/raid1/www/Hosts/bankrupt/TCRLA_Public/190307.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, March 7, 2019, Vol. 20, No. 48
Headlines
A R G E N T I N A
ALGODON GROUP: Receives Notice of Allowance on Trademark Filing
B E L I Z E
BELIZE: Moody's Affirms B3 Long-Term Issuer Ratings
B R A Z I L
ODEBRECHT SA: Bondholders Ask for Collateral, Cash to Restructure
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Haiti Border Market Earns US$1.4M Weekly
DOMINICAN REPUBLIC: To Build a Wall at Border Town
J A M A I C A
DIGICEL INTERNATIONAL: Fitch Rates Sr. Sec. Notes 'B(EXP)'/'RR4'
P U E R T O R I C O
GYMBOREE CORP: Enters Into Asset Purchase Agreement
KONA GRILL: Renaissance Technologies Has 6.5% Stake as of Dec. 31
KONA GRILL: Richard Hauser Has 4.8% Stake as of Dec. 31
NAVEGAR NETWORK: Hires McConnell Valdes as Bankruptcy Counsel
PRESERBA-COMPANIA: Condado Wants to Prohibit Cash Collateral Use
S T . V I N C E N T A N D T H E G R E N A D I N E S
ST. VINCENT AND THE GRENADINES: Economy Recovering, IMF Says
V E N E Z U E L A
VENEZUELA: Guaido Seeks Public Workers' Support
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A R G E N T I N A
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ALGODON GROUP: Receives Notice of Allowance on Trademark Filing
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Algodon Group, Inc. has been granted a Notice of Allowance from the
United States Patent and Trademark Office for the trademark filing
of Gaucho - Buenos Aires, the new luxury, fashion, and leather
accessories direct to consumer brand (GauchoBuenosAires.com) based
in Argentina. The U.S. trademark filing covers goods and services
such as apparel, leather accessories and other products, jewelry,
cosmetic fragrances and home goods.
Gaucho Buenos Aires is scheduled to premiere its Winter fashion
show at the prestigious Designers BA (Buenos Aires' own "fashion
week") on March 18, 2019. The event and exclusive runway show will
feature social media influencers and television stars from the U.S.
and Argentina.
Founded by entrepreneur Scott Mathis and headed up by Argentine
designers Santiago Gallo and Carmen Vils, Gaucho + Buenos Aires
blends the quality of a bygone era with a sophisticated, modern,
global outlook. The brand's beautifully handcrafted clothing and
accessories herald the birth of Argentina's finest designer label.
Gaucho Buenos Aires's premier Resort Collection debuted to
fashion industry media at Algodon Mansion in Buenos Aires in
October 2018.
Gaucho - Buenos Aires embodies the spirit of Argentina, its grand
history, its folklore and its revival as a global center of
luxury.
Inspired by the sophisticated elegance of the great European
maisons, Gaucho - Buenos Aires is also rooted in the traditions of
native, nomadic culture. With its ambitious couture, ready-to-wear
and high-street fashion offering, this is the brand in which
Argentine luxury finds its contemporary expression.
"We are so excited to take this next step towards our objective of
becoming the top luxury, fashion and leather accessories brand in
Argentina," said Scott Mathis, Algodon's founder, chairman and
CEO.
"We anticipate that our e-commerce platform will be ready to go
live in just a few weeks, after a brief soft launch for our
shareholders. Thanks to the hard work and extraordinary talent of
our young Argentine designers, Santiago Gallo and Carmen Vils, we
will soon be ready for our premiere on the world stage."
Established in Buenos Aires, the Gaucho story is one of impeccable
timing. Once dubbed the Paris of South America for its exquisite
Belle Epoque style, the city is thriving again and entering a new
golden age. The time is ripe for Buenos Aires to align itself with
Milan, New York, Paris and London as a global fashion capital, and
Gaucho - Buenos Aires will be its bold ambassador.
Gaucho's goal is to reintroduce the world to the grandeurs of the
city's elegant past, intertwined with an altogether deeper cultural
connection: the strength, honor and integrity of the Gaucho. Seen
in the intricate stitching of handmade leather, or the exquisite
workmanship of an embossed belt buckle, "Gaucho" style is a
world-renowned symbol of Argentine craftsmanship. Blending the
quality of a bygone era with a sophisticated, modern, global
outlook, the brand's beautifully handcrafted clothing and
accessories herald the birth of Argentina's finest designer label.
