/raid1/www/Hosts/bankrupt/TCRLA_Public/190129.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
Monday, January 29, 2019, Vol. 20, No. 20
Headlines
A R G E N T I N A
CUOTAS CENCOSUD: Moody's Rates Class C Debt Caa3(sf)
B A R B A D O S
BARBADOS: High Murder Rate Could Hurt the Economy
B R A Z I L
EMBRAER SA: Signs Agreement to Sell Commercial Division to Boeing
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: CDEEE Owes Power Companies US$600 Mil.
N I C A R A G U A
NICARAGUA: Business Leaders Deny Plotting Coup
NICARAGUA: Moody's Affirms B2 LT Issuer Rating, Outlook Now Neg.
P U E R T O R I C O
OPTICAL HOLDINGS: Seeks to Extend Exclusivity Period to March 24
OPTICAL HOLDINGS: Taps Sun Mergers as Business Broker
LUBY'S INC: Releases Prelim. Voting Results from Annual Meeting
V E N E Z U E L A
VENEZUELA: Maduro Calls for Talks, Discloses War Games
- - - - -
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A R G E N T I N A
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CUOTAS CENCOSUD: Moody's Rates Class C Debt Caa3(sf)
----------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has rated
Fideicomiso Financiero Cuotas Cencosud Serie IV. This transaction
will be issued by TMF Trust Company S.A. acting solely in its
capacity as issuer and trustee.
This credit rating is subject to the fulfillment of contingencies
that are highly likely to be completed, such as finalization of
documents and issuance of the securities. This credit rating is
based on certain information that may change prior to the
fulfillment of such contingencies, including market conditions,
financial projections, transaction structure, terms and conditions
of the issuance, characteristics of the underlying assets or
receivables, allocation of cash flows and of losses, performance
triggers, transaction counterparties and other information
included in the transaction documentation. Any pertinent change in
such information or additional information could result in a
change of this credit rating.
The full rating action for the "Fideicomiso Financiero Cuotas
Cencosud Serie IV" deal is as follows:
- ARS 440,151,668 in Class A Floating Rate Debt Securities
(VDFA), rated Aaa.ar (sf) (Argentine National Scale) and Ba2 (sf)
(Global Scale)
- ARS 14,574,558 in Class B Floating Rate Debt Securities
(VDFB), rated B1.ar (sf) (Argentine National Scale) and Caa2 (sf)
(Global Scale)
- ARS 30,023,591 in Class C Floating Rate Debt Securities
(VDFC), rated Caa2.ar (sf) (Argentine National Scale) and Caa3
(sf) (Global Scale)
- ARS 352,306 in Certificates (CP), rated Ca.ar (sf) (Argentine
National Scale) and Ca (sf) (Global Scale)
RATINGS RATIONALE
The rated securities are payable from the cash flow derived from
the trust assets, which includes a static and amortizing pool of
approximately 301,113 eligible purchases in credit card
installments denominated in Argentine pesos and originated by
Cencosud (Argentina) S.A. ("Cencosud Argentina"), the local
subsidiary of Cencosud S.A. ("Cencosud" Baa3, Negative). Cencosud
is among Latin America's largest retailers, with presence in
Chile, Argentina, Peru, Colombia and Brazil. Only installments
payable after March 1st, 2019 will be assigned to the trust.
The assigned installments pertain to credit cards issued by
Cencosud Argentina. Cencosud credit cardholders can make purchases
in affiliated stores and split the payments in several monthly
installments bearing no interest. The monthly installments are
detailed in the cardholder's monthly credit card statements. Not
all installments due under a given credit card will be assigned to
the trust; a given credit card account may also have other
installments that do not serve as collateral for this transaction.
In this transaction, the minimum payment level of cardholders'
credit card monthly statement will always include 100% of any
installments assigned to the trust and due in that month.
Therefore, the trust will receive the expected cash flows without
any delays as long as the cardholder is considered a performing
obligor.
A reserve fund covering two times the next interest accrual of the
VDFA and VDFB will be funded using collections received on the
pool.
Moody's based the analysis on the following factors: (i) the
strong credit profile of Cencosud and Cencosud Argentina and their
position as key players in the retail sector of Argentina and the
region; (ii) the relatively short expected life of the notes; and
(iii) the strong performance of Cencosud's portfolio.
