/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190110.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 10, 2019, Vol. 20, No. 7 Headlines D O M I N I C A N R E P U B L I C BARRICK PUEBLO: Lays Off 241 Workers After Talks With Randgold DOMINICAN REPUBLIC: Private Interests Could Get Tax Breaks DOMINICAN REPUBLIC: To Sell Stake of Power Plant in Scandal M E X I C O PLAYA DEL CARMEN: Makes Arrests for Massacre in City P U E R T O R I C O COPY DU SERVICES: Taps Juan C. Bigas Valedon as Counsel PEOPLE TELEVISION: Case Summary & 20 Largest Unsecured Creditors SEARS HOLDINGS: To Consider ESL's Revised Offer SPANISH BROADCASTING: Alex Meruelo Living Does Not Own CL-A Shares TOYS R US: Jan. 24 Confirmation Hearing on Wayne Plan V E N E Z U E L A VENEZUELA: Says it Can Prove Exxon Ships Entered its Waters V I R G I N I S L A N D S GEOPHYSICAL SUBSTRATA: S&P Assigns B Long-Term ICR, Outlook Stable - - - - - =================================== D O M I N I C A N R E P U B L I C =================================== BARRICK PUEBLO: Lays Off 241 Workers After Talks With Randgold -------------------------------------------------------------- Dominican Today reports that since last October, 241 employees of the miner Barrick Pueblo Viejo have been laid off, the company's workers union affirmed, and showed Labor Ministry certifications to back their claim. Barrick Workers Union (Sutrabarrick) secretary Franklin Mora said the company has alleged a cut in production to justify the layoffs, according to Dominican Today. However, he refuted a reduction in extractions, since on average it continues at over 3,000 ounces of gold per day, noting that just on Jan. 5, it was 3,524, the report relays. Mr. Mora told hoy.com.do that the dismissals climbed since Barrick started negotiations with the miner Randgold, the report adds. DOMINICAN REPUBLIC: Private Interests Could Get Tax Breaks ---------------------------------------------------------- Dominican Today reports that private interests that might enter into a joint project with the State could benefit from a "temporary exemption" of the ITBIS Tax (VAT) in the purchase or rental of equipment, materials and supplies directly related to the construction or expansion of the goods and infrastructure part of the contract during the first five years, as stated in the preliminary draft of the Public-Private Partnerships Law (PPP) that the Government has just sent to Congress. The developers of public-private initiatives could demand the refund of the ITBIS in the first five years, counted from the start of the execution of the project, according to Dominican Today. The document that should be debated in Congress also proposes that the contracts under the PPP Law would have a maximum term of 30 years, during which they can look to obtain the return on their investment, the report notes. In case of extensions of the terms already agreed in a project, they must be included in the specifications and in the original contract "and in no case may exceed half the time agreed," the report says. Likewise, variations of an original contract may not exceed 25 percent of the original value of the agreement and must be made in accordance with a capital expenditure valuation methodology stipulated in the regulations implementing the norm, the report discloses. "Any modification of the contracts of public-private partnerships must be submitted to the approval of the National Public-Private Partnerships Committee, except for cases expressly excluded in the regulations of this law," the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. DOMINICAN REPUBLIC: To Sell Stake of Power Plant in Scandal ----------------------------------------------------------- Dominican Today reports that the start of operations of the Punta Catalina plant's first unit is set for the end of February, while the Dominican Republic government moves forward with plans to sell part of the property. The Finance Ministry selected the firm Guggenheim Securities to advise on the design of a potential tender to sells shares of the plant linked to the Odebrecht graft and ballooned costs scandal, according to Dominican Today reports that. "The objective of the Dominican Government with the design of the tender is to obtain, in a transparent manner, a strategic partner of recognized international trajectory that participates in the operations of the plants competing in the Dominican electricity market as a company that adheres to the global best practices. In this manner, the Dominican State would continue to be a partner of the plant and would participate in the annual profits generated by Punta Catalina," the Finance Ministry said in a statement obtained by the news agency. Finance said that Guggenheim Sovereign Securities Advisory Dept. director Mark Walker will head the advisory team, the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =========== M E X I C O =========== PLAYA DEL CARMEN: Makes Arrests for Massacre in City ---------------------------------------------------- The Latin Herald reports that Mexican authorities have several suspects in custody in connection with last weekend's shooting at a bar in the Caribbean resort city of Playa del Carmen that left seven people dead, state prosecutors said. "The Attorney General's Office of Quintana Roo State reports the arrest of several people, among them the material authors of the seven homicides," the agency said on Twitter, according to The Latin Herald. Two gunmen entered the Virginias bar around 8:00 p.m. Sunday, Jan. 6 and opened fire with large-caliber arms, the report notes. The gunmen left the bar and escaped in a vehicle, the report relays. The shooting was similar to one on Jan. 16, 2017, at the Blue Parrot club, where six people were killed and 15 others wounded in Playa del Carmen during an electronic music festival, the report says. Officials blamed that shooting on a dispute between drug traffickers, the report discloses. Unlike the shooting at the Blue Parrot, which is in a hotel and restaurant district, the Virginias bar is on the outskirts of the city and frequented mostly by locals, the report relays. Since 2017, drug-related violence has been a growing problem in Quintana Roo, which welcomes tens of thousands of tourists each year and generates huge amounts of hard currency for Mexico, the report recalls. Officials blame the violence on a turf war involving the Jalisco Nueva Generacion Cartel, the Los Zetas cartel and other gangs that want to control the illegal drug trade in the region, the report adds. ====================== P U E R T O R I C O ====================== COPY DU SERVICES: Taps Juan C. Bigas Valedon as Counsel ------------------------------------------------------- Copy Du Services Corp seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico (Old San Juan) to employ Juan C. Bigas Valedon Law Office as its counsel. A $5,000.00 retainer was advanced by the debtor, against which the law firm will bill on the basis of $250.00 per hour, plus expenses, for work performed or to be performed by Juan C. Bigas Valedon, Esq. Juan C. Bigas Valedon, Esq. assures the Court that he is a disinterested person, as defined in USC Sec. 101(14). The counsel can be reached at: Juan C. Bigas Valedon, Esq. JUAN C. BIGAS VALEDON LAW OFFICE 4ta. Ext. El Monte 63-D Granada Street Ponce, PR 00730 Home: 787-645-1252 Office: 787-259-1000 Fax: 866-521-7440 Cellular: 787-633-1253 About Copy Du Services Corp Copy Du Services Corp filed its petition for reorganization under the provisions of 11 USC Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-06268) on Oct. 26, 2018, estimating under $1 million in both assets and liabilities. Juan Carlos Bigas Valedon, Esq., at Juan C. Bigas Valedon Law Office, is the Debtor's counsel. PEOPLE TELEVISION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: People Television Inc. PO Box 366511 San Juan, PR 00936 Business Description: People Television Inc. is an entertainment production group headquartered in San Juan, Puerto Rico. Chapter 11 Petition Date: January 7, 2019 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Case No.: 19-00041 Judge: Hon. Brian K. Tester Debtor's Counsel: Noemi Landrau Rivera, Esq. LANDRAU RIVERA & ASSOCIATES PO Box 270219 San Juan, PR 00927 Tel: 787-774-0224 Fax: 787-793-1004 E-mail: nlandrau@landraulaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Francisco Zamora Reyes, president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/mowb19-40032.pdf SEARS HOLDINGS: To Consider ESL's Revised Offer ----------------------------------------------- Sears Holdings Corporation has agreed to consider the revised offer from its Chairman Eddie Lampert, through his ESL Investments hedge fund, to buy the retailer and save it from liquidation. Lauren Zumbach, writing for Chicago Tribune, reports that Sears' Chapter 11 counsel, Ray Schrock, told Judge Robert Drain during a hearing before the U.S. Bankruptcy Court for the Southern District of New York, that the company has agreed to consider a revised bid from Lampert along with other bids. CNBC's Lauren Hirsch reports that the bankruptcy judge gave Lampert more time -- but required ESL to pay a $120 million deposit. CNBC notes Sears will allow Lampert to participate in a previously scheduled auction, when it will compare ESL's offer to others by liquidators. But it's unclear where he will get the funds to back his offer. A person familiar with the situation told CNBC Lampert has been working to get the financing, the report says. ESL Investments said late in December it was prepared to pay $4.4 billion for many of Sears' remaining assets, including about 425 Sears and Kmart stores. CNBC relates that Sears had planned to reject Lampert's bid. One of the biggest unresolved issues, according to the report, was that the bid fell short of covering the fees and vendor payment it owes, making the company "administratively insolvent." According to the report, ESL protested Sears' decision. A person familiar with the