About Algodon Group
Through its wholly-owned subsidiaries, Algodon Group, Inc.,
formerly known as Algodon Wines & Luxury Development Group,
Inc. -- http://www.algodongroup.com/-- invests in, develops and
operates real estate projects in Argentina. Based in New York,
Algodon operates a hotel, golf and tennis resort, vineyard and
producing winery in addition to developing residential lots located
near the resort. The activities in Argentina are conducted through
its operating entities: InvestProperty Group, LLC, Algodon Global
Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties
II S.R.L., and Algodon Wine Estates S.R.L. AWLD distributes its
wines in Europe through its United Kingdom entity, Algodon Europe,
LTD.
Algodon Wines reported a net loss attributable to common
stockholders of $8.25 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common stockholders of
$10.04 million for the year ended Dec. 31, 2016. As of Sept. 30,
2018, Algodon Group had $5.26 million in total assets, $4.89
million in total liabilities, $9.02 million in series B convertible
redeemable preferred stock, and a total stockholders' deficiency of
$8.65 million.
Marcum LLP, in New York, the Company's auditor since 2013, issued a
"going concern" opinion in its report on the consolidated financial
statements for the year ended Dec. 31, 2017, citing that the
Company has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
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B E L I Z E
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BELIZE: Moody's Affirms B3 Long-Term Issuer Ratings
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Moody's Investors Service has affirmed Government of Belize's B3
long-term foreign and local-currency issuer ratings, and the
government's B3 foreign and local-currency senior unsecured bond
ratings. The outlook remains stable.
The affirmation of Belize's B3 rating is based on the following key
rating drivers:
1) A forceful fiscal adjustment was enacted in 2017/18 and
continued in 2018/19, while the economic recovery has strengthened,
supporting debt sustainability,
2) Despite decreased fiscal pressures, lingering credit challenges
including structurally low growth and vulnerability to climate
shocks, remain substantial.
The stable outlook reflects the balanced risks to Belize's credit
profile at the B3 rating level. The risk of a subsequent credit
event remains low over the next 12 to 18 months given the
government's more favorable debt repayment schedule. However,
fiscal and economic challenges are likely to persist and Moody's
believes that, despite the liquidity relief provided by the debt
restructuring, there is a low likelihood that upward pressure on
Belize's creditworthiness will develop.
Belize's long-term country ceilings for local and foreign-currency
bonds remain unchanged at B1, while the local and foreign-currency
bank deposit ceilings remain unchanged at B1 and Caa1,
respectively. Its short-term country ceilings for foreign-currency
bonds and bank deposits remain unchanged at Not Prime (NP).
RATINGS RATIONALE
RATIONALE FOR THE AFFIRMATION OF THE B3 RATING
FIRST DRIVER: THE ONGOING FISCAL ADJUSTMENT AND ECONOMIC RECOVERY
SUPPORT DEBT SUSTAINABILITY
The authorities consolidated the fiscal accounts to a primary
surplus of 1.4% of GDP in fiscal year (FY) 2017/18 (overall fiscal
deficit of 1.7% of GDP). This was a 2.5 percentage point adjustment
compared to the prior fiscal year. The fiscal adjustment was
underpinned by revenue-enhancing measures that included decreasing
the amount of goods exempted from the general sales tax and by
raising excise taxes (particularly on fuel), but the bulk of the
fiscal adjustment was achieved through a strong decrease in public
investment, which will likely be sustained. Public debt stabilized
at the end of 2017 at 95.4% of GDP.
Fiscal performance has remained strong in FY 2018/19 as the budget
aimed to raise the primary surplus to 2% of GDP. The authorities
have expanded the revenue measures by further reducing exemptions,
broadening the general sales tax, and by continuing to increase
fuel surcharges. These measures amount to approximately 0.5% of
GDP. Public investment has continued to decline through the end of
2018 as a result of the government's consolidation measures and a
lower availability of financing. Moody's estimates that the overall
fiscal deficit will decline to 1.1% of GDP in FY 2018/19 and that
public debt will decrease marginally to around 94% of GDP.
Moreover, the economic recovery strengthened in 2018, on the back
of a further increase in tourism inflows. Economic growth in the
first three quarters of 2018 averaged 3.6% year-on-year and Moody's
forecasts full-year growth at 3.3%. Despite favorable external
conditions that include a robust expansion in the US that has
supported increased tourism arrivals and remittances, Moody's
projects economic growth in Belize will gradually ease to 2.4% in
2019, 2.0% in 2020, and 1.7% over the medium-term. This dynamism
will support continued reductions in the sovereign's debt burden in
2019 and beyond, barring any unforeseen shocks.
SECOND DRIVER: LINGERING CREDIT CHALLENGES LIMIT UPWARD MOBILITY
FOR THE SOVEREIGN'S CREDITWORTHINESS
Belize's potential growth remains constrained at below 2%, partly
as a reflection of negative total factor productivity that prevents
faster convergence with higher income economies. Obstacles to
raising productivity include labor market rigidities and skill
shortages, significant barriers to investment, limited access to
finance (due to a very large informal sector of the economy and
related challenges), low population density and a large
infrastructure gap.