TRANSACTION STRUCTURE
The VDFA will bear a floating interest rate (BADLAR plus 150 bps).
The VDFA's interest rate will never be higher than 46.0% or lower
than 38.0%. The VDFB will bear a floating interest rate (BADLAR
plus 250 bps). The VDFB's interest rate will never be higher than
47.0% or lower than 39.0%. The VDFC will bear a floating interest
rate (BADLAR plus 350 bps). The VDFC's interest rate will never be
higher than 48.0% or lower than 40.0%.
Overall credit enhancement is comprised of: (i) subordination; ii)
overcollateralization and iii) expense reserve accounts. The
transaction has initial subordination levels of 24.5% for the
VDFA, 22.0% for the VDFB and 16.9% for the VDFC, calculated over
the pool's undiscounted principal balance.
Finally, the transaction has an estimated 38.4% of negative annual
excess spread, before considering losses, taxes or prepayments and
calculated at the interest rate cap for the notes. As mentioned,
the assigned monthly installments do not bear interest. Available
credit enhancement and a relatively short estimated term of 7
months for Class A largely mitigate this risk.
Moody's analyzed the historical performance data of previous
transactions and the dynamic credit card portfolio of Cencosud
Argentina, ranging from January 2015 to November 2018.
The rating agency also analyzed the payment levels in the seller's
overall credit card dynamic portfolio, identifying a payment rate
(monthly payment / monthly balance) averaging 64.4% during the
last twelve months as of November 2018.
In assigning the ratings to this transaction, Moody's assumed a
lognormal distribution of losses for the static securitized pool
with a mean expected loss of 6.3% and a PCE of 15.8% (PCE, or the
portfolio credit enhancement, represents the credit enhancement
consistent with the highest rating achievable -i.e., the local
currency ceiling- in the country). These assumptions were derived
considering the historical performance of Cencosud's loan pools
and prior transactions.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may lead to a downgrade of the ratings include a
downgrade in Argentina's local currency ceiling and an increase in
delinquency levels beyond the level Moody's assumed when rating
this transaction. Although Moody's analyzed the historical
performance data of previous transactions and similar receivables
originated by Cencosud, the actual performance of the securitized
pool may be affected, among others, by the economic activity, high
inflation rates compared with nominal salaries increases and the
unemployment rate in Argentina.
Factors that may lead to an upgrade of the ratings include an
upgrade in Argentina's local currency ceiling and the building of
credit enhancement over time due to the turbo sequential payment
structure, when compared with the level of projected losses in the
securitized pool.
The principal methodology used in these ratings was "Moody's
Approach to Rating Consumer Loan-Backed ABS" published in
September 2015.
===============
B A R B A D O S
===============
BARBADOS: High Murder Rate Could Hurt the Economy
-------------------------------------------------
Caribbean360.com reports that within the first month of the year,
Barbados has recorded a higher murder rate than that of Trinidad
and Tobago and according to economist Jeremy Stephen, a
continuation of this trend could be disastrous for the economic
recovery efforts.
To date, Barbados has recorded eight murders, which puts the
murder rate at 2.8 per 100 thousand, while Trinidad, which has
recorded 32 murders thus far, has a rate of 2.3 per 100 thousand,
according to Caribbean360.com.
Last year, Trinidad and Tobago recorded 516 murders, which
represented a rate per 100 thousand that was five times more than
Barbados, which recorded 28 murders for the same period, the
report notes.
"This is very sobering fact because the way you look at these
figures, the rate for Barbados has to be rounded off to three
persons per 100 000 because you can't have a half of a person. So
we are at three and they [Trinidad and Tobago] are at two. This
could easily change as the year progresses but normally when the
year starts, Barbados is nowhere near Trinidad's murder rate," Mr.
Stephen said in an interview with online newspaper Barbados Today,
the report relays.
The University of the West Indies lecturer warned that the
worrying trend could derail the Government's recent efforts at
restoring investor confidence in the country, the report notes.
"This could really damage investor confidence in the long term.
People believe that Barbados is still a safe place but if this
issue persists it definitely can undermine any efforts to attract
foreign direct investment in any sustainable manner," the report
quoted Mr. Stephen as saying.