situation told CNBC that ESL pointed to the advisory fees that Sears has racked up during bankruptcy. ESL worked over the weekend to improve its offer. The hedge fund said it is formalizing its proposal to be evaluated at the auction, the Chicago Tribune reports. "As we have said before, our proposal provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer and up to 50,000 jobs," ESL said in an emailed statement after the hearing, according to the Tribune. "We believe in Sears and will continue to do everything we can to ensure that it has a profitable future." About $17.9 million of the $120 million deposit is nonrefundable and will cover the cost of delaying the company's liquidation if ESL doesn't emerge as the winning bidder, Schrock said, according ot the Tribune. Bloomberg reported that Sears is preparing for a possible liquidation after ESL's bid fell short of bankers' qualifications, citing people with knowledge of the matter. According to the report, Sears started laying out the groundwork for a liquidation after meetings. Ted Gavin, according to his firm Gavin/Solmonese's Twitter post, said ESL may make last-minute changes to entice Sears and that "if he improves his bid such that unsecured creditors realize a recovery that gives them reason to reconsider litigation risk of going after the transactions, then they might support his efforts." According to Chicago Tribune, Abid Qureshi, an attorney representing a committee of Sears' creditors, told the court it had not been included in the negotiations and continued to have "significant concerns" about ESL's bid. In November, the creditors committee raised questions about financial dealings between Lampert, ESL and Sears, saying those transactions "may be part of an extended pattern of conduct that served to benefit certain (insider) equity holders," according to court filings. ESL denied those allegations, but Qureshi said creditors are still assessing what they believe are "significant viable claims against ESL," the report relates. Chicago Tribune notes that Sears has not said how many other offers it received or whether any others would let the retailer avoid liquidation. The report relates Great American Group submitted a bid with Tiger Capital Group but declined to share details of the offer. A subsidiary of B. Riley Financial, Great American Group partnered with Tiger Capital Group last year to buy many of bankrupt retailer Bon-Ton Stores' assets and liquidate the company, the report recounts. Transform Holdco, the entity controlled by ESL, also said it would bid individually on some assets if the $4.4 billion bid was not accepted. Judge Drain said other parties can submit additional or improved bids before the auction and that Sears will be obligated to consider all its options, Tribune adds. About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Freres & Co. LLC is serving as investment banker to Holdings. DLA Piper LLP is the real estate advisor. Prime Clerk is the claims and noticing agent. SPANISH BROADCASTING: Alex Meruelo Living Does Not Own CL-A Shares ------------------------------------------------------------------ In a Schedule 13D/A filed with the Securities and Exchange Commission, these entities or individuals reported beneficial ownership of shares of Class A common stock of Spanish Broadcasting System, Inc. as of Dec. 31, 2018: Shares Percentage Beneficially of Outstanding Reporting Person Owned Shares ---------------- ------------ -------------- Alex Meruelo Living Trust 0 0% Meruelo Investment Partners LLC 0 0% Liset Meruelo 5,000 0% Alexander Meruelo 3,000 0% Lisette Meruelo 2,500 0% Alexis Meruelo 2,500 0% Alex Meruelo 0 0% For the period from Dec. 27, 2018 through Dec. 31, 2018, Alex Meruelo Living Trust sold a total of 376,323 Shares. As a result of the transactions, on Dec. 31, 2018 each of the Reporting Persons ceased to be the beneficial owner of more than five percent of the Shares. The filing of the Amendment No. 2 represents the final amendment to the Schedule 13D and constitutes an exit filing for the Reporting Persons. A full-text copy of the regulatory filing is available at no charge at: https://is.gd/BwyxUP About Spanish Broadcasting Based in Miami, Florida, Spanish Broadcasting System, Inc. (OTCMKTS:SBSAA) -- http://www.spanishbroadcasting.com/-- owns and operates radio stations located in the top U.S. Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico, airing the Tropical, Regional Mexican, Spanish Adult Contemporary, Top 40 and Urbano format genres. SBS also operates AIRE Radio Networks, a national radio platform of over 250 affiliated stations reaching 94% of the U.S. Hispanic audience. SBS also owns MegaTV, a network television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico, produces a nationwide roster of live concerts and events, and owns a stable of digital properties, including La Musica, a mobile app providing Latino-focused audio and video streaming content and HitzMaker, a new-talent destination for aspiring artists. The report from the Company's independent accounting firm Crowe Horwath LLP, the Company's auditor since 2013, on the consolidated financial statements for the year ended Dec. 31, 2017, includes an explanatory paragraph stating that the 12.5% Senior Secured Notes had a maturity date of April 15, 2017. Cash from operations or the sale of assets was not sufficient to repay the notes when they became due. In addition, for the year ended Dec. 31, 2017, the Company had a working capital deficiency and negative cash flows from operations. These factors raise substantial doubt about its ability to continue as a going concern. Spanish Broadcasting reported net income of $19.62 million for the year ended Dec. 31, 2017, compared to a net loss of $16.34 million for the year ended Dec. 31, 2016. As of Sept. 30, 2018, Spanish Broadcasting had $437.66 million in total assets, $530.24 million in total liabilities and a total stockholders' deficit of $92.57 million. * * * In May 2017, S&P Global Ratings withdrew its 'D' corporate credit rating and issue-level ratings on Spanish Broadcasting System. "We withdrew the ratings because we were unlikely to raise them from 'D', based on SBS' ongoing plans to restructure its debt," said S&P Global Ratings' credit analyst Scott Zari. S&P had downgraded SBS to 'D' on April 21, 2017, following the company's announcement that it didn't repay its $275 million 12.5% senior secured notes that were due April 15, 2017, as reported by the TCR on May 25, 2017. In April 2017, Moody's Investors Service downgraded SBS's corporate family rating to 'Ca' from 'Caa2'. SBS's 'Ca' corporate family rating reflects an elevated expected loss rate following the default under the company's 12.5% senior secured notes due April 2017, said Moody's. TOYS R US: Jan. 24 Confirmation Hearing on Wayne Plan ----------------------------------------------------- Bankruptcy Judge Keith L. Phillips approved Wayne Real Estate Parent Company, LLC's disclosure statement in support of its chapter 11 plan. The plan objection deadline is Jan. 23, 2019, at 12:00 p.m., prevailing Eastern Time. The confirmation hearing date is Jan. 24, 2019, at 1:00 p.m., prevailing Eastern Time. The Debtor is an indirect wholly owned subsidiary of Debtor Toys "R" Us, Inc. The Debtor's primary asset is its indirect 99.99% ownership interest in Propco I. The Debtor is also the direct owner of the remaining 0.01% ownership interest in Propco I. As of November 15 2018, the Propco I Debtors owned fee simple and leasehold interests in, collectively, 186 real properties located in 41 states, which include 154 owned real estate stores, 21 ground leasehold interests, and 11 building leasehold interests. Pursuant to the Master Lease, the Propco I Debtors leased the Properties to TRU DE on a triple-net basis, which means that under the Master Lease, TRU DE paid all real estate taxes, building insurance, and maintenance on the Properties up until the Master Lease was rejected on June 30, 2018. Whereas prior to the rejection of the Master Lease, substantially all of Propco I's revenues and cash flows derived from payments from TRU DE under the Master Lease, today, substantially all of the Propco I Debtors' cash flows were derived from the sale and assignment of owned and leased assets, with expected future revenue from leases executed with new tenants at the Propco I Debtors' real property. The Plan contemplates a reorganization of the Debtor, allowing it to emerge from chapter 11 as a holding company for the Propco I Debtors, allowing the General Unsecured Creditors of the Debtor to receive the Debtor's recovery under the Propco I Plan. Specifically, under the terms of the Plan, holders of Claims and Interests will receive the following treatment in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for, such holders Claims and Interests. Each Holder of an Allowed General Unsecured Claim in Class 3 will receive their pro rata share of the consideration to be specified in the Restructuring Transactions Memorandum, which in any case will consist of either direct or indirect ownership of the New Contingent Equity Rights, which direct or indirect ownership may be accomplished through the receipt of New Common Stock, the direct receipt of the New Contingent Equity Rights, or another mechanism to be determined. The Plan will be funded by Cash on hand and any other Cash received or generated by the Debtor. A copy of the Disclosure Statement Order is available at: http://bankrupt.com/misc/vaeb7-34665-6119.pdf A copy of the Disclosure Statement explaining the Wayne Plan is available at: http://bankrupt.com/misc/vaeb17-34665-6054.pdf About Toys "R" Us Toys "R" Us, Inc., was an American toy and juvenile-products retailer founded in 1948 and headquartered in Wayne, New Jersey, in the New York City metropolitan area. Merchandise was sold in 880 Toys "R" Us and Babies "R" Us stores in the United States, Puerto Rico and Guam, and in more than 780 international stores and more than 245 licensed stores in 37 countries and jurisdictions. Merchandise was also sold at e-commerce sites including Toysrus.com and Babiesrus.com. On July 21, 2005, a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts, and Vornado Realty Trust invested $1.3 billion to complete a $6.6 billion leveraged buyout of the company. Toys "R" Us is a privately owned entity but still files with the U.S. Securities and Exchange Commission as required by its debt agreements. The Company's consolidated balance sheet showed $6.572 billion in assets, $7.891 billion in liabilities, and a stockholders' deficit of $1.319 billion as of April 29, 2017. Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its Canadian subsidiary voluntarily filed for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No. 17-34665) on Sept. 19, 2017. In addition, the Company's Canadian subsidiary voluntarily commenced parallel proceedings under the Companies' Creditors Arrangement Act ("CCAA") in Canada in the Ontario Superior Court of Justice. The Company's operations outside of the U.S. and Canada, including its 255 licensed stores and joint venture partnership in Asia, which are separate entities, were not part of the Chapter 11 filing and CCAA proceedings. Grant Thornton is the monitor appointed in the CCAA case. Judge Keith L. Phillips presides over the Chapter 11 cases. In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland & Ellis International LLP serve as the Debtors' legal counsel. Kutak Rock LLP serves as co-counsel. Toys "R" Us employed Alvarez & Marsal North America, LLC as its restructuring advisor; and Lazard Freres & Co. LLC as its investment banker. It hired Prime Clerk LLC as claims and noticing agent. Consensus Advisory Services LLC and Consensus Securities LLC, serve as sale process investment banker. A&G Realty Partners, LLC, serves as its real estate advisor. On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an official committee of unsecured creditors. The Committee retained Kramer Levin Naftalis & Frankel LLP as its legal counsel; Wolcott Rivers, P.C., as local counsel; FTI Consulting, Inc., as financial advisor; and Moelis & Company LLC as investment banker. Toys "R" Us UK Toys "R" Us Limited, Toys "R" Us, Inc.'s UK arm with 105 stores and 3,000 employees, was sent into administration in the United Kingdom in February 2018. Arron Kendall and Simon Thomas of Moorfields Advisory Limited, 88 Wood Street, London, EC2V 7QF were appointed Joint Administrators on Feb. 28, 2018. The Administrators now manage the affairs, business and property of the Company. The Administrators act as agents only and without personal liability. The Administrators said they will make every effort to secure a buyer for all or part of the business. Liquidation of U.S. Stores Toys "R" Us, Inc., on March 15, 2018, filed with the U.S. Bankruptcy Court a motion seeking Bankruptcy Court approval to start the process of conducting an orderly wind-down of its U.S. business and liquidation of inventory in all 735 of the Company's U.S. stores, including stores in Puerto Rico. Propco I Debtors Toys "R" Us Property Company I, LLC and its subsidiaries own fee and leasehold interests in more than 300 properties in the United States. The Debtors lease the properties on a triple-net basis under a master lease to Toys-Delaware, the operating entity for all of TRU's North American businesses, which operates the majority of the properties as Toys "R" Us stores, Babies "R" Us stores or side-by-side stores, or subleases them to alternative retailers. Toys "R" Us Property was founded in 2005 and is headquartered in Wayne, New Jersey. Toys 'R' Us Property operates as a subsidiary of Toys "R" Us Inc. Company LLC, MAP Real Estate LLC, TRU 2005 RE I LLC, TRU 2005 RE II Trust, and Wayne Real Estate Company LLC -- Propco I Debtors -- sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 18-31429) on March 20, 2018. The Propco I Debtors sought and obtained procedural consolidation and joint administration of their Chapter 11 cases, separate from the Toys "R" Us Debtors' Chapter 11 cases. The Propco I Debtors estimated assets of $500 million to $1 billion and liabilities of $500 million to $1 billion. Judge Keith L. Phillips presides over the Propco I Debtors' cases. The Propco I Debtors hired Klehr Harrison Harvey Branzburg, LLP; and Crowley, Liberatore, Ryan & Brogan, P.C., as co-counsel. The Debtors also tapped Kutak Rock LLP. They hired Goldin Associates, LLC, as financial advisors. ================= V E N E Z U E L A ================= VENEZUELA: Says it Can Prove Exxon Ships Entered its Waters ----------------------------------------------------------- EFE News reports that the Venezuelan government presented what it described as evidence that vessels belonging to global oil giant ExxonMobil entered the Andean nation's territorial waters last month. Vice President Delcy Rodriguez presented a press conference with audiovisual material in which officers of the Venezuelan navy are heard talking with crews of