/raid1/www/Hosts/bankrupt/TCRLA_Public/190125.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, January 25, 2019, Vol. 20, No. 18
Headlines
A R G E N T I N A
GPAT COMPANIA: Moody's Rates AR$500MM Sr. Unsec. Debt B1
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Secrecy Has Shrouded Producers Over Bird Flu
J A M A I C A
CIBONEY GROUP: Continues in The Red
M E X I C O
CEMEX SAB: Cabrera New Co. President in the Dominican Republic
P U E R T O R I C O
OLIVER C&I: Claims in Suit vs. Carolina Developers, Narrowed
PERFECT BROW: Case Summary & 20 Largest Unsecured Creditors
SEARS HOLDINGS: Hearing on $5.2-Billion Sale to ESL on Feb. 4
SEARS HOLDINGS: PBGC Steps in to Oversee Two Pension Plans
SEARS HOLDINGS: Taps Deloitte & Touche as Auditor
V E N E Z U E L A
VENEZUELA: Defaulted Bonds Soar as Anti-Maduro Protests Mount
VENEZUELA: To Run Six Flights to Return Migrants from Ecuador
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A R G E N T I N A
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GPAT COMPANIA: Moody's Rates AR$500MM Sr. Unsec. Debt B1
--------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo S.A., has
assigned a B1 global local currency senior debt rating and a
Aa3.ar national scale local currency debt rating to GPAT Compania
Financiera S.A.U.'s XXXIII expected series issuance. The notes
will be issued in up to four tranches, A, B, C and D, which will
be due in 6, 9, 12 and 18 months respectively, in an aggregate
amount of up to ARS 500 million. The ratings have a stable
outlook.
The following ratings were assigned to GPAT Compan°a Financiera
S.A.U.:
AR$500 million Senior Unsecured Debt Issuance:
B1 Global Local Currency Debt Rating; Stable Outlook
Aa3.ar Argentina National Scale Local Currency Debt Rating;
Stable Outlook
RATINGS RATIONALE
GPAT's ratings reflect the entity's fundamentals, which remain
adequate despite current recessionary conditions in Argentina and
very high inflation rates, which have led to a deterioration in
capitalization, profitability, and asset quality in 2018. The
ratings also incorporate the high probability of support from the
company's ultimate parent, Banco do Brasil S.A. (BB, Ba2 stable,
ba2) in an event of stress.
The company's earnings fell sharply in the first nine months of
2018, with net income to tangible assets dropping to 1.3% from
4.9% at the end of 2017, as a result of increased funding costs
following the spike in Argentina's benchmark interest rate in mid-
2018. Earnings were also affected by a decline in loan
origination, which limited the company ability to pass these
higher costs through to borrowers. In the first nine month of
2018, the company's cost of funding jumped 52.7% compared to the
same period in 2017, while interest income remained flat. With
interest rates expected to remain high, the entity's strong
dependence on private institutional and bank funding will continue
to challenge its financial fundamentals.
Moreover, despite declining in the third quarter, problem loans
stood at 2.7% of gross loans in September 2018, above both the
industry's average of 2.5% and the entity's historic average of
1.5% between 2015 and 2017. While weak economic growth will
continue to pressure GPAT's asset risk, the high granularity of
the company's loan book, healthy reserve coverage and strong
collateralization of its portfolio will help mitigate any
deterioration in asset quality.
Although the company's capital levels have also declined sharply
in recent years, as a result of strong loan growth, they remain
adequate to mitigate rising asset risks and diminishing earnings.
Moreover, Moody's expects capital levels to stabilize with the
contraction of its loan book.
The ratings also consider refinancing risks related to the
company's heavy reliance on short-term market funding and its very
low levels of liquidity, both characteristic of captive auto
lenders. Market funds total a high 73% of tangible banking assets,
and roughly 80% of GPAT's outstanding debts mature in next 12
months. However, the potential to start raising deposits could
help mitigate these risks by increasing its funding granularity
and giving it access to a large pool of investors. In addition,
the moderate loan origination expected for 2019 will reduce the
company's funding needs. Deposits could also help reduce the
company's funding costs, and hence alleviate pressure on its
earnings.
GPAT's ratings also take into consideration the links between the
company and its direct shareholder, Banco Patagonia S.A. (Ba3
stable, b2), including the close operational interconnections and
GPAT's strategic importance to the bank's operations. Between 2015
and 2017, GPAT directly contributed to roughly 8% of Patagonia's
total earnings and also generated significant cross selling
opportunities for the bank, which focuses on retail banking
services. Although owned by Patagonia since 2009, GPAT grants
loans for the acquisition of new and used cars sold by the dealers
of General Motors in Argentina. Targeting medium and low income
borrowers, GPAT finances approximately 80% of GM's financed new
vehicles sales.