He contended that the repercussions were not limited to those on
the outside looking in, noting that the nocturnal entertainment
sector could also suffer as result of growing fears brought on by
increased gun violence, the report relays. Mr. Stephen argued
that because of the possibility of being caught in the crossfire,
Barbadians might decide not to leave the safety of their homes to
go out at night, the report notes.
"From a confidence point of view it could also damage what is
happening on the local side. Persons would not want to go out at
night because they are afraid that people will shoot up the place.
A lot of people are reacting to these murders even though they
don't know the circumstances surrounding them. It seems a little
more intense than the others that we had a year ago. So if this
persists it could really damage the economy and affect people's
confidence to move around," he explained, the report relays.
However, Mr. Stephen made it clear that while he believes that the
trend is worrying, he is by no means suggesting that Barbados is
at crisis stage, as it is less than a month into the year, the
report says.
"We need to bear in mind that the year has only just started and
there is really no need to start getting carried away. However, it
is important to make comparisons to bring the problem into sharp
focus. Every time we hear about Trinidad the story is that they
start each year very hot in terms of murders but it is really
sobering when you place the start of our year in that context," he
explained, pointing out that due Barbados' small population and a
few incidents can easily taint the image of the country, the
report notes.
"Given the size of our population we need to understand that we
cannot afford for this problem to get out of control and we need
to support our law enforcement in every way. I need people to
understand that this is a problem for all Barbadians," he
stressed, adds the report.
===========
B R A Z I L
===========
EMBRAER SA: Signs Agreement to Sell Commercial Division to Boeing
-----------------------------------------------------------------
Agence France-Presse reports that Brazilian aircraft manufacturer
Empresa Brasileira de Aeronautica SA (Embraer) signed an agreement
for the sale of its commercial division to Boeing -- and set the
date for a shareholders meeting to approve the tie-up on February
26.
Despite initial reservations, Brazil's President Jair Bolsonaro
already gave the deal -- which will create a joint entity valued
at $5.2 billion -- his approval earlier this month, according to
Agence France-Presse.
Embraer was privatized in 1994, but Brazil's government retained a
"golden share" that gave it veto power over strategic decisions,
the report notes.
On top of getting shareholders on board, the agreement must also
be approved by regulators, among other things, the report relays.
If all progresses without delay, the companies expect to conclude
negotiations by the end of 2019, the report discloses.
Embraer are exempt from the Boeing tie-up, which was first
announced in July, the report notes.
Under the deal with Boeing, the US company will take 80 percent
control of Embraer's civilian business, putting it in a position
to offer commercial planes with up to 150 seats, the report adds.
About Embraer SA
Headquartered in Brazil, Empresa Brasileira de Aeronautica SA
(Embraer) -- http://www.embraer.com-- is a company engaged in the
manufacture of aircrafts for commercial aviation, executive jet
and defense and government purposes. The Company has developed a
line of executive jets based on one of its regional jet platforms
and launched executive jets in the entry-level, light, ultra-large
and mid-light/mid-size categories, the Phenom 100/300 family, the
Lineage 1000 and the Legacy 450/500 family, respectively. The
Company supplies defense aircraft for the Brazilian Air Force
based on number of aircraft sold, and sells aircraft to military
forces in Europe, Asia and Latin America. In July 2008, the
Company acquired a 40% interest owned by Liebherr Aerospace SAS in
ELEB Equipamentos Ltda (ELEB). ELEB is an aerospace system and
component manufacturer, and its products include landing gear
systems, hydraulics and electro-mechanical sub-assemblies, such as
actuators, valves, accumulators and pylons.
* * *
As reported in the Troubled Company Reporter-Latin America on Aug.
2, 2018, The Latin American Herald said that Brazilian aircraft
maker Empresa Brasileira de Aeronautica SA (Embraer) reported a
net loss in the second quarter as sales declined, financial
expenses rose and the Brazilian currency weakened. The company
posted a loss of $126.5 million in the quarter, after earning a
$61.7 million gain a year before, the company said, according to
The Latin American Herald. Embraer had revenue of $1.26 billion
in the period, a decline from the same period a year earlier, the
report noted.
