchange
Commission on Sept. 18, 2018, an amended Form D was filed on Nov.
20, 2018, and another amended Form D was filed on Dec. 10, 2018.
About Algodon Group
Through its wholly-owned subsidiaries, Algodon Group, Inc.,
formerly known as Algodon Wines & Luxury Development Group, Inc.
-- http://www.algodongroup.com/-- invests in, develops and
operates real estate projects in Argentina. Based in New York,
Algodon operates a hotel, golf and tennis resort, vineyard and
producing winery in addition to developing residential lots
located near the resort. The activities in Argentina are
conducted through its operating entities: InvestProperty Group,
LLC, Algodon Global Properties, LLC, The Algodon - Recoleta S.R.L,
Algodon Properties II S.R.L., and Algodon Wine Estates S.R.L.
AWLD distributes its wines in Europe through its United Kingdom
entity, Algodon Europe, LTD.
Algodon Wines reported a net loss attributable to common
stockholders of $8.25 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common stockholders of
$10.04 million for the year ended Dec. 31, 2016. As of Sept. 30,
2018, Algodon Group had $5.26 million in total assets, $4.89
million in total liabilities, $9.02 million in series B
convertible redeemable preferred stock, and a total stockholders'
deficiency of $8.65 million.
Marcum LLP, in New York, the Company's auditor since 2013, issued
a "going concern" opinion in its report on the consolidated
financial statements for the year ended Dec. 31, 2017, citing that
the Company has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ALGODON GROUP: Options to Buy 6.5M Shares Granted Under 2018 Plan
-----------------------------------------------------------------
Algodon Group, Inc., as the sole stockholder of Gaucho Group, and
the Board of Directors of Gaucho Group approved the 2018 Equity
Incentive Plan on Oct. 5, 2018. Algodon and the Board of
Directors of Gaucho adopted the 2018 Plan to promote long-term
retention of key employees of Gaucho Group and others who
contribute to the growth of Gaucho Group.
Up to 8,000,000 shares of Gaucho Group's common stock is made
available for grants of equity incentive awards under the 2018
Plan. Authorized shares under the 2018 Plan may be subject to
adjustment upon determination by the committee in the event of a
corporate transaction including but not limited to a stock split,
recapitalization, reorganization, or merger.
The 2018 Plan includes two types of options, stock appreciation
rights, restricted stock and restricted stock units, performance
awards and other stock-based awards. Options intended to qualify
as incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended are referred to as incentive
options. Options which are not intended to qualify as incentive
options are referred to as non-qualified options.
To date, options to purchase 6,495,000 shares of common stock of
the Company have been granted under the 2018 Plan.
The 2018 Plan is administered and interpreted by Gaucho Group's
compensation committee, or the entire Board of Directors. In
addition to determining who will be granted options or other
awards under the 2018 Plan and what type of awards will be
granted, the committee has the authority and discretion to
determine when awards will be granted and the number of awards to
be granted. The committee also may determine the terms and
conditions of the awards; amend the terms and conditions of the
awards; how the awards may be exercised whether in cash or
securities or other property; establish, amend, suspend, or waive
applicable rules and regulations and appoint agents to administer
the 2018 Plan; take any action for administration of the 2018
Plan; and adopt modifications to comply with laws of non-U.S.
jurisdictions.
Participants in the 2018 Plan consist of eligible persons, who are
employees, officers, consultants, advisors, independent
contractors, or directors providing services to Gaucho Group or
any affiliate of Gaucho Group as determined by the committee. The
committee may take into account the duties of persons selected,
their present and potential contributions to the success of Gaucho
Group and such other considerations as the committee deems
relevant to the purposes of the 2018 Plan.
The exercise price of any option granted under the 2018 Plan must
be no less than 100% of the "fair market value" of the Company's
common stock on the date of grant. Any incentive stock option
granted under the 2018 Plan to a person owning more than 10% of
the total combined voting power of the common stock must be at a
price of no less than 110% of the fair market value per share on
the date of grant.
Awards remain exercisable for a period of six months (but no
longer than the original term of the award) after a participant
ceases to be an employee or the consulting services are terminated
due to death or disability. All restricted stock held by the
participant becomes free of all restrictions, and any payment or
benefit under a performance award is forfeited and cancelled at
time of termination unless the participant is irrevocably entitled
to such award at the time of termination, where termination
results from death or disability. Termination of service as a
result of anything other than death or disability results in the
award remaining exercisable for a period of one month (but no
longer than the original term of the award) after termination and
any payment or benefit under a performance award is forfeited and
cancelled at time of termination unless the participant is
irrevocably entitled to such award at the time of termination.
All restricted stock held by the participant becomes free of all
restrictions unless the participant voluntarily resigns or is
terminated for cause, in which event the restricted stock is
transferred back to Gaucho Group.
The committee may amend, alter, suspend, discontinue or terminate
the 2018 Plan at any time; provided, however, that, without the
approval of the stockholders of Gaucho Group, no such amendment,
alteration, suspension, discontinuation or termination shall be
made that, absent such approval: (i) violates the rules or
regulations of any securities exchange that are applicable to the
Company; (ii) causes the Company to be unable, under the Internal
Revenue Code, to grant incentive stock options under the 2018
Plan; (iii) increases the number of shares authorized under the
2018 Plan; or (iv) permits the award of options or stock
appreciation rights at a price less than 100% of the fair market
value of a share on the date of grant of such award, as prohibited
by the 2018 Plan or the repricing of options or stock appreciation
rights, as prohibited by the 2018 Plan.