Consequently, GPAT's B1 deposit rating incorporates one notch of
uplift to reflect the high probability of support from Banco
Patagonia's parent, Banco do Brasil S.A. (BB, Ba2 stable, ba2) in
an event of stress. GPAT's Argentine national scale local currency
deposit rating of Aa3.ar is the lower of two alternatives on the
national scale corresponding to its B1 global scale rating (GSR)
and considers its monoline business profile and its strong
correlation with economic cycles. The foreign currency deposit
ratings of B3 and Baa1.ar are constrained by Argentina's country
ceiling for foreign currency deposits.
The stable outlook considers Moody's expectations that capital
levels will stabilize while any further deterioration in
profitability and asset quality will remain limited. Moreover, if
the deterioration of the company's fundamentals exceeds
expectations, it will continue to benefit from strong support from
its ultimate parent.
WHAT COULD CHANGE THE RATING -- DOWN/UP
Upward pressure on GPAT's ratings is limited at this point given
the recent deterioration in its fundamentals and the challenging
operating environment. Moreover, its BCA is currently at the same
level as Argentina's government bond rating, which has a stable
outlook. Consequently, even if the company's earnings, capital and
asset quality metrics and/or Argentina's operating environment
improve, its BCA would not be upgraded unless Argentina's
sovereign rating were upgraded as well.
Similarly, while further deterioration of GPAT's earnings,
capital, and/or asset quality in the coming quarters, or
difficulty in rolling over its debts as they mature, could put
downward pressure on its BCA, the deposit and debt ratings would
not be affected because they would continue to receive uplift from
parental support. Hence, only a severe deterioration of GPAT's
financial fundamentals, or a downgrade of Banco do Brasil, would
put downward pressure on its ratings.
RATING METHODOLOGY
The principal methodology used in these ratings was Banks
published in August 2018.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Secrecy Has Shrouded Producers Over Bird Flu
----------------------------------------------------------------
Dominican Today reports that a veil of secrecy has shrouded
Dominican Republic's poultry producers over the outbreak of bird
flu detected in northern Espaillat province, on fear of stating a
position after Agriculture minister Osmar Ben°tez confirmed its
presence in that area.
Agriculture Ministry said its officials and poultry sector
representatives met to establish a protocol to deal with the cases
and contain the virus, according to Dominican Today. "We have
already defined a work plan in that sense and we want to clarify
that we have a team of technicians working on the eradication of
the outbreak," the report notes.
Poultry sector sources quoted by Diario Libre affirm that there
are more than nine million laying hens, of which 60,000 are under
observation in Espaillat province due to the outbreak detected in
the towns of Corozo and Quebrada Honda, the report relays.
Demand
While the internal normal demand is around 17.3 million chickens
per month, it can peak to 17.8 million, the report discloses.
Recently the sector was producing 19 million chickens per month,
the report adds.
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J A M A I C A
=============
CIBONEY GROUP: Continues in The Red
-----------------------------------
RJR News reports that listed company Ciboney Group continues to
operate in the red.
It suffered a J$2.3 million loss during the six months to November
2018, according to RJR News. In the previous year, it reported a
J$2.5 million loss.
Based in Kingston, Jamaica, Ciboney Group Limited was involved in
the acquisition, development, and letting of resort properties.
Ciboney Group Limited is a subsidiary of Crown Eagle Life
Insurance Company Limited.
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M E X I C O
===========
CEMEX SAB: Cabrera New Co. President in the Dominican Republic
--------------------------------------------------------------
Dominican Today reports that Jose Antonio Cabrera will assume
starting Feb. 1, the CEMEX presidency for the Dominican Republic,
Puerto Rico and Haiti, replacing Alejandro Ramirez Cantu, who was
appointed president of the company in Colombia.
Mr. Cabrera, who served as Vice President of Planning Strategy of
CEMEX Egypt, as well as Vice President of Planning Strategy of the
AMEA Region of CEMEX, which includes Asia, the Middle East and
Africa, has worked at the company for 19 years, according to
Dominican Today.
"At CEMEX I have had the opportunity to play different roles,
which they have allowed me an integral understanding of the
company and the various markets where we operate," said Mr.
Cabrera, who joined the Mexico-based transnational in 2000, the
report notes.
As reported in the Troubled Company Reporter-Latin America on
March 16, 2018, Fitch Ratings has affirmed CEMEX, S.A.B. de C.V.'s
(CEMEX) Long- Term Issuer Default Rating (IDR) at 'BB-'. Fitch has
also affirmed the company's National Scale Long-Term Rating at
'A(mex)' and affirmed the company's National Scale Short-Term
rating at 'F1(mex)'. The Rating Outlook remains Positive.