TCRLA reported in Apr 30, 2018, that a class action against
Embraer was recently dismissed by U.S. District Judge Richard
Berman. The class action, which was brought in federal district
court in New York, alleged that the firm had failed to adequately
disclose the scope and possible financial impact of ongoing
corruption investigations by the DOJ and SEC, harming the
company's investors.
In September 2016, the TCRLA reported that Embraer confirmed that
it would cut nearly 8 percent of its workforce through a voluntary
buyout program, slashing costs amid weak business jet sales and
downsized defense contracts.
The TCRLA further reported that Egan-Jones Ratings Company, in
September 2016, lowered the senior unsecured ratings on debt
issued by Embraer SA to BB+ from BBB-.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: CDEEE Owes Power Companies US$600 Mil.
----------------------------------------------------------
Dominican Today reports that State Electric Utility (CDEEE) Chief
Executive Officer Ruben Jimenez Bichara, revealed that suppliers
are owed around US$600 million and that they expect to reach a
payment agreement.
"Some installments to the debt with suppliers have been made, we
hope that we will reach an agreement to update the outstanding
commitments," the report quoted Mr. Bichara as saying.
The official spoke after his presentation at the 19th annual
Caribbean Energy Conference, which brings together electricity
sector experts and investors of the region, taking place at Hotel
Jaragua, the report notes.
Mr. Jimenez listed the major energy projects being carried out in
the Dominican Republic and noted that construction on the Punta
Catalina power plant, built at a cost of nearly US$2.2 billion, is
over 97% completed, the report relays.
Mr. Jimenez added that the start-up tests will start mid-February
when it's expected to inject up to 224 megawatts to the national
grid, 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.
=================
N I C A R A G U A
=================
NICARAGUA: Business Leaders Deny Plotting Coup
------------------------------------------------
EFE News reports that organizations representing Nicaragua's
business community demanded that the National Police withdraw its
public accusation against them for allegedly participating in the
"failed coup d'etat" of April 2018.
"We demand that the unfounded accusations of the police
authorities be withdrawn immediately," the leaders said in a
statement read by the president of the Cosep Employers Federation,
Jose Adan Aguerri, according to EFE News.
During the reading of the statement in the presence of
journalists, the Cosep office was surrounded by a strong police
contingent, EFE confirmed.
Police accused the businessmen of being "participants in last
April's failed coup d'etat," which is why the force denied them a
permit they had requested to hold a demonstration to express
support finding a solution to the socio-political crisis in
Nicaragua, the report says.
The police statement likewise accused business organizations of
being "promoters, inciters, leaders, in the realization of
blockades (roadblocks)," the report discloses.
The businessmen referred to in the statement are members of Cosep,
the American Chamber of Commerce of Nicaragua and the Nicaraguan
Foundation for Economic and Social Development, who requested
permission to hold a march, permission for which was denied, the
report says.
"The National Police - without any legal basis - is rejecting our
request, and with political arguments contrary to the principles
of police . . . legality and professionalism, it accuses us of
being participants in a series of absurd activities, which we
strongly deny," the businessmen said in a statement obtained by
the news agency.
Before the social crisis that broke out last April, the private
sector was one of the main allies of President Daniel Ortega's
government, the report relays.
Last September, the National Police prohibited public
demonstrations without prior approval, the report discloses.
The crisis in Nicaragua has left between 325 and 561 people dead,
and 340 to 767 under arrest, depending on which figures from
humanitarian agencies one uses, the report says.
However, Ortega claims that there have been 199 deaths and 340
arrests, calling those people "terrorists" or "common criminals,"
the report relays.
The Inter-American Commission on Human Rights has said that
Ortega's government has committed crimes against humanity, the
report adds.
NICARAGUA: Moody's Affirms B2 LT Issuer Rating, Outlook Now Neg.
----------------------------------------------------------------
Moody's Investors Service has changed the outlook to negative from
stable on the Government of Nicaragua's long-term issuer ratings
and affirmed the ratings at B2.
The change in outlook to negative reflects Moody's view that a
prolonged sociopolitical crisis in Nicaragua is weighing on the
sovereign's economic and fiscal strengths. With no resolution to
the ongoing conflict in sight, the crisis could materially weaken
the government's credit profile. The negative outlook also
incorporates the possibility of rising liquidity pressures on the
Nicaraguan government if official financing from multilateral
institutions were to decline materially as a result of increasing
international pressure.