Also on Oct. 5, 2018, the Board of Directors of Gaucho Group
declared a forward stock split of its common stock to all holders
of record as of the same date at a rate of 200,000 shares for each
one share of common stock of Gaucho Group. After the stock split,
Algodon owns 20,000,000 common shares as the sole stockholder of
Gaucho Group.
On Nov. 16, 2018, the sole director of the Board of Directors of
Gaucho Group, Scott L. Mathis, appointed Peter Lawrence and Steven
Moel as members of the Board of Directors of Gaucho Group.
On Dec. 18, 2018, the Board of Directors of Gaucho Group granted
options to purchase common stock of Gaucho Group to certain
employees, consultants, officers, and directors of Gaucho Group at
an exercise price of $0.1375 per share, of which an option to
purchase 4,500,000 shares of common stock was granted to the CEO,
an option for 200,000 shares was granted to the CFO, and two
options, each for 50,000 shares was granted to two members of the
Board of Directors of Gaucho Group. After one year from the date
of grant, 25% of the options vest, with the remaining 75% vesting
in equal quarterly installments thereafter. The options expire on
Dec. 18, 2023.
Non-Payment of Stock Dividends
In 2017, Algodon issued shares of its Series B preferred stock.
The Certificate of Designation governing those shares generally
provides that Series B stockholders will be paid an 8% annual
dividend, on a quarterly basis, "when, as and if declared by the
Board of Directors of Algodon, out of assets which are legally
available for the payment of such dividends."
Dividends on those shares were paid, either in cash or common
shares at the stockholder's discretion, for the second, third, and
fourth quarters of 2017 and the first quarter of 2018. However,
the Board of Directors of Algodon has not declared the Series B
dividend for the second and third quarters of 2018, and it is not
presently expected that it will do for the fourth quarter of 2018.
The decision to not declare and pay such dividends at this time
(they do continue to accrue to holders of record of the Series B
shares) results from Algodon's desire to preserve cash on hand in
light of the economic difficulties currently facing Argentina,
difficulties that are having a negative impact on the Company's
various businesses. More specifically, beginning in May 2018,
Argentina's currency began a steep slide in its value, so that the
exchange rate of the Argentine peso dropped from 15 pesos to the
U.S. dollar, to 41 pesos to the U.S. dollar. At the same, the
local inflation rate reached upwards of 40% annually. Global
headlines suggested Argentina might again default on its debt.
This negative news led to a sharp drop in global investor
confidence in Argentina, with local businesses and consumer
confidence adversely affected as well. During this time, the
MERVAL (the most important index of the Buenos Aires Stock
Exchange) fell by more than 50%, as measured in U.S. dollars.
Not surprisingly, these macro-economic developments have been
having a negative impact on the Company. For example, potential
purchasers of parcels or lots at Algodon Wine Estates have been
restrained, its overall business operations has failed to reach
expectations, and overall it has been more difficult to raise
additional funds from investors. While international lenders such
as the International Monetary Fund and the International
Development Bank have reached agreements to provide significant
financing to help stabilize the economic situation in Argentina,
the Company has concluded that it must still tread cautiously and
manage its available cash resources prudently. For this reason,
the decisions were made to not declare any additional cash
dividends at this time.
About Algodon Group
Through its wholly-owned subsidiaries, Algodon Group, Inc.,
formerly known as Algodon Wines & Luxury Development Group, Inc.
-- http://www.algodongroup.com/-- invests in, develops and
operates real estate projects in Argentina. Based in New York,
Algodon operates a hotel, golf and tennis resort, vineyard and
producing winery in addition to developing residential lots
located near the resort. The activities in Argentina are
conducted through its operating entities: InvestProperty Group,
LLC, Algodon Global Properties, LLC, The Algodon - Recoleta S.R.L,
Algodon Properties II S.R.L., and Algodon Wine Estates S.R.L.
AWLD distributes its wines in Europe through its United Kingdom
entity, Algodon Europe, LTD.
Algodon Wines reported a net loss attributable to common
stockholders of $8.25 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common stockholders of
$10.04 million for the year ended Dec. 31, 2016. As of Sept. 30,
2018, Algodon Group had $5.26 million in total assets, $4.89
million in total liabilities, $9.02 million in series B
convertible redeemable preferred stock, and a total stockholders'
deficiency of $8.65 million.
Marcum LLP, in New York, the Company's auditor since 2013, issued
a "going concern" opinion in its report on the consolidated
financial statements for the year ended Dec. 31, 2017, citing that
the Company has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ARGENTINA: Bonds Are Losing Even After Record IMF Bailout
---------------------------------------------------------
Daniel Cancel at Bloomberg News reports that Argentina bond
investors couldn't catch a break in 2018, with yields on the
country's debt soaring even after the government took out a record
$56 billion credit line with the International Monetary Fund in an
effort to bolster public finances.
The average yield on sovereign notes from the country has almost
doubled this year to 11 percent, and now tops the 10.9 percent
rate on overseas securities from much smaller Ecuador, which has
the dubious distinction of having the second-most defaults in the
world since 1800, according to Bloomberg News. While both credits
are considered junk by rating companies, Argentina holds a B grade
from S&P Global Ratings, one step higher than Ecuador's B-.
In terms of returns, Argentine creditors lost 23 percent on
average this year, according to JPMorgan Chase & Co. indexes,
while Ecuador's investors have lost 9.4 percent, the report notes.