======================
P U E R T O R I C O
======================
OLIVER C&I: Claims in Suit vs. Carolina Developers, Narrowed
------------------------------------------------------------
Bankruptcy Judge Mildred Caban Flores granted in part and denied
in part Defendants' motion to dismiss the case captioned OLIVER C
& I CORP. Plaintiff, v. CAROLINA DEVELOPERS ASSOCIATES S. EN C.
POR A., S.E., ET ALS., Defendants, Adversary Case No. 17-00166
(MCF) (Bankr. D.P.R.).
Plaintiff and Debtor Oliver C & I Corp., filed an amended
complaint against its partners and other non-creditor third
parties to claim partnership distributions as property of the
estate. The Defendants filed a renewed motion to dismiss or
abstain ("Second Motion to Dismiss"). In it, they request that the
Court dismiss the amended complaint on all counts based on this
court's lack of jurisdiction to interpret the partnership
agreements over which the Debtor alleges a breach. The Defendants
also move to dismiss certain counts based on their failure to
state a claim for relief. Alternatively, they request that the
Court abstain from hearing all counts in the amended complaint.
The Debtor's amended complaint has nine counts that it classified
as either core or non-core proceedings. Counts 1 through 4 are
collection of money actions that the Debtor claims against the
partnerships for disputed partnership distributions. The Debtor
identified these as non-core. Next, the Debtor raises two actions
in count 5: (1) declaratory judgment to determine that the unpaid
distributions are property of the estate ("count 5(a)"); and (2)
declaratory judgment regarding the partners' violation of
fiduciary duties ("count 5(b)"). Count 6 is an action to avoid as
fraudulent certain transfers conducted by the partnerships. Count
7 is an action for turnover of property of the estate regarding
the disputed unpaid distributions. The Debtor classified counts 5
through 7 as core matters. Count 8 is for attorneys' fees and
costs (which the Debtor classified as a non-core matter). The
Debtor added a ninth count to preserve a cause of action. This is
not a cause of action.
The Defendants' Second Motion to Dismiss reiterates most of the
original arguments raised in its first dismissal motion. The
Defendants disagree as to the Debtor's designation of counts as
core in the amended complaint because according to them all counts
are non-core. They also take issue with count 5(b), a subpart
contained in the fifth cause of action for a determination of
fiduciary violations and liabilities under local law, and with the
sixth cause of action for fraudulent transfers under 11 U.S.C.
section 548 as well. Defendants move the Court to dismiss all
causes of action, pursuant to Fed. R. Civ. P. 12(b)(1) & (b)(6).
In the alternative, Defendants also requested abstention as to all
counts in the amended complaint.
Counts 1 through 4 are styled as collection of moneys actions
against the Defendant partnerships. An action to collect monies
owed arises from substantive local law. Under Puerto Rico law, for
a collection of moneys action, the plaintiff must show that
defendant has an outstanding obligation which is due, liquid and
payable. The Debtor may proceed with its collection of moneys
actions against the partnerships should the distributions be
determined property of the estate. A collection of moneys action
is a non-core matter over which the Court may enter proposed
findings of fact and conclusions of law. It is related to the
administration of the bankruptcy case because any collected
distributions will go towards funding the plan of reorganization
and paying priority creditors.
Count 7 seeks turnover of estate property under 11 U.S.C. section
542. A turnover proceeding is one to compel the debtor or a third
party to deliver to the trustee property that belongs to the
bankruptcy estate. The obligation of turnover applies only to
"property that the trustee may use, sell, or lease under section
363 of this title." "A turnover action can only be considered a
core proceeding when the purpose of the proceeding is to obtain
the turnover of property or the collection of a matured debt,
rather than the creation, recognition, or liquidation of a debt.
When a bona fide dispute exists as to liability involving state
law, then the proceeding is not core." Therefore, count 7 for
turnover of property is dependent on a determination that the
unpaid distributions are property of the estate. At this juncture
of the proceedings, the Court cannot dismiss count 7.
In sum, the Court the Court grants the Second Motion to Dismiss or
to Abstain in part and denies it in part. Accordingly, count 6 for
fraudulent transfers is dismissed for failure to state a plausible
claim for relief, pursuant to Fed. R. Civ. P. 12(b)(6). The Second
Motion to Dismiss is denied as to counts 1 through 5(a) and 7
through 8. However, with respect to counts 1 through 4 and count
8, the Court will submit to the District Court its proposed
findings of fact and conclusions of law regarding these non-core
claims because Defendants did not consent to their final
adjudication. The Court will abstain from resolving the
partnership fiduciary violation claim included in count 5(b),
pursuant to 28 U.S.C. section 1334(c)(1).
A copy of the Court's Opinion and Order dated Dec. 28, 2018 is
available at https://bit.ly/2HqF6ZK from Leagle.com.
OLIVER C & I CORP, PLAINTIFF, Plaintiff, represented by WILLIAM J.