the oil company's ships, according to EFE News. "The crews admitted they invaded our territory. And because they retreated, they were not boarded," she said, the report notes. "They knew they were in Venezuelan territory and decided to leave once they were given the warning," the report relays. "They (the vessels' crews) said very clearly that they were authorized by the Guyana government to sail in waters under Venezuelan jurisdiction," the report quoted Mr. Rodriguez as saying. The ships, intercepted on Dec. 23, were at coordinates corresponding to "the maritime projection of the Orinoco Delta" and are waters "of unquestionable Venezuelan sovereignty," Caracas said at the time, the report relays. Mr. Rodriguez said that this material will be given to the United Nations as evidence of the "unbelievable provocation" of which the government of neighboring Guyana is guilty, the report relays. After the interception, ExxonMobil announced that, for now, it has suspended some of its projects on the western portion of the Stabroek Block, where the US-based oil supermajor has been working since 2015, the report notes. The Stabroek Block sits off the coast of Essequibo, a 160,000-sq.- kilometer (61,780-sq.-mile) area that is administered by Guyana and makes up more than half of its territory, but which Venezuela has claimed as its own since the 19th century, the report relays. The Caribbean Community expressed its "great concern" following the Dec. 23 incident, the report says. For its part, Guyana said it will present a formal complaint before the UN for Venezuela's "illegal" action, Foreign Minister Carl Greenidge said, the report adds. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings in May 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'. =========================== V I R G I N I S L A N D S =========================== GEOPHYSICAL SUBSTRATA: S&P Assigns B Long-Term ICR, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings said that it has assigned its 'B' long-term issuer credit rating to Geophysical Substrata Ltd. The outlook is stable. At the same time, S&P assigned its 'B' long-term issue rating to the company's senior unsecured notes under its US$400 million medium-term note (MTN) program and the drawdown under the same. Geophysical is a holding company based in the British Virgin Islands. The company has interests in oilfield services through SDP Services Ltd. and in business process outsourcing (BPO) services through iEnergizer Ltd. S&P's rating reflects Geophysical's small scale, limited market share, and single weak customer in the oilfield services business. The company's sizable related-party advances and shareholder distributions in the past weigh on its credit profile. Tempering these weaknesses are Geophysical's steady operating cash flows, revenue diversity from two uncorrelated business segments, and margins that are better than the industry average. Geophysical has raised US$151.5 million as a part of the debt- raising plans for its oilfield services business' capital expenditure that will increase its leverage over the next 12-24 months. This is in line with S&P's expectations. S&P has therefore finalized its preliminary rating on Geophysical assigned on Dec. 17, 2018. The small scale of both Geophysical's subsidiaries constrains its overall scale. iEnergizer has limited market share in the highly competitive BPO services industry in India. Also, the company's limited service offerings result in lower client and revenue diversity relative to larger domestic peers such as Genpact Ltd. In addition, SDP Services has a small fleet of 15 rigs and single- site operations in India. This places it in a weaker position than peers such as Pioneer Energy Services Corp., which has 24 rigs and higher geographic diversity. Another key constraint is Geophysical's customer concentration. SDP Services leases its rigs to a single client, Focus Energy Ltd., an operator of five oil and gas blocks in the states of Gujarat and Rajasthan in India. In addition, SDP Services has lumpy cash flows and a long receivable cycle from the client. Focus Energy itself is a very small player with only about 7% participating interest in the RJ-ON/06 block, the site of SDP Services' operations. In our view, Focus Energy is a weak counterparty, given its very high leverage with a debt-to-EBITDA ratio of more than 6x at the end of fiscal 2018 (year ended March 31). SDP Services' long-standing relationship with Focus Energy, with long-term, take-or-pay contracts that provide good revenue visibility, temper the client concentration risk. SDP Services also benefits from its stable track record of operations and entry barriers, given its dominant position in the region. S&P said, "We believe Geophysical's revenue diversity from two uncorrelated business segments will remain a strength. iEnergizer's stable operating performance partially offsets the weakness in the oilfield services business. We expect the high- margin back office services and real-time