The report relays that politics has a lot to do with it.
President Lenin Moreno has continued to push Ecuador through a
drastically different agenda than his predecessor in an attempt to
shore up public finances and there's even the possibility of
officials sitting down with the IMF in 2019 to bolster confidence
further, he report relays. While the dollarized nation remains
vulnerable due to its dependency on crude oil and loans from
China, most analysts see the government as on the right path, the
report notes.
Argentina's Mauricio Macri, while widely respected by investors,
is preparing for a re-election run in 2019 with inflation expected
to be north of 20 percent and an economy in recession, the report
discloses. His vulnerability, particularly with the possibility
of former President Cristina Fernandez de Kirchner challenging him
for the presidency despite a myriad of legal woes, has traders on
edge, the report says.
So one might ask whether the market or rating companies are
miscalculating the situation, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Nov. 14, 2018, S&P Global Ratings lowered its long-term foreign
and local currency ratings on Argentina to 'B' from 'B+' and
affirmed its short-term foreign and local currency ratings at 'B'.
S&P also removed the long-term ratings from CreditWatch,
where it placed them on Aug. 31, 2018, with negative implications.
The outlook on the long-term ratings is stable. At the same time,
S&P lowered its national scale ratings to 'raAA-' from 'raAA'. S&P
also lowered its transfer and convertibility assessment to 'B+'
from 'BB-'.
The stable outlook reflects S&P's expectation that the
government will implement difficult fiscal, monetary, and other
measures to stabilize the economy over the coming 18 months,
gradually staunching the deterioration in the sovereign's
financial profile and debt burden, reversing inflation dynamics,
and restoring investor confidence. The combination of lower
government financing needs, declining inflation and interest
rates, and expectations of continuity in key economic policies
after national elections in October 2019 could set the stage for
economic recovery and contain external vulnerability.
Fitch Ratings affirmed on May 8, 2018, Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B' and revised
the Outlook to Stable from Positive.
On December 4, 2017, Moody's Investors Service upgraded the
Government of Argentina's local and foreign currency issuer and
senior unsecured ratings to B2 from B3. The senior unsecured
shelves were upgraded to (P)B2 from (P)B3. The outlook on the
ratings is stable. At the same time, Argentina's short-term
rating was affirmed at Not Prime (NP). The senior unsecured
ratings for unrestructured debt were affirmed at Ca and the
unrestructured senior unsecured shelf affirmed at (P)Ca.
As previously reported by the TCR-LA, Argentina defaulted on some
of its debt late July 30, 2014, after expiration of a 30- grace
period on a US$539 million interest payment. Earlier than that,
talks with a court-appointed mediator ended without resolving a
standoff between the country and a group of hedge funds seeking
full payment on bonds that the country had defaulted on in 2001.
A U.S. judge had ruled that the interest payment couldn't be made
unless the hedge funds led by Elliott Management Corp., got the
US$1.5 billion they claimed. The country hasn't been able to
access international credit markets since its US$95 billion
default 13 years ago. On March 30, 2016, Argentina's Congress
passed a bill that will allow the government to repay holders of
debt that the South American country defaulted on in 2001,
including a group of litigating hedge funds that won judgments
in a New York court. The bill passed by a vote of 54-16.
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J A M A I C A
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DIGICEL GROUP: CEO Dies Suddenly on Holiday
-------------------------------------------
Stephen Addison at Reuters reports that Digicel Group Limited and
entertainment provider said its group Chief Executive Officer Alex
Matuschka von Greiffenclau had died suddenly while on holiday.
Chairman Denis O'Brien said in a message to staff he would take
over as interim CEO, according to Reuters.
The report notes that he wrote: "It is with a heavy heart and much
sadness that I share news of the untimely death of our Group CEO,
Alex Matuschka von Greiffenclau. Alex died suddenly while on
holiday with his family in Germany."
As reported in the Troubled Company Reporter-Latin America on
July 5, 2018, Moody's Investors Service changed to negative
from stable the outlook on the ratings of Digicel Group Limited
("Digicel", "DGL" or the "company") and Digicel Limited ("DL") and
assigned a negative outlook to Digicel International Finance
Limited ("DIFL"). At the same time, Moody's has affirmed DGL's B2
corporate family rating (CFR) and B2-PD probability of default
rating (PDR), as well as the B1 rating on the unsecured notes of
DL and the Ba2 rating on the secured bank credit facilities of
DIFL.
UC RUSAL: Appoints Independent Director as New Board Chairman
-------------------------------------------------------------
Polina Devitt at Reuters reports that Russian aluminum company UC
Rusal said it has appointed independent non-executive director
Jean-Pierre Thomas as its new chairman as part of an agreed
restructuring in exchange for the lifting of U.S. sanctions.
The previous chairman, Matthias Warnig, stepped down earlier after
six years at the world's largest aluminum producer outside China,
according to Reuters. His resignation was a condition of the
deal.
Jean-Pierre Thomas was elected by the board as chairman with
effect from Jan. 1, Rusal said in a filing to the Hong Kong
bourse, the report relays.
Thomas, 61, has been an independent non-executive director on
Rusal's board since June, the report notes. He was a managing
partner at Lazard investment bank for 15 years, leaving in 2013,
the report notes.
He has also been a non-executive independent director on the board
of French metals producer Recylex since 2009, the report
discloses.