ALEMANY, C. CONDE & ASOC, CARMEN D. CONDE TORRES --
condecarmen@condelaw.com -- -- NELSON ROBLES DIAZ, NELSON ROBLES
DIAZ LAW OFFICES PSC & LUISA S. VALLE CASTRO --
ls.valle@condelaw.com -- C. CONDE & ASSOCIATES.
CAROLINA DEVELOPERS ASSOCIATES S. EN C. POR A., S.E., DEFENDANT,
MARINA DEVELOPERS (CAROLINA) GP, INC., DEFENDANT, MERCANTIL
MAYAGUEZ ASSOCIATES, S. EN C. POR A., S.E., DEFENDANT, MERCANTIL
MAYAGUEZ GP, INC., DEFENDANT, MERCANTIL SAN PATRICIO ASSOCIATES,
S. EN C. POR A., S.E., DEFENDANT, MERCANTIL SAN PATRICIO GP, INC.,
DEFENDANT, MONACILLOS CENTER ASSOCIATES S. EN C. POR A., S.E.,
DEFENDANT, MONACILLOS CENTER GP, DEFENDANT, D Group Commercial
Equities Associates S. en C., por A., S.E., DEFENDANT, D GROUP
CAPITAL CORPORATION, DEFENDANT, D GROUP EQUITY HOLDING ASSOCIATES
S. EN C. POR A., DEFENDANT, SAN JOSE BUILDING ASSOCIATES S. EN C.
POR A., S.E., DEFENDANT, PUERTA DEL CONDADO ASSOCIATES S. EN C.
POR A., S.E., DEFENDANT, MILLENIUM PARK PLAZA ASSOCIATES, S. EN C.
POR A., S.E., DEFENDANT, METRO CENTER ASSOCIATES, S. EN C. POR A.,
S.E., DEFENDANT & UNKNOWN ENTITIES, DEFENDANT, Defendants,
represented by WIGBERTO LUGO MENDER, LUGO MENDER & CO.
About Oliver C & I Corp.
Oliver C & I Corp., based in Guaynabo, Puerto Rico, is a profit
corporation organized under the laws of Puerto Rico. It was
incorporated on Dec. 17, 2003. The Debtor is wholly owned by
Maria del Carmen Magraner Folch. The Debtor's main assets are
participations in certain limited partnerships and the
corporations which serve as general partners of the limited
partnerships.
The Debtor filed a Chapter 11 petition (Bankr. D.P.R. Case No.
16-08311) on Oct. 17, 2016. The petition was signed by Max
Olivera, vice-president and treasurer. The case is assigned to
Judge Mildred Caban Flores. In its petition, the Debtor indicated
$29.94 million in total assets and $1.06 million in total
liabilities.
The Debtor is represented by Carmen D. Conde Torres, Esq., at C.
Conde & Assoc. The Debtor employed Doris Barroso Vicens of RSM
Puerto Rico as its accountant; and Aurora Oti-Yvonnet of Villafane
& Oti, Certified Public Accountants, PSC, as its external auditor.
PERFECT BROW: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Eight affiliated companies that have filed voluntary petitions
seeking relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Perfect Brow Art, Inc. 19-01811
3330 Skokie Valley, Suite 200
Highland Park, IL 60035
P.B. Art Franchise, Inc. 19-01818
Perfect Brow Florida, Inc. 19-01820
Perfect Brow New York, Inc. 19-01821
Perfect Brow Puerto Rico, Inc. 19-01824
Ooh La La Beauty Bar Franchise, Inc. 19-01825
Locks Rock, Inc. 19-01826
Perfect Brow Oakland, Inc. 19-01828
Business Description: The Debtors operate boutiques that offer
eyebrow, facial and body threading; eyelash
extensions; and henna tattoos nationwide.
On the web: http://www.browart23.com/
Chapter 11 Petition Date: January 22, 2019
Court: United States Bankruptcy Court
Northern District of Illinois (Eastern Division)
Judge: Hon. Carol A. Doyle
Debtors' Counsel: Harold D. Israel, Esq.
GOLDSTEIN & MCCLINTOCK LLLP
111 W. Washington Street, Suite 1221
Chicago, IL 60602
Tel: 312 337-7700
E-mail: haroldi@restructuringshop.com
haroldi@goldmclaw.com
Perfect Brow Art's
Estimated Assets: $1 million to $10 million
Perfect Brow Art's
Estimated Liabilities: $1 million to $10 million
P.B. Art Franchise's
Estimated Assets: $0 to $50,000
P.B. Art Franchise's
Estimated Liabilities: $100,000 to $500,000
The petitions were signed by Elizabeth Porikos-Gorgees, president
and sole shareholder.