processing businesses to drive iEnergizer's revenue growth over the next one to two years, rather than content delivery. The company's operating performance has stabilized over the past 12-18 months with new customer wins across these business segments. The addition of new customers has also lowered the business' client concentration risk while fueling growth. The company's top two clients contributed less than 20% of its nearly US$155 million revenue in fiscal 2018, down from 24% in fiscal 2017. We do not see the risk of any significant client loss for iEnergizer in the next 12 months, given that none of the company's key client contracts are up for renewal over the next few quarters." Geophysical will likely sustain its profitability at 45%-50% over the next three years driven by robust profitability in the oilfield services business. S&P expects SDP Services to be the key driver of Geophysical's business profile and to contribute 60%-70% of its EBITDA. SDP Services' above-average EBITDA margin is attributable to the dry-lease contracts with Focus Energy. Given that these contracts are long term (expiring through 2023), S&P expects SDP Services to sustain its margins. iEnergizer's EBITDA margin of 22%-24% is also above the industry average and higher than that of some of its domestic Indian peers. The company has historically earned good margins from its access to a large low-cost workforce from India and its high seat utilization. iEnergizer's efforts to improve business diversity with greater focus on digital and online dissemination of content should further support its profitability. S&P anticipates that Geophysical's leverage will remain high over the next 12-24 months due to substantial capital expenditure in the oilfield services business. S&P estimates the company will raise about US$350 million of debt in fiscal 2019 to fund this capital expenditure and repay iEnergizer's outstanding term loan. Even with stable margins, the interest outgo on such incremental debt will restrict Geophysical's ratio of funds from operations (FFO) to debt at 23%-28% over the next two years, lower than the 51% in fiscal 2018. The subsidiaries' cash flows will remain fully accessible to Geophysical by way of dividends to meet its debt servicing requirements. We expect SDP Services' free cash flows to be negative due to its capital expenditure on new rigs and other oilfield services equipment over the next two years. However, iEnergizer will generate healthy operating cash flows over this period. S&P expects iEnergizer to refinance the outstanding US$45 million loan due in April 2019 to allow dividend distribution (currently restricted under the loan covenants) to support debt servicing at Geophysical. Geophysical's healthy accumulated cash will underpin its credit profile over the next two years. We estimate the company to have more than US$400 million in accumulated cash at the end of fiscal 2019, gradually reducing to US$300 million-US$325 million over the next two years as capital expenditure at SDP Services accelerates. Other than the dividend payout to minority shareholders of iEnergizer of about US$3 million annually, Geophysical is unlikely to make any other shareholder or related party distributions over the next two years. However, the company's history of sizable related-party advances and distributions remain a risk to our base-case assumption. At the end of fiscal 2018, Geophysical had more than US$400 million outstanding in advances to related parties. S&P said, "The stable outlook reflects our view that Geophysical will maintain its robust profitability and steady operating cash flows over the next 12-18 months. We also believe the company will not undertake any large-scale debt-funded capital expenditure beyond our base-case expectations. This will result in EBITDA interest coverage remaining above 2x and the company not facing any liquidity pressure. "We may lower our rating on Geophysical if the company faces liquidity pressure or its EBITDA interest coverage approaches 2x on a sustained basis. This could happen if: (1) the company's oilfield services business or software services business loses clients resulting in a material decline in revenues; or (2) the company takes on debt to fund growth significantly beyond our expectations or make substantial related party distributions, investments, or advances. "We are unlikely to upgrade Geophysical over the next 12-18 months given its very small scale, high concentration to a weak counterparty, and large debt-funded investment plan. However, we may raise our rating on the company if: (1) we expect the company to maintain a debt-free status; or (2) the financial position of the counterparty significantly improves resulting in steady cash flows and the company commits to not undertaking any significant related party distributions, investment, or advances." *********** 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 2019. 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 * * *