The affirmation of Nicaragua's B2 ratings considers that despite
Moody's expectation that government debt metrics will likely
deteriorate in the coming years, Nicaragua will continue to report
lower debt ratios than those of its B-rated peers. A government
debt structure characterized by a very long maturity profile and a
large share of official external credit will also support the B2
rating, both of which mitigate rollover risks. Despite the
challenges posed by the political crisis, Moody's also considers
that macroeconomic policy has remained prudent, signaling
policymakers' willingness to adjust in the context of adverse
economic conditions.
Nicaragua's long-term foreign-currency bond ceiling is unchanged
at B1. Its long-term foreign-currency bank deposit ceiling is
unchanged at B3. The short-term foreign-currency bond and bank
deposit ceilings remain unchanged at Not Prime, while the long-
term local currency bond and bank deposit ceilings are unchanged
at Ba3.
RATINGS RATIONALE
RATIONALE FOR THE CHANGE IN THE OUTLOOK TO NEGATIVE FROM STABLE
PROLONGED POLITICAL CRISIS IS WEIGHING ON ECONOMIC AND FISCAL
STRENGTHS
Moody's estimates that real GDP declined by 3.2% in 2018 and that
it will contract again this year by 1.0%-2.0%. Furthermore, the
rating agency now expects that the economy will not return to its
previous trend growth rates of over 4.5% and instead projects
economic activity to remain subdued, reporting average annual
growth of around 2.5% in 2020-22. This contrasts with Moody's
previous view that, following a resolution of the political crisis
at some point in 2018 and overall weak growth in 2018-19, the
economy would recover back to trend growth by 2021-22. The agency
expects that investment will remain weak over the coming years
with foreign direct investment (FDI) reporting lower levels than
in the past when net FDI inflows averaged 7% of GDP. Additionally,
due to a combination of lower government revenue and funding
constraints, the authorities will reduce expenditures --
particularly public investment -- which will also weigh on growth.
The tourism sector, an industry that has performed well in recent
years, will not recover to levels seen in 2017 until 2021-22. A
weaker growth performance will undermine Nicaragua's economic
strength, which is already constrained by wealth levels and the
size of the economy below that of B-rated peers.
Weaker economic activity will affect the fiscal accounts via lower
revenue. Although the authorities have sought to limit the
deterioration of the fiscal accounts, lower revenue and rising
pressures from the pension system -- following a failed reform
attempt last year -- will contribute to the deterioration in
government debt metrics. Moody's forecasts the debt-to-GDP ratio
will rise to about 40% by 2020 from 34% in 2017, while the
interest-to-revenue ratio will increase to about 8% from 4.4%.
Higher debt and interest burdens will undermine Nicaragua's fiscal
strength.
EXTERNAL AND DOMESTIC LIQUIDITY PRESSURES ARE RISING
Liquidity risks in Nicaragua are rising on account of (1) lower
FDI inflows; (2) deposit outflows from the banking system, (3)
declining foreign exchange reserves; and, (4) prospects of reduced
financing from multilateral institutions.
Net FDI inflows amounting to 7.2% of GDP on average in 2014-17
covered a significant portion of Nicaragua's current account
deficits, reducing the country's reliance on external debt
financing. In 2018, net FDI inflows fell 26% in January to
September (year-on-year) as a consequence of the political crisis.
Moody's expects FDI inflows to decline again in 2019, which will
increase external borrowings.
Another element affecting reserves has been deposit outflows from
the banking system. Following the onset of the political crisis,
deposits in the banking system declined by more than 25% between
April and December, with a large share of those withdrawals
involving dollar deposits, which account for 75% of total bank
deposits.
Foreign exchange reserves reported a large decline last year.
After peaking at $2.86 billion (21% of GDP) in April 2018,
reserves fell by $712 million through December. Over the past
decade, reserves increased steadily, supporting Nicaragua's
crawling peg exchange rate regime -- a policy feature that
operated as a strong anchor of market expectations vis-a-vis the
exchange rate. Should the reduction in reserves resume in 2019,
this would put additional strain on the external accounts and the
exchange rate regime.