The economy remains vulnerable to a slowdown in tourism activity,
and more importantly, climate shocks, despite a relatively high
share of renewables in the country's energy matrix. Economic
activity, especially in the primary sectors, and basic
infrastructure remain key areas of vulnerability to weather shocks.
High public debt levels and the need to maintain a restrictive
fiscal stance to meet targets committed to bondholders under the
terms of the March 2017 restructuring agreement crowd out resources
available to invest in infrastructure.
Adopting policies to enhance growth and resilience remain a
fundamental credit challenge. Although the authorities have
achieved significant progress on consolidating the fiscal position,
this is just one element of a more comprehensive effort to lift
Belize out of high debt and low structural growth. At the moment,
given the proximity of national elections (due by November 2020)
there has been little impetus for a strong reform push. In the
absence of extensive structural reforms, weak growth and the
country's vulnerability to shocks constrain the sovereign's credit
profile.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects the balanced risks to Belize's credit
profile at the B3 rating level. The risk of a subsequent credit
event remains low in the coming two years given the government's
more favorable debt repayment schedule. However, fiscal and
economic challenges are likely to persist and Moody's believes
that, despite the liquidity relief provided by the debt
restructuring, there is a low likelihood that upward pressure on
Belize's creditworthiness will develop over the next 12 to 18
months.
WHAT COULD CHANGE THE RATING UP
Although the stable outlook indicates that rating changes are
unlikely in the near future, upward pressure on the rating could
come from the adoption of extensive structural reforms that enhance
productivity, boost competitiveness and attract sizable investment
to significantly increase potential growth and improve the
sustainability of external finances. A substantial reduction of the
public debt burden as a result of sustained high primary fiscal
surpluses would also be credit positive.
WHAT COULD CHANGE THE RATING DOWN
Conversely, downward pressure on the sovereign's rating would
emerge if there was a deterioration in growth prospects, due to the
materialization of a large shock, that derails the progress
achieved in maintaining low fiscal deficits such that the
government's ability to remain current on its debt payments is
jeopardized.
GDP per capita (PPP basis, US$): 8,342 (2017 Actual) (also known as
Per Capita Income)
Real GDP growth (% change): 1.4% (2017 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 1.1% (2017 Actual)
Gen. Gov. Financial Balance/GDP: -1.7% (2017 Actual) (also known as
Fiscal Balance)
Current Account Balance/GDP: -7.1% (2017 Actual) (also known as
External Balance)
External debt/GDP: 73.5% [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 28 February 2019, a rating committee was called to discuss the
rating of the Belize, Government of. The main points raised during
the discussion were: The issuer's economic fundamentals, including
its economic strength, have decreased. The issuer's fiscal or
financial strength, including its debt profile, has decreased. The
issuer has become less 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.
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B R A Z I L
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ODEBRECHT SA: Bondholders Ask for Collateral, Cash to Restructure
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Tatiana Bautzer at Reuters reports that a group of bondholders of
construction conglomerate Odebrecht SA proposed the restructuring
of $3 billion in bonds requiring new collateral and a cash infusion
to allow a four-year extension on maturities.
In a proposal publicized by the bondholders advisers, Rothschild &
Co and law firms Davis Polk and Pinheiro Neto, bondholders require
payment with no discount from the bonds' face value, according to
Reuters.
Bondholders also ask for an immediate cash infusion of $375 million
by Odebrecht SA into the construction unit, that is the guarantor
of the bonds, and the pledge of shares in petrochemical company
Braskem SA as collateral, the report notes.
The proposal is radically different from what Odebrecht had floated
to bondholders in recent meetings, a discount of 70 percent over
the bonds value, Reuters discloses.
Odebrecht is the controlling shareholder in the company, and its
stake is already pledged as collateral to the conglomerate's
largest banking loans with local creditors such as Banco Bradesco
SA, the report relays.
The conglomerate, implicated in a multinational corruption scandal,
has been in negotiations with LyondellBasell Industries NV for a
merger between the two companies, the report notes.
Bondholders also ask to be consulted before asset sales.
In an e-mailed statement, Odebrecht SA said the publicly released
proposal "was not discussed" between the company and its
bondholders and is "unfeasible," the report notes. The
conglomerate added its advisers are working on a formal proposal
that would be consensual, the report discloses.
Odebrecht has spent the past four years at the center of one of the
largest corruption scandals in Latin America, after admitting
paying bribes for works contracts from Peru to Panama, the report
relays. It has paid about $3.5 billion in settlements as a result,
the report adds.