The U.S. Treasury said it would remove sanctions against Rusal,
its parent En+ and power firm EuroSibEnergo if they restructured
to reduce the controlling stakes of businessman Oleg Deripaska,
who is on Washington's sanctions list, the report says.
The deal is subject to a 30-day review period in the U.S.
Congress, the report says. After the restructuring is completed,
En+ will retain the right to nominate the producer's chief
executive, the U.S. Treasury has said earlier, the report
discloses.
"Mr. Thomas has in-depth experience with Russian relations, having
been tasked with several projects aimed at boosting economic
cooperation between France and Russia," Rusal said in a disclosure
in June, the report notes.
Hong Kong-listed shares of Rusal rose 2 percent and were on track
for their biggest monthly percentage gain in a year, the report
adds.
As reported in the Troubled Company Reporter-Latin America on
April 18, 2018, Fitch Ratings revised the Rating Watch on
Russia-based aluminium company United Company Rusal Plc's Long-
Term Issuer Default Rating (IDR) of 'BB-', Short-Term IDR of
'B' as well as Rusal Capital D.A.C.'s senior unsecured rating of
'BB- '/'RR4' to Negative from Evolving. Fitch simultaneously
withdrew all the ratings.
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P A N A M A
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PANAMA: IMF Estimated 3.7% Growth in 2018 First Half
----------------------------------------------------
The Executive Board of the International Monetary Fund (IMF), on
Dec. 12, 2018, concluded the Article IV consultation [1] with
Panama.
Despite slowing in 2018, Panama is expected to remain among the
most dynamic economies in the region with strong fundamentals.
Growth is estimated at 3.7 percent in the first half of 2018
(compared to 5.4 percent a year ago), reflecting a sharp
deceleration in key sectors including construction, which was
affected by a prolonged strike in April/May. The unemployment rate
increased marginally to 5.8 percent in March 2018 from a year ago,
reflecting less dynamic activity. Inflation remains subdued at 0.8
percent (year on year) in September 2018, (compared to 0.5 percent
in December 2017) despite supply shocks that have increased food
and fuel prices. The overall deficit of the Non-Financial Public
Sector (NFPS) reached 1.6 percent of GDP in the first half of 2018
(compared to deficit of 0.2 percent of GDP in the first semester
of 2017), due to accelerated budget execution to support the
economic weakening. The external current account deficit stood at
8.0 percent of GDP in 2017, as a significant increase in oil
imports (fueled by higher international oil prices) was offset by
strong service exports, driven partly by additional revenue from
the expanded Panama Canal. Credit growth has decelerated as
financial conditions have started to tighten.
The outlook remains positive, albeit set against heightened
downside risks. Growth is projected at 4.3 percent in 2018, but to
rebound to 6.3 percent in 2019 supported by the opening of a large
mine (Minera Panama) and a recovery in construction, and
subsequently converge to its potential of 5 1/2 percent over the
medium term. Inflation is expected to average about 2 percent. The
external current account deficit, mostly covered by FDI, is
expected to reach 9 percent of GDP in 2019 and gradually decline
to about 5 1/2percent of GDP over the medium term. Fiscal policy
is expected to remain guided by the amended Fiscal Responsibility
Law (FRL). The overall NFPS deficit is projected to increase to 2
percent of GDP in 2018-19 and gradually fall to 1 1/2 percent of
GDP over the medium-term, keeping public debt sustainable and
below the FRL indicative of target of 40 percent of GDP. Key risks
relate to setbacks in implementing the remaining Financial Action
Task Force (FATF) recommendations and making continued progress on
tax transparency, continued oversupply in the domestic property
markets, delays in completing the large mining project (following
the recent Supreme Court ruling which creates uncertainty about
some elements of the contract), political uncertainty ahead of the
upcoming elections; a sharper-than-expected tightening of global
financial conditions, and rising trade protectionism.
Executive Board Assessment
Executive Directors commended Panama's impressive growth
performance and noted that macroeconomic fundamentals remain
solid, with growth set for a rebound in the near term. Directors
considered that, while the outlook remains positive, the balance
of risks is tilted to the downside. Against this background, they
called for sustained policy efforts to strengthen the AML/CFT
framework and enhance tax transparency to preserve Panama's
competitive advantage as a regional financial center. They also
recommended measures to enhance financial sector resilience and
reforms to facilitate continued robust and inclusive growth.
Directors welcomed the recent good progress on technical
compliance with FATF standards, bringing Panama on par with its
peers, while underscoring the importance of effective
implementation of the Anti Money Laundering/Combatting the
Financing of Terrorism (AML/CFT) framework. In this context, they
encouraged the authorities to continue strengthening supervisory
capacity for AML/CFT oversight, including through risk-based
approaches, and further addressing AML/CFT risks to which Panama
is exposed. Directors emphasized the need to promptly address the
remaining shortcomings in the AML/CFT framework, including making
tax crimes a predicate offense to money laundering and ensuring
the availability of timely and accurate beneficial ownership
information of entities incorporated in Panama. In addition, the
authorities should advance the implementation of tax transparency
initiatives to ensure a successful Global Forum assessment against
enhanced standards.