Potential disruptions to official external lending to Nicaragua,
in particular from multilateral development banks (MDBs), would
generate additional external liquidity pressures. The Nicaraguan
Investment Conditionality Act (the "Nica Act"), which became law
in the US in December 2018, calls for conditioning US approval of
multilateral loans to Nicaragua on the "government's adherence to
democratic norms." Some Latin American governments could support
the conditioning of new loans to Nicaragua, following measures
undertaken by the Organization of American States (OAS),
potentially impacting new loans for 2020 onward. Moreover, Moody's
considers that Nicaragua faces risks that already approved loans
for 2019 could be suspended if international pressure increases.
RATIONALE FOR THE RATING AFFIRMATION AT B2
Nicaragua's B2 rating is supported by its relatively higher fiscal
strength compared to B-rated peers. Despite Moody's expectation
that debt-to-GDP will increase to about 40% by 2020, it would
still be lower than the 'B' median of 58%. Similarly, while debt
affordability will worsen, an interest-to-revenue ratio of 8%
would still be lower than the 'B' median of about 12%.
Nicaragua's government debt structure is another credit feature
that supports the B2 rating. Although over 90% of government debt
is denominated in foreign currency, the fact that official lenders
-- mainly MDBs -- make up the majority of the government's
creditors and that this debt has a long maturity profile reduces
credit risks. Unlike other sovereigns that received debt
forgiveness under the Heavily Indebted Poor Countries (HIPC)
Initiative over the past decade, Nicaragua did not access the
international bond markets, a condition that limits its exposure
to volatility in international financial markets.
Despite very weak institutional strength, Nicaragua's
macroeconomic policymaking developed a track record of prudent
policies in the face of shocks over the past decade. Moreover,
although the severity of the economic toll of the political crisis
has limited the effectiveness of the monetary and fiscal policy
response, authorities have shown a willingness to adjust under
very adverse conditions.
WHAT COULD CHANGE THE RATING DOWN
Moody's would likely downgrade the rating if it became apparent
that the authorities were unwilling -- or unable -- to adjust
policies to mitigate the effect on the fiscal and external
accounts of deteriorating macroeconomic conditions prompted by the
ongoing political crisis. Indications that international pressure
was leading to a significant reduction in the flows of official
external financing would significantly increase credit risks,
raising the prospects of heightening government and/or external
liquidity risk materially weakening Nicaragua's credit profile.
WHAT COULD CHANGE THE RATING UP
Moody's would consider stabilizing the outlook if an impending
resolution of the political crisis led to a stronger-than-expected
recovery in economic activity and eliminated liquidity risks
associated with a possible decline in external official financing.
GDP per capita (PPP basis, US$): 5,852 (2017 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 4.9% (2017 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 5.7% (2017 Actual)
Gen. Gov. Financial Balance/GDP: -2.2% (2017 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: -5% (2017 Actual) (also known as
External Balance)
External debt/GDP: 76.8% (2017 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.
On January 22, 2019, a rating committee was called to discuss the
rating of the Government of Nicaragua. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially decreased. The
issuer's fiscal or financial strength, including its debt profile,
has decreased. The issuer has become increasingly susceptible to
event risks.
The principal methodology used in these ratings was Sovereign Bond
Ratings published in November 2018.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable
======================
P U E R T O R I C O
======================
OPTICAL HOLDINGS: Seeks to Extend Exclusivity Period to March 24
----------------------------------------------------------------
Optical Holdings of Puerto Rico, LLC and OHI of Puerto Rico, LLC
asked the U.S. Bankruptcy Court for the District of New Jersey to
extend the period during which they have the exclusive right to
file a Chapter 11 plan through March 24, and to solicit
acceptances for the plan through May 23.
The companies' current exclusive filing period expired on Jan. 23
and the company has to solicit votes for its reorganization plan
by March 24.
Since their bankruptcy filing, the companies have made progress to
reorganize their business affairs and have already started
negotiations for the sale of their business, according to their
attorney Alan Brody, Esq., at Greenberg Traurig, LLP, in Florham
Park, New Jersey.
"The additional time requested will allow them to engage in
discussions with various parties in interest in an effort to
ensure that any plan will hopefully be consensual so that this
case can proceed to an expeditious conclusion," Mr. Brody said.