P.B. Art Franchise lists Advitam IP, LLC as its sole unsecured
creditor holding a claim of $16,642. A full-text copy of the
petition is available for free at:
http://bankrupt.com/misc/ilnb19-01818.pdf
A full-text copy of Perfect Brow Art's petition containing, among
other items, a list of the Debtor's 20 largest unsecured creditors
is available for free at:
http://bankrupt.com/misc/ilnb19-01811.pdf
SEARS HOLDINGS: Hearing on $5.2-Billion Sale to ESL on Feb. 4
-------------------------------------------------------------
Sears Holdings Corp Chairman Eddie Lampert won a bankruptcy
auction to buy the once iconic U.S. retailer after beefing up its
offer to $5.2 billion.
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing on Feb. 4, 2019, at 10:00 a.m. (ET) to
consider approval of the sale to Lampert's ESL Investments, Inc.
Objections to the sale are due Jan. 26 at 4:00 p.m.
ESL will acquire substantially all of the Company's assets,
including the "Go Forward Stores" on a going-concern basis for
approximately $5.2 billion. Provided the closing conditions are
satisfied, the transaction is expected to close on or about
February 8, 2019.
The Restructuring Committee of the Board of Directors said: "We
are pleased to have reached a deal that would provide a path for
Sears to emerge from the chapter 11 process. Importantly, the
consummation of the transaction would preserve employment for tens
of thousands of associates, as well as the relationships with many
vendors and suppliers who provide Sears with goods and services.
We would like to thank our dedicated associates, vendors and
partners for their continued support through this process, and
most importantly the members and customers we have the privilege
to serve."
On November 21, 2018, the Debtors filed a notice soliciting bids
for substantially all assets, including the Debtors' retail stores
or groups of stores on a going concern or liquidation basis and
individual target businesses, including Sears Home Services, the
business unit PartsDirect, Sears Auto Centers, and Innovel. The
Retail Stores together with the Target Businesses are called the
"Global Assets".
On January 14, 2019, the Debtors commenced an auction for the sale
of the Global Assets. As announced on the record of the Auction,
the Debtors, as directed by the Restructuring Committee,
determined that the offer submitted by Transform Holdco, LLC,
established by ESL Investments to acquire all or substantially all
of the Global Assets, was the highest or best offer for the Global
Assets.
Terms of Sale
According to court filings, the material terms of the sale are:
* Sellers: Sears Holdings Corporation and each of its
subsidiaries party to the Asset Purchase Agreement.
* Buyer: Transform Holdco LLC
* Acquired Assets: The successful bid involves the purchase of
substantially all of the Assets of the Company, including: (1) A
go-forward retail footprint of approximately 425 retail stores
under the "Sears" and "Kmart" brands (the "Retail Stores") and
certain other owned and leased real estate interests; and (2) The
Target Businesses, including, among others, businesses conducted
at the Retail Stores, the "Sears Auto Centers" brand, the
"PartsDirect" brand, the "ServiceLive" brand, the "Sears Home
Services" brand, the "Wally" brand, the "Kenmore" and "Diehard"
businesses, the "Monark Premium Appliance Co." brand, a home
delivery and retail installation business, various websites, the
"Shop Your Way" membership program, and the "Sears Home
Improvement" brand (in certain circumstances only).
* Purchase Price: The Successful Bid includes the following
consideration (in connection with which, the Buyer has paid a
Deposit Amount of $120,000,000):
a. A "Closing Payment Amount" equal to
(i) $1,408,450,000; plus
(ii) an amount in cash equal to the store cash (in an
amount not to exceed $17,000,000) as of 12:00 a.m. New York City
time on the closing date; plus
(iii) the credit bid release consideration of
$35,000,000; less
(iv) the aggregate amount of (A) the credit bid relating
to the outstanding obligations under the "FILO Facility" plus (B)
the credit bid in an aggregate amount equal to $433,450,000
(related to the "Second Lien Term Loan", the "Second Lien Line of
Credit Facility" and the "Second Lien PIK Notes"), plus (C) the
"FILO Facility Buyout Amount" (if any);
b. Subject to Bankruptcy Court approval, a credit bid
pursuant to Section 363(k) of the Bankruptcy Code of:
(i) all outstanding obligations held by Buyer and its
Affiliates as of the Closing Date under the IP/Ground Lease Term
Loan Facility (together with the IP/Ground Lease Buyout Amount,
approximately $231,000,000);
(ii) all outstanding obligations held by Buyer and its
Affiliates as of the Closing Date under the FILO Facility
(together with the FILO Buyout Amount, approximately
$125,000,000);
(iii) obligations held by Buyer and its Affiliates as of
the Closing Date under the Real Estate Loan 2020 (together with
the Real Estate Loan 2020 Buyout Amount, in an amount equal to
$544,000,000); and
(iv) obligations held by Buyer and its Affiliates as of
the Closing Date in an aggregate amount equal to $433,450,000
under (x) the Second Lien Term Loan; (y) the Second Lien Line of
Credit Facility; and (z) the Second Lien PIK Notes.