Directors were encouraged by the authorities' continued commitment
to a prudent fiscal stance and agreed on the importance of
preserving the track record of fiscal discipline to keep the
public debt-to-GDP ratio on a downward trajectory. They concurred
that the revised deficit ceilings provide the budgetary space to
accommodate additional capital spending, given the softening
activity this year, but recommended a gradual withdrawal of the
stimulus in the near term as growth gathers pace. Directors also
saw scope for raising tax revenue through improvements in revenue
administration to support key social expenditures. They welcomed
modifications to the social fiscal responsibility law, which
simplified and enhanced the transparency of the fiscal rule; and
noted the approval of a law to establish a fiscal council, which
further bolsters the fiscal framework.
Directors noted the stability of the financial system and the
continued progress in financial sector reforms, including the
alignment of prudential regulations with Basel III. They urged the
authorities to strengthen risk-based supervision and reiterated
the importance of putting in place robust frameworks for crisis
management and bank resolution. In addition, Directors recommended
measures to further strengthen macro-prudential policies and
systemic risk oversight, including through improved inter-agency
coordination.
Directors called for a reinforcement of the structural reform
agenda to sustain high potential growth, while also reducing
inequality. They agreed on the need to sustain productivity growth
through reforms to improve skills and education quality, attract
talent, and further improve the investment climate. Strengthening
social policies to continue reducing poverty, improve income
distribution, and ensure inclusive growth over the medium-term
were also encouraged.
=====================
P U E R T O R I C O
=====================
ARQUIDIOCESIS DE SAN JUAN: Seeks Plan Exclusivity Extension
-----------------------------------------------------------
Arquidiocesis de San Juan de Puerto Rico asks the U.S. Bankruptcy
Court for the District of Puerto Rico for an extension of the
exclusivity period, until Feb. 28, 2019, to submit its Disclosure
Statement and Plan of Reorganization, and a subsequent extension
of 60 days after an order approving the Disclosure statement is
entered to solicit votes for confirmation of its Plan.
The Debtor asserts that cause exists to extend the exclusivity
period due to the fact that there is pending litigation regarding
the scope of the Debtor's estate, the ongoing negotiations with
main creditors and the pending motion to dismiss.
The Debtor's bankruptcy petition was prompted by the series of
pre-judgment attachments on behalf of the state court plaintiffs
in the cases (a) Yali Acevedo Feliciano et als. v. Iglesia
Catolica Apostolica y Romana et als., Case No. SJ2016cv00131; (b)
Sonia Arroyo Velazquez, et als. v. Iglesia Catolica Apostolica y
Romana et als., Case No. SJ2016cv00143; and (c) Elsie Alvarado
Rivera, et als. v. Iglesia Catolica Apostolica y Romana et als.,
Case No. SJ2016cv00156. These attachments not only were made to
the bank accounts of the Archdiocese in Banco Popular de Puerto
Rico, but also to the Banco Popular bank accounts of the Parishes
within the archdiocese. These attachments were approximately $4.7
million, of which approximately $3.8 million was an administrative
freeze imposed to the accounts of the Parishes and the amount of
$606,569 was tendered on Aug. 24, 2018 to the marshal and was
deposited in the Unidad de Cuentas del Tribunal de Primera
Instancia Sala Superior de San Juan, Cash No. SJ2016cv00131
RE34336-22UG18.
In addition, on Sept. 7, 2018, the Court under Adversary
Proceeding No. 18-00099 (EAG) held that automatic stay "benefits
and protects against collection actions and asset attachments and
seizures, all the assets of the Roman Catholic Church of Puerto
Rico, unless those assets are owned by fragments of the Church
that are formally incorporated." Thereafter, what was originally
envisioned as the Chapter 11 case of the Archdiocese has included
its 146 parishes and the other un-incorporated Dioceses and their
respective parishes, each are over 200 distinct and separate
economic units.
Thereafter, the Diocese of Ponce and the Diocese of Mayaguez filed
a motion for the partial withdrawal of the reference. This matter
is currently pending before the U.S. District Court for the
District of Puerto Rico and there has been no adjudication. Due to
this filing, the Dioceses have not submitted their financial
information.
The Debtor also has two appeals pending: (a) Case No. 18-1931 on
the issue of the retroactive remand pending before the U.S. Court
of Appeals for the First Circuit and (b) the filing of the
petition for Writ of Certiorari before the Supreme Court of the
United States in order to seek review of the Opinion of the Puerto
Rico Supreme Court dated June 11, 2018.
The Debtor asserts that all these matters can impact the scope and
extent of its estate and may have a substantial effect on the
Debtor's Disclosure Statement and Plan of Reorganization. They are
also directly related to the pending Motion to Dismiss filed by
the U.S. Trustee, which will be considered on Jan. 25, 2019.
Moreover, the Debtor is also in negotiations with the main
creditors that may have a substantial impact on the Plan of
Reorganization that Debtor will propose and the treatment given to
these creditors.
Given all these present facts, the Debtor needs an extension of
time to file its Disclosure Statement and Plan of Reorganization.
About Arquidiocesis
de San Juan de Puerto Rico
Arquidiocesis de San Juan de Puerto Rico -- http://www.arqsj.org/
-- is an unincorporated religious association in San Juan, Puerto
Rico.
Arquidiocesis de San Juan de Puerto Rico, a/k/a Iglesia Catolica
Apostolica Y Romana, Arquidiocesis De San Juan De Puerto Rico,
filed a petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D.P.R. Case No. 18-04911) on Aug. 29, 2018. In the
petition signed by Father Alberto Arturo Figueroa Morales, vicar
general, the Debtor estimated $10 million to $50 million in assets
and liabilities. Carmen D. Conde Torres, Esq., at C. Conde &
Assoc., is the Debtor's counsel.