About Optical Holdings of Puerto Rico
Optical Holdings of Puerto Rico, LLC, owns health and personal
care stores. OHI of Puerto Rico, LLC is an eyewear supplier in
Springfield, New Jersey.
Optical Holdings and OHI sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case Nos. 18-29070 and 18-29071) on
Sept. 25, 2018. At the time of the filing, Optical Holdings
estimated assets of less than $50,000 and liabilities of $1
million to $10 million. OHI estimated assets of less than $1
million and liabilities of $1 million to $10 million. Judge
Stacey L. Meisel presides over the cases. The Debtors tapped
Greenberg Traurig LLP as their legal counsel.
OPTICAL HOLDINGS: Taps Sun Mergers as Business Broker
-----------------------------------------------------
Optical Holdings of Puerto Rico, LLC and OHI of Puerto Rico, LLC,
received approval from the U.S. Bankruptcy Court for the District
of New Jersey to hire Sun Mergers & Acquisitions, LLC, as broker.
Sun Mergers will assist the Debtors in the sale of their assets.
The firm will receive a contingent commission fee of 6% of first
$5 million, 5% of next $5 million, and 4% thereafter of the total
consideration based on its success in closing a sale.
Prior to their bankruptcy filing, the Debtors paid Sun Mergers a
non-refundable retention fee of $25,000. To the extent the firm
earns a commission fee, such fee will be reduced by the $25,000
previously paid.
Stephen Goldberg, managing partner of Sun Mergers, disclosed in a
court filing that he and his firm are "disinterested" as defined
in section 101(14) of the Bankruptcy Code.
Sun Mergers can be reached through:
Stephen Goldberg
Sun Mergers & Acquisitions, LLC
411 Route 17 South, Suite 300
Hasbrouck Heights, NJ 07604
Phone: (800) 232-0180
Email: sg@sunmerger.com
About Optical Holdings of Puerto Rico
Optical Holdings of Puerto Rico, LLC, owns health and personal
care stores. OHI of Puerto Rico, LLC is an eyewear supplier in
Springfield, New Jersey.
Optical Holdings and OHI sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case Nos. 18-29070 and 18-29071) on
Sept. 25, 2018. At the time of the filing, Optical Holdings
estimated assets of less than $50,000 and liabilities of $1
million to $10 million. OHI estimated assets of less than $1
million and liabilities of $1 million to $10 million. Judge
Stacey L. Meisel presides over the cases. The Debtors tapped
Greenberg Traurig LLP as their legal counsel.
LUBY'S INC: Releases Prelim. Voting Results from Annual Meeting
---------------------------------------------------------------
Luby's, Inc., disclosed that based on the preliminary vote count
at the Company's 2019 Annual Meeting of Shareholders reviewed by
its proxy solicitor, shareholders have supported the election of
all nine of the Company's director nominees: Gerald W. Bodzy,
Judith B. Craven, M.D., Twila Day, Jill Griffin, Frank
Markantonis, Joe C. McKinney, Gasper Mir, III, Christopher J.
Pappas and Harris J. Pappas.
Gasper Mir, III, Independent Chairman of Luby's, said, "We greatly
appreciate the candid and valuable perspectives that shareholders
provided to us throughout this election and we appreciate the
support that we received from shareholders. Our goal as a Company
and a Board is to be responsive to shareholder feedback and
continue these dialogues, particularly as we conduct the
previously announced search to add two new independent directors
to the Board. We will welcome the input and views of Bandera
Partners during our Board refreshment process and will be seeking
to engage further with them in the near-term."
Christopher J. Pappas, CEO of Luby's, said, "With this annual
election now completed, our full focus returns to executing our
turnaround plan for the business and ensuring that we have our
right Board composition to oversee our strategy. Our goal is to
create value for all shareholders, and we will be working
tirelessly to achieve this by improving our operating results and
helping Luby's reach its full potential."
The preliminary voting results also indicate that at the Annual
Meeting shareholders approved the non-binding advisory vote to
approve the Company's executive compensation and the ratification
of the appointment of the Company's independent registered public
accounting firm. According to the preliminary voting results,
shareholders did not approve the proposal to approve an amendment
to the Company's Amended and Restated Certificate of Incorporation
to eliminate the supermajority voting requirement for shareholders
to remove directors. In order to be approved, this proposal
required the affirmative vote of the holders of at least 80% of
the voting power of the outstanding shares.