c. Cash in the amount of the outstanding obligations owed to
lenders other than Buyer or its Affiliates as of the Closing Date
under (i) the IP/Ground Lease Term Loan Facility (the "IP/Ground
Lease Buyout Amount"), (ii) the FILO Facility (the "FILO Facility
Buyout Amount"), and (iii) the Real Estate Loan 2020 (the "Real
Estate Loan 2020 Buyout Amount"), unless such lender(s) provide
written confirmation to the Sellers that such cash payment and the
obligations owed to lenders by the Seller under the IP/Ground
Lease Term Loan Facility, the FILO Facility or the Real Estate
Loan 2020, as applicable, are permanently waived and discharged
against the Sellers;
d. The "Securities Consideration" which means debt or equity
securities in Buyer, in an amount and form to be determined by
Buyer in an amount and form reasonably acceptable to Buyer,
including as to subordination;
e. The "Junior DIP Consideration" consisting of evidence
reasonably satisfactory to the Sellers that all obligations
(including any accrued and unpaid interest) of the Sellers with
respect to $350,000,000 aggregate principal amount outstanding
under the Junior DIP Term Loan Agreement (or such lesser aggregate
principal amount outstanding thereunder to the extent that the
junior DIP facility under the Junior DIP Credit Agreement is not
fully drawn as of the Closing Date) have been satisfied and
released;
f. The "L/C Facility Consideration" consisting of evidence
reasonably satisfactory to the Sellers that all obligations of
Sellers with respect to amounts outstanding or commitments under
the Citi L/C Facility (but in no event with respect to a principal
amount of greater than $271,000,000) have been satisfied and
released, including as contemplated by the Cyrus Financing; and
g. The assumption of certain of the Sellers' liabilities
* Employees: The Asset Purchase Agreement provides that Buyer
will make offers of ongoing employment to approximately 45,000
employees.
* New ABL Facility: The obligations owed under the DIP Credit
Agreement will be refinanced with $850,000,000 in cash to be
funded with the proceeds of a new ABL facility by and among the
Buyer, Bank of America, N.A., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Citigroup Global Markets, Inc. and Royal Bank
of Canada and the other lenders party from time to time thereto.
* Roll-Over of Senior Debt: The Asset Purchase Agreement
contemplates a roll-over of $621,000,000 of senior indebtedness
(including $350,000,000 of the amounts owed under the Junior DIP
Term Loan and approximately $271,000,000 of the Citi L/C Facility)
into exit facilities.
* Bankruptcy Milestones: The Parties will use reasonable best
efforts to comply with the following milestones:
a. To obtain entry of the Approval Order on or before Feb. 8,
2019; and
b. To close the Transactions on or before Feb. 19, 2019.
The Buyer can be reached at:
Kunal S. Kamlani
Harold Talisman
Transform Holdco LLC
c/o ESL Partners, Inc.
1170 Kane Concourse, Suite 200
Bay Harbor Islands, FL 33154
Facsimile: (305) 864-1370
E-mail: kunal@eslinvest.com
harold@eslinvest.com
The Buyer's attorneys:
Christopher E. Austin, Esq.
Benet J. O'Reilly, Esq.
Sean A. O'Neal, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
E-mail: caustin@cgsh.com
boreilly@cgsh.com
soneal@cgsh.com
A copy of the Asset Purchase Agreement is available at:
http://bankrupt.com/misc/Sears_ESL_APA.pdf
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 and M-III
Partners is serving as restructuring advisor. Aebersold, Managing
Director, and Levi Quaintance, Vice President of Lazard Freres &
Co. LLC serve as investment banker to Holdings. DLA Piper LLP is
the real estate advisor. Prime Clerk is the claims and noticing
agent.
SEARS HOLDINGS: PBGC Steps in to Oversee Two Pension Plans
----------------------------------------------------------
The Pension Benefit Guaranty Corporation said Jan. 18, 2019, that
it is taking steps to assume responsibility for Sears Holdings
Corporation's two defined benefit pension plans, which cover about
90,000 people.
Sears Holdings, which operates through its subsidiaries, which
include Sears, Roebuck and Co. and Kmart Corporation, filed for
Chapter 11 protection in October 2018.
PBGC is stepping in to become responsible for the company's two
pension plans because it is clear that Sears' continuation of the
plans is no longer possible.
"Our mission is to protect the retirement income of plan
participants and their families," said PBGC Director Tom Reeder.
"When it's no longer possible for plan sponsors to maintain their
pension plans, PBGC plays the crucial role of providing lifetime
retirement income for the workers and retirees."
PBGC has worked with Sears for several years to improve funding
for the company's plans. PBGC estimates that the Sears' plans are
underfunded by $1.4 billion leaving them 64 percent funded.