ARQUIDIOCESIS DE SAN JUAN: Taps Susana Cintron as Special Counsel
-----------------------------------------------------------------
Arquidiocesis de San Juan de Puerto Rico received approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to hire
the Law Firm of Susana Castro Cintron as special counsel.
The firm will provide legal services related to real property,
which include the drafting of sale and real estate lease
agreements, real estate property registration, collection of money
claims, and notary services.
Cintron charges an hourly fee of $150. The firm has not requested
a retainer fee.
The firm and its employees neither represent nor hold any interest
adverse to the Debtor and its bankruptcy estate, according to
court filings.
Cintron can be reached through:
Susana Castro Cintron, Esq.
Law Firm of Susana Castro Cintron
128 F.D. Roosevelt
San Juan, PR 00918
Tel: (787) 608-0685
Email: sbc@castrocintronlaw.com
About Arquidiocesis
de San Juan de Puerto Rico
Arquidiocesis de San Juan de Puerto Rico -- http://www.arqsj.org/
-- is an unincorporated religious association in San Juan, Puerto
Rico.
Arquidiocesis de San Juan de Puerto Rico, also known as Iglesia
Catolica Apostolica Y Romana, Arquidiocesis De San Juan De Puerto
Rico, filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D.P.R. Case No. 18-04911) on Aug. 29,
2018. In the petition signed by Father Alberto Arturo Figueroa
Morales, vicar general, the Debtor estimated $10 million to $50
million in assets and liabilities. Carmen D. Conde Torres, Esq.,
at C. Conde & Assoc., is the Debtor's counsel.
HARAS STANTA: Seeks to Hire Carrasquillo as Financial Consultant
----------------------------------------------------------------
Haras Santa Isabel, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to hire Luis R. Carrasquillo
& CO., P.S.C., as its financial consultant.
The firm will assist the Debtor in the financial restructuring of
its affairs by providing advice on strategic planning, preparing a
plan of reorganization and business plan, and participating in
negotiations with its creditors.
The firm will charge these hourly fees:
Luis Carrasquillo Partner $0
Marcelo Gutierrez Senior CPA $125
Lionel Rodriguez Perez Senior Accountant $90
Carmen Callejas Echevarria Senior Accountant $85
Zoraida Delgado Junior Accountant $45
Rosalie Hernandez Admin Assistant $45
Maricruz Mangual Admin Assistant $45
Iris Franqui Admin Assistant $45
Luis Carrasquillo, a partner at the firm, will only bill the hours
spent by his staff.
Mr. Carrasquillo disclosed in a court filing that he and other
members of his firm are "disinterested" as defined in section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Luis R. Carrasquillo
Luis R. Carrasquillo & CO., P.S.C
28th Street, TI-26
Turabo, Gardens, Caguas PR 00725
Tel: 787-746-4555 / 787-746-4556
Fax: 787-746-4564
E-mail: luis@cpacarrasquillo.com
About Haras Santa Isabel
Haras Santa Isabel Inc. is a privately-held company in Coamo,
Puerto Rico, in the horse breeding business.
Haras Santa Isabel previously sought bankruptcy protection (Bankr.
D.P.R. Case No. 10-06672) on July 27, 2010.
Haras Santa Isabel again sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.P.R. Case No. 18-07077) on Dec. 4, 2018.
At the time of the filing, the Debtor disclosed $2,579,669 in
assets and $8,787,638 in liabilities. The case is assigned to
Judge Enrique S. Lamoutte Inclan. The Debtor tapped Charles
Alfred Cuprill, Esq., at Charles A Cuprill, PSC Law Offices, as
its legal counsel.
LUBY'S INC: Urges Shareholders to Vote on Director Nominees
-----------------------------------------------------------
Luby's, Inc. has mailed a letter to shareholders in connection
with the Company's upcoming Annual Meeting of Shareholders to be
held on Jan. 25, 2019. The full text of the letter follows.
December 24, 2018
Dear Shareholders,
At our Annual Meeting of Shareholders on January 25, 2019, you
will face a critical decision that will significantly impact the
future of your investment in Luby's. You will be asked to choose
between two vastly different paths for the Company:
* Elect the seasoned and highly-qualified nominees put forth by
Luby's, who collectively possess decades of restaurant
industry experience, and whose 36.8% ownership in the Company
ensures the strongest possible alignment of interests with
all shareholders; or
* Put your investment at risk by electing four nominees hand-
picked by New York-based activist hedge fund Bandera Partners
LLC, who have almost zero meaningful industry experience and
we believe view the Company as a financial engineering
vehicle to further their own interests at the expense of
Luby's customers and you, the shareholders.
In making this important decision, we ask you to consider the
following:
Luby's Board and management team are in the midst of executing an
aggressive plan to improve our financial results and operating
performance -- against the backdrop of strong industry headwinds
and a highly competitive restaurant environment that has
challenged many mature restaurant brands, including ours. This
turnaround strategy includes evaluating multiple ways to lower
costs and improve operations, steps to significantly reduce debt,
and the addition of new voices and perspectives at both the senior
management and Board level.