The Company intends to file the voting results, as tabulated by
the Company's independent Inspector of Elections, on a Form 8-K
with the Securities and Exchange Commission.
Luby's is represented by Sidley Austin LLP.
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.
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.
=================
V E N E Z U E L A
=================
VENEZUELA: Maduro Calls for Talks, Discloses War Games
------------------------------------------------------
EFE News reports that President Nicolas Maduro said that while he
wants dialogue with the opposition, led by self-proclaimed interim
head of state Juan Guaido, he will order the armed forces to
conduct exercises in preparation for a potential US intervention
in the Andean nation.
At roughly the same time, Mr. Guaido was telling supporters in
another part of Caracas that he would only agree to talks if
Maduro stepped down and offered the incumbent an amnesty if he
relinquished the presidency, according to EFE News.
President Maduro, in a press conference as the presidential
palace, described Mr. Guaido as an "agent of the gringos" directed
by US officials, notes the report. "He will follow orders from
them, he has no capacity to think for himself," the leftist said
of the National Assembly speaker.
President Maduro stressed, however, that "there have always been
channels of communication" between the government and the
opposition and that he remained committed to dialogue, "despite
the recent actions of the Venezuelan opposition and foreign
interference," the report relays.
Without providing details, he mentioned a meeting between Mr.
Guaido and the leader of the pro-government National Constituent
Assembly, Diosdado Cabello, where the two men agreed to keep open
the possibility of a new dialogue, the report notes.
The president then announced plans for Feb. 10-15 military
exercises to prepare for the possibility of a US invasion, the
report says.
President Donald Trump has flirted with the idea of military
intervention in Venezuela, where the US supported an abortive coup
in 2002 against then-President Hugo Chavez (1954-2013), Maduro's
predecessor and political mentor, the report discloses.
President Maduro went on to say he welcomed the prospect of the
scheduled debate on Venezuela in the UN Security Council, being
held at the initiative of Washington, the report relays.
"It's what we wanted. I was on the verge of telling the foreign
minister (Jorge Arreaza) 'request a debate in the Security
Council,'" President Maduro said, the report says. "(US Secretary
of State) Mike Pompeo beat me to it, thanks Mike."
The United States and a dozen of its Latin American allies have
recognized Mr. Guaido as Venezuela's interim president, while the
governments of Spain and Germany have threatened to do so unless
President Maduro calls new elections, the report relays.
President Maduro responded to Trump's recognition of Guaido by
breaking diplomatic relations with the US, the report notes.
He ordered Venezuelan diplomatic missions in the US to close and
gave American diplomats in Venezuela a deadline to leave the
country, the report says.
Washington recalled non-essential personnel from Venezuela, but it
remained unclear if all of the US diplomats will comply with
President Maduro's ultimatum, the report discloses.
Mr. Guaido, in his first public appearance since he designated
himself as acting head of state, urged citizens to turn out for
meetings in Venezuela's 335 municipalities to prepare for a "big
mobilization," the report notes.
The rallies will also serve, he said, to "exercise the strong and
powerful majority we are" and to honor "our victims," alluding to
the 26 people reportedly killed in clashes between protesters and
police, the report says.
Opposition activists plan to deliver to members of the security
forces a copy of the Amnesty Law approved by the National Assembly
to shield police, soldiers and civil servants who disobey orders
from the Maduro government, Mr. Guaido said, the report notes.
"An unprecedented civil action," he said, adding that until now
the opposition's relationship with the military has been "harsh"
due to clashes in demonstrations, the report relays.
Venezuela's defense minister and military brass went on state
television to vow loyalty to President Maduro and denounce Mr.
Guaido, the report notes.
Mr. Guaido said that the opposition will remain in the streets
until the end of the Bolivarian Revolution, the program initiated
in 1999 by Chavez, the report relays.
President Maduro was first elected in a special vote following
Chavez's death in office and won a second term last May, but the
opposition contends the process was illegitimate, 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'
***********
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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
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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.
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* * * End of Transmission * * *