About Odebrecht SA
Construtora Norberto Odebrecht SA is a Latin American engineering
and construction company fully owned by the Odebrecht Group, one of
the 10 largest Brazilian private groups. Construtora Norberto is
the world's largest builder of hydroelectric plants, of sanitary
and storm sewers, water treatment and desalination plants,
transmission lines and aqueducts. The Group's main businesses are
heavy engineering and construction based in Rio de Janeiro, Brazil,
and Braskem S.A., its chemicals/petrochemicals company, based in
Sao Paulo, Brazil.
As of May 5, 2009, the company continues to carry Standard and
Poor's BB Issuer Credit ratings, and Fitch Rating's BB+ Issuer
Default ratings and BB+ Senior Unsecured Debt ratings.
* * *
As reported in the Troubled Company Reporter-Latin America on Dec.
2, 2016, The Wall Street Journal related that Marcelo Odebrecht,
the jailed former head of Brazilian construction giant Odebrecht
SA, agreed to sign a plea-bargain agreement in connection with
Brazil's largest corruption probe ever, according to a person close
to the negotiations. The move could roil the nation's political
class yet again. The testimony of the former industrialist, which
is part of the deal, has the potential to implicate numerous
politicians who allegedly took kickbacks from contractors as part
of a years-long graft ring centered on Brazil's state-run oil
company, Petroleo Brasileiro SA, known as Petrobras, according to
The Wall Street Journal.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Haiti Border Market Earns US$1.4M Weekly
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Dominican Today reports that the Dominican-Haitian border market
held Feb. 26 and march 1 totals up to RD$70 million (US$1.4
million) in those two days, according to merchants from both
countries.
The site of the market, after its expansion with the support of the
European Community, is more than 40,000 square meters, which
includes a perimeter road and parking and space for up to 2,600
Dominican and Haitian merchants, according to Dominican Today.
But on the outskirts of the building, as many as 25,000 Haitian and
Dominican vendors who offer diverse products and merchandise, while
the market over time has engulfed other neighborhoods in Dajabon,
the report notes.
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 Build a Wall at Border Town
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Dominican Today reports that Dominican Republic will build a wall
at the border town El Carrizal, western Elias Pina province, to
control the flow of people and goods to and from Haiti, "seeking
effective and efficient actions in the security of the area,"
Customs said.
Customs spokesperson Lissette Selman told El Dia that the border
wall will delineate the Dominican and Haitian territories with
stricter Customs control and will help Haitian customs collect the
duties on the goods that enter that country, according to Dominican
Today.
Precedent
In 2013, Haitian authorities built a wall nearly eight kilometers
from the Dominican Immigration and Customs offices, the report
notes.
The report relays that Mr. Selman said in addition to the wall,
offices will be built for other agencies including Immigration and
Border Security.
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.
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J A M A I C A
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DIGICEL INTERNATIONAL: Fitch Rates Sr. Sec. Notes 'B(EXP)'/'RR4'
----------------------------------------------------------------
Fitch Ratings has assigned an expected rating of 'B(EXP)'/'RR4' to
Digicel International Finance Limited's (DIFL) senior secured notes
due 2024. The proceeds will be used to repay both DIFL's USD100
million revolving credit facility and DIFL's USD300 million term
loan A fully. The remaining proceeds will be used to improve
liquidity and for general corporate purposes as the company seeks
to improve operating performance.
The notes are secured by a first lien on the company's assets and
rank pari passu with DIFL's remaining USD1.0 billion term loan B,
and are senior to unsecured notes issued by Digicel Limited (DL),
as well as the guarantee of those notes by DIFL. The notes are
further senior to the unsecured debt at Digicel Group One Limited
(DGL1), Digicel Group Two Limited (DGL2) and Digicel Group Limited
(DGL).
On Jan. 14, 2019, Fitch upgraded DIFL, DL and DGL and
simultaneously assigned new ratings to DGL1 and DGL2 following the
completion of the DGL distressed debt exchange. No other rating
actions have been taken at this time with respect to the other
companies operating under the Digicel group structure. At the close
of the transaction, Fitch will convert the expected rating on the
new notes and withdraw the rating on the term loan A.
KEY RATING DRIVERS
Group Structure Drives Ratings: DIFL's debt is secured by the
company's operating assets in the Caribbean, which account for over
80% of the group's consolidated EBITDA. Fitch expects leverage of
1.9x at DIFL on a pro-forma basis, up modestly from 1.8x. Fitch
forecasts recovery rates commensurate with 'RR1' for DIFL; however,
Fitch caps DIFL's debt instruments at 'RR4' due to weak creditor
protections in the countries of operation, thereby capping the
instruments' ratings at the Issuer Default Rating.
Deteriorating Operating Performance: The group's revenues and
EBITDA have contracted in recent years as mobile consumers shift to
data from voice amid mobile maturity. These