PBGC is seeking to terminate the plans as of Jan. 31, 2019. The
agency will become responsible for the pension plans when Sears
agrees or a court orders plan termination.
Until PBGC assumes responsibility for the pension plans, they
remain the responsibility of Sears Holdings Corporation. Retirees
will continue to receive benefits without interruption, and future
retirees can apply for benefits as soon as they are eligible.
Sears pension plan participants with questions about their
benefits should contact Sears Holdings Pension Service Center at
1-800-953-5390, Monday through Friday 8:00 a.m. to 6:00 p.m.,
Central Time.
PBGC covers Sears' two pension plans under its Single-Employer
Insurance Program. Benefit accruals under the plans have been
frozen since 2005. The PBGC expects that its guarantees will
cover the vast majority of pension benefits earned under these
plans.
Termination of the Sears pension plans will not have a significant
effect on PBGC's financial statements because the claim was
previously included in the agency's fiscal year 2017 and 2018
financial statements, in accordance with generally accepted
accounting principles.
About PBGC
The Pension Benefit Guaranty Corporation "http://www.PBGC.gov/
-- protects the pension benefits of nearly 37 million Americans in
private-sector pension plans. The agency operates two separate
insurance programs -- one covering pension plans sponsored by a
single-employer and another covering multiemployer pension plans,
which are sponsored by more than one employer and maintained under
collective bargaining agreements. PBGC is currently responsible
for the benefits of about 1.5 million people in failed pension
plans. PBGC receives no taxpayer dollars. Its operations are
financed by insurance premiums, investment income, and, for the
Single-Employer Program, assets and recoveries from failed
single-employer plans.
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 and M-III
Partners is serving as restructuring advisor. Aebersold, Managing
Director, and Levi Quaintance, Vice President of Lazard Freres &
Co. LLC serve as investment banker to Holdings. DLA Piper LLP is
the real estate advisor. Prime Clerk is the claims and noticing
agent.
SEARS HOLDINGS: Taps Deloitte & Touche as Auditor
-------------------------------------------------
Sears Holdings Corporation and its debtor-affiliates received
approval from the U.S. Bankruptcy Court for the Southern District
of New York to employ Deloitte & Touche LLP as their auditor and
advisor.
The firm will provide audit services to Sears Holdings and certain
affiliates and subsidiaries of the company. These services
include an audit of Sears Holdings' financial statements for the
year ending February 2, 2019 pursuant to an engagement letter
dated
April 23, 2018.
Deloitte & Touche estimated that its fees for the audit services
under the engagement letter will be approximately $3.935 million,
to be billed in 10 equal installments on a monthly basis. As of
the petition date, Deloitte & Touche received four of the 10
installments in the total amount of $1.574 million.
For audit services that are not covered by the April 23 engagement
letter, the firm will charge these hourly fees:
Professional Level Hourly Rates
------------------ ------------
Partner/Principal/ $550 - $600
Managing Director
Senior Manager $450 - $500
Manager $350 - $400
Senior $250 - $300
Staff $175 - $200
For services related to the examination of Sears Holdings'
description and design of the system related to the Financial
Reporting and Transaction Processing Services and related General
Computer Controls, Deloitte & Touche agreed to charge fees of
approximately $310,000, of which $160,000 was paid to the firm
prior to the petition date.
Aside from the audit services, Deloitte & Touche will also provide
advisory services, which include (i) an evaluation of proposed
divestitures of certain business units of Sears Holdings; (ii)
software asset management and software license analysis services;
(ii) accounting advisory services related to restructuring; and
(iv) accounting advisory services in connection with Phase II
through Phase III of Sears Holdings' assessment of the New Revenue
Standard and Phase II through Phase V of their assessment of the
New Leases Standard.
For accounting advisory services related to restructuring,
Deloitte & Touche will charge these hourly fees:
Professional Level Hourly Rates
------------------ ------------
Partner/Principal/ $775 - $925
Managing Director
Senior Manager $625
Manager $525
Senior $450
Staff $295
Meanwhile, the firm agreed to charge fees of approximately
$850,000 for services related to Sears Holdings' assessment of the
New Revenue Standard and New Leases Standard. Prior to the
petition date, the firm received $390,000 in fees.
Jim Berry, a partner at Deloitte & Touche, attests that the firm
is a "disinterested person" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jim Berry
Deloitte & Touche
111 S. Wacker Drive
Chicago, IL 60606-4301
Tel: +1 312 486 1000
Fax: +1 312 486 1486
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 and M-III
Partners is serving as restructuring advisor. Aebersold, Managing
Director, and Levi Quaintance, Vice President of Lazard Freres &
Co. LLC serve as investment banker to Holdings. DLA Piper LLP is
the real estate advisor. Prime Clerk is the claims and noticing
agent.