We are continuously taking a hard look at our portfolio of
restaurant locations and have taken decisive action to improve
profitability. We announced an asset sales program of $25 million
in April 2018 and expanded this program up to $45 million in July
2018, with the goal of strengthening our balance sheet and
decreasing our debt. 10 Company-owned property locations were
sold in fiscal 2018, generating $14.8 million in net cash
proceeds. 21 underperforming Company-owned restaurants were
closed in fiscal 2018 and nine were closed in fiscal 2017. In
recognition of the fact that Luby's business needs to improve, CEO
Chris Pappas reduced his annual salary to only $1, and committed
to keeping it at that amount until the Company's turnaround
efforts bear fruit for Luby's shareholders.
The Luby's and Fuddruckers brands are highly regarded in the
marketplace, and we believe these brands can thrive and grow over
time. In order to meet the customers where they are, we continued
re-directing funds from a traditional media strategy (TV, radio,
billboards, direct mail, sponsorships) to a digital media strategy
(on-line advertising, geo-fencing, E-club promotions) which allows
us to connect and engage directly with our guests in a more
personal and relevant manner. We also made further improvements
to our mobile ordering capabilities at Fuddruckers and geared up
for launching similar capabilities for our Luby's cafeteria
guests.
In October 2018, we announced the promotion of Benjamin "Todd"
Coutee to the position of Chief Operating Officer. Todd has more
than 30 years of restaurant experience. Importantly, he knows
this industry and he knows our Company, our brands and our people
extremely well. Todd also has held several significant leadership
roles at Luby's and achieved proven results, including in his most
recent position as Senior Vice President of Culinary Contract
Services, which has been growing significantly for the past two
years under his watch.
On December 14th, we announced that Luby's entered into an $80
million refinancing credit facility with MSD Partners, providing
funding to help reduce the Company's debt balance as we continue
to aggressively strengthen our financial position.
We recently added Twila Day to our slate of director nominees for
the 2019 Annual Meeting, replacing Luby's General Counsel Peter
Tropoli as a director and thereby further increasing the number of
independent directors. Ms. Day is currently Chief Information
Officer of the Huntsman Corporation, a global chemical
manufacturer and marketer. Previously, she was the National
Practice Leader for Technology Services at Alvarez and Marsal, one
of the most highly-respected professional services firms in the
world. Prior to Alvarez, Ms. Day was Chief Information Officer at
SYSCO Corporation (NYSE:SYY), the global leader in distributing
food products to restaurants.
Luby's believes that Ms. Day's extensive leadership experience and
broad technology expertise will be highly valuable as we continue
to examine how to best implement tech solutions across the
Company, both to enhance productivity and improve customer
experience.
The experience of the current Board has never been more essential
than now as the entire restaurant sector faces challenges driven
by oversaturation in many markets and a fundamental evolution in
the way consumers think about dining.
Importantly, Luby's leadership has successfully steered the
Company through previous difficult periods in the restaurant
industry cycle -- most notably when CEO and Director Chris Pappas
and Director Harris Pappas took over Luby's in 2000 and in 2008
following the global financial crisis. In each case, the Company
was able to streamline operations, reduce its store count and debt
-- and ultimately improve financial results and Luby's stock
price. This expertise will be essential as Luby's continues to
manage through the current downturn in the industry cycle -- and
ultimately establish a foundation for future profitability.
CEO and Director Chris Pappas and Director Harris Pappas have the
strongest possible incentive to create shareholder value. They
beneficially own together approximately 36.8% of the Company's
stock -- meaning they have more skin in the game than anyone, and
more than three and a half times as much at stake as Bandera and
its nominees -- none of whom have meaningfully acquired any
Company shares other than what Jeff Gramm holds through his fund.
As stated above, we are already in the process of monetizing
underperforming restaurant locations, which will allow us to
strengthen our core operations and invest appropriately in the
right assets with better return characteristics to ultimately
improve our overall financial results.
Further, the value of the Luby's brands cannot be discounted.
According to a recent survey by a major industry trade
publication, Nation's Restaurant News, the Luby's Restaurant brand
ranks in the top 20 nationally in brand loyalty, based on the
percentage of customers who "visit because of a real desire to
experience the brand, as opposed to convenience." In the same
survey Fuddruckers was ranked by consumers in the top 10 for
taste, with 82% rating the chain "best in class" or "above
average" for taste. Notably, highly popular and fast-growing
chains like In-N-Out Burger, Chick-fil-A and Panera Bread were
among the winners.
We believe the value of the entire Luby's enterprise is worth
meaningfully more than where the stock is currently trading. In
our view, taking drastic steps to "monetize" only the Company's
real estate now, or otherwise break up the Company's assets, would
be tantamount to "selling at the bottom."
Luby's Board and management team have shown in the past the
ability to execute against a strategic plan, manage through
industry headwinds and deliver improved results. We are always
open to all strategic options to maximize shareholder value, but
believe that taking a short-term view would not be in the best
long-term interest of shareholders.
Bandera approached Luby's only nine days before the deadline for
nominating directors and demanded three seats on the Board,
threatening to launch a proxy fight if its demands were not met.
As a courtesy to them, Luby's extended the nomination deadline to
consider Bandera's demands. Bandera demanded the appointment of
Mr. Jeff Gramm, Senator Phil Gramm, and Mr. Timothy Brog, a close
business associate of Mr. Gramm's, to the Board while setting the
size of the Board at nine directors. To be clear, this meant that
Bandera was demanding a third of the seats on the Luby's Board.
Notwithstanding our extension, Bandera gave us only roughly 48
hours to agree to their demands.