=================
V E N E Z U E L A
=================
VENEZUELA: Defaulted Bonds Soar as Anti-Maduro Protests Mount
-------------------------------------------------------------
Justin Villamil at Bloomberg News reports that Venezuelan bond
prices jumped to the highest in six months as large anti-
government protests throughout the country spurred speculation
that President Nicolas Maduro's regime could be coming closer to
an end.
As Venezuelans took to the streets, the country's $4 billion of
defaulted notes due in 2027 surged 2.4 cents to 30.7 cents on the
dollar, the highest price since June, according to Bloomberg News.
Other overseas notes from the government and state-owned oil
company joined along in a broad rally, Bloomberg News says.
The hope among investors is that popular dissatisfaction with
Maduro will eventually lead to his removal from office and the
ascension of a new government that will be able to boost oil
production and get the economy back on track, paving the way for a
restructuring deal after $9 billion of defaults, Bloomberg News
relays. Creditors have been stuck in limbo since November 2017,
when Maduro said he would suspend debt payments amid an economic
crisis, while U.S. sanctions prevented any sort of renegotiation
that would pave the way for payments to resume, Bloomberg News
adds.
The report notes that the opposition has rallied behind the call
of National Assembly leader Juan Guaido, who has invoked the
constitution as he pushed for restoring democratic order after
Maduro began a new term widely deemed to be illegitimate due to
fraudulent elections.
"The opposition is now united around a new leader with a more
radical strategy," said Siobhan Morden, the head of Latin America
fixed-income strategy at Nomura in New York, Bloomberg News
relates. "It may soon be reaching a breaking point while the
cashflow stress continues to worsen and the political crisis
morphs into a social crisis."
Morden says the opposition's new strategy distinguishes this time
from previous protest waves in 2014 and 2017, and could have more
chances of succeeding, Bloomberg News discloses. Venezuelan bonds
traded in a range for most of last year as investors mostly sat on
the sidelines, but renewed speculation that the Maduro regime
could be toppled is enticing some to come back.
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'
VENEZUELA: To Run Six Flights to Return Migrants from Ecuador
-------------------------------------------------------------
The Latin American Herald reports that the Venezuelan regime has
added one flight to the five it already had scheduled to help
return its citizens to Caracas from Ecuador as part of the "Return
to the Homeland" project, the charge d'affaires at the country's
embassy in this capital, Pedro Sassone, said.
Mr. Sassone told EFE that three flights will make the trip back to
Venezuela and another flight has been added to the two already
scheduled as a result of the "emergency situation" arising from
the reaction in certain sectors of local society to the murder of
an Ecuadorian woman by a Venezuelan in the northern city of
Ibarra, according to The Latin American Herald.
Arriving in Quito from Ibarra and the Rumichaca zone, on the
border with Colombia, were about 80 people and they were taken to
the Venezuelan Embassy, from where they departed on buses for the
airport, the report relays.
It is expected that two flights will leave Quito and one will
depart from Guayaquil, each carrying about 85 passengers, although
the planes have the capacity to carry 90 people, the report says.
Dozens of Venezuelans gathered at their embassy to have their
suitcases weighed -- since they cannot exceed 20 kg (44 pounds) --
their documents checked and to board the buses, the report
discloses.
There were mothers with children, many wearing overcoats and
wrapped in blankets to protect themselves against the morning cold
in the Andean city located 2,850 meters (9,350 feet) above sea
level, the report relays.
The buses depart from the Embassy, located in northern Quito, for
the Mariscal Sucre international airport, located about 40 minutes
from Quito, where aircraft made available by the Nicolas Maduro
regime await the Venezuelans, the report notes.
Besides Ecuador, the Return to the Homeland program, which was
launched last year, is being carried out in Peru, Colombia, the
Dominican Republic, Chile and Brazil, among other countries, the
report relays.
"We're talking about 18,000 people on the international level" who
have returned, Mr. Sassone said, emphasizing that none of the
migrants is being barred from migrating again if they decide to do
so, the report notes.
In Caracas, the Venezuelan regime is assembling buses to transport
the returning migrants to their hometowns, the report says.
After the murder of the Ecuadorian woman in front of a group of
police, a killing that was recorded on video and went viral
online, a Venezuelan man with a criminal record was arrested and
he is now being held in a rehabilitation center in the city of
Latacunga, the report relays.
Two days after the crime, the Ecuadorian government announced that
it will ask Venezuelans to provide their criminal records, if any,
a decision that concerns the migrant associations of the latter
nation due to the difficulty of obtaining such an official
document, the report notes.
Juan Sebastian Roldan, the personal secretary for Ecuadorian
President Lenin Moreno, said that authorities were still working
out the details for implementing that requirement, which must be
carried out by the Interior and Foreign Ministries, 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'
***********
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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Tuesday's edition of the TCR-LA features a list of companies with
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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
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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
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
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balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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* * * End of Transmission * * *