A public company board cannot responsibly make decisions blindly
on such a tight timeframe -- especially when it comes to director
nominees who most of our Board members have never met. The Board
requested to interview two of Bandera's nominees -- Savneet Singh
and Brian Wright -- but Bandera then illogically insisted there
must be first "a settlement agreement in place" and "then Luby's
and Bandera can agree to have specific nominees interviewed [...]
to fill the number of seats that the settlement agreement
provides." Just as Luby's wouldn't agree to hire any employee
without first interviewing the candidate, the Board would not
agree to appoint directors without interviewing them first and
assessing their suitability. Following a similar pattern as with
Mr. Brog, Mr. Wright was ultimately left off Bandera's slate. No
explanation was given for either removal.
Bandera's conduct indicates that they fundamentally do not
understand the duties and responsibilities of a public company
board. The Board carefully considers any potential nominees, and
there is a process in place to vet and interview such nominees.
Agreeing to put candidates on the Board before the Board has even
interviewed them would be tantamount to a breach of the Board's
fiduciary duties to shareholders.
It is important to note that the nominees put forward by Bandera
do not possess meaningful restaurant operating experience. So far
the full extent of a "plan" for the Company offered up by Bandera
could fit on a Fuddruckers napkin. Taken together, this
information is highly troubling as it suggests that if given Board
representation Bandera will likely push for liquidating the
Company or selling off its real estate assets - a path we fully
believe would short change Luby's shareholders, employees and
customers.
Jeff Gramm previously wrote a book on shareholder activism: Dear
Chairman: Boardroom Battles and the Rise of Shareholder Activism.
But writing this book - predominately a compilation of open
letters authored by well-known hedge funds does not qualify Jeff
Gramm as an expert in creating shareholder value. As he himself
states in the book, "Over time, I've learned I'm much better
suited to finding good investment ideas than managing activist
interventions or serving on corporate boards." We couldn't agree
more.
Notably, the entire slate of four directors nominated by Bandera
have close ties to the Gramm family, starting with Senator Phil
Gramm, his father. For this reason, we find it hard to believe
Bandera's claims that its nominees, if elected, would act as truly
independent Board members, unbeholden to Bandera and its principal
Jeff Gramm.
We believe that electing our proposed slate of highly-qualified
nominees for the Luby's Board is the best choice to maximize the
value of your investment in Luby's and improve the Company's share
price.
Luby's current Board and management team are successfully
executing against a strategic plan designed to build long-term
value for all our shareholders, and we are deeply aligned with
your best interests.
In stark contrast, the activist investor nominees possess
virtually no restaurant operating experience, raising the
question: who do you want charting the strategic course of Luby's
-- seasoned executives who have successfully navigated through
these waters before, or a group led by an academic and book author
who wants to test out his theories with your investment?
VOTE FOR YOUR BOARD'S NOMINEES ON THE WHITE PROXY CARD TODAY
DO NOT SIGN ANY GOLD PROXY CARD SENT TO YOU BY BANDERA PARTNERS
Sincerely,
The Board of Directors of Luby's, Inc.
About Luby's
Houston, Texas- based Luby's, Inc. (NYSE: LUB) --
http://www.lubysinc.com/-- operates 142 restaurants nationally as
of Nov. 7, 2018: 82 Luby's Cafeterias, 59 Fuddruckers, and 1
Cheeseburger in Paradise. The Company is also the franchisor for
104 Fuddruckers franchise locations across the United States
(including Puerto Rico), Canada, Mexico, Panama, and Colombia.
Luby's Culinary Contract Services provides food service management
to 30 sites consisting of healthcare, higher education, sport
stadiums, and corporate dining locations as of Nov. 7, 2018.
Luby's reported a net loss of $33.56 million for the year ended
Aug. 29, 2018, compared to a net loss of $23.26 million for the
year ended Aug. 30, 2017. As of Aug. 29, 2018, Luby's had $199.98
million in total assets, $87.36 million in total liabilities, and
$112.6 million in total shareholders' equity.
Grant Thornton LLP, in Houston, Texas, issued a "going concern"
qualification in its report on the consolidated financial
statements for the year ended Aug. 29, 2018, noting that the
Company sustained a net loss of approximately $33.6 million and
net cash used in operating activities of approximately $8.5
million. The Company's term and revolving debt of approximately
$39.5 million is due May 1, 2019. The Company was in default of
certain debt covenants of its term and revolving credit agreements
maturing on May 1, 2019. On Aug. 24, 2018, the lenders agreed to
waive the existing events of default resulting from any breach of
certain financial covenants or the limitation on maintenance
capital expenditures, in each case that may have occurred during
the period from and including May 9, 2018 until Aug. 24, 2018, and
any related events of default. Additionally, the lenders agreed
to waive the requirements that the Company comply with certain
financial covenants until Dec. 31, 2018, at which time the Company
will be in default without an additional waiver or alternative
financing. These conditions, along with other matters, raise
substantial doubt about the Company's ability to continue as a
going concern.
================================
T R I N I D A D & T O B A G O
================================
TRINIDAD & TOBAGO: Challenges Continue
--------------------------------------
Trinidad Express reports that business groups, owners and
economists all agree: 2018 was indeed a tough year.
And they expect that 2019 will present its owns challenges,
according to Trinidad Express.
The report notes that they shared with Express Business their
goals, hopes and expectations for the year ahead.
***********
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.
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for actual trades are probably different. Our objective is to
share information, not make markets in publicly traded securities.
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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
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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
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***********
S U B S C R I P T I O N I N F O R M A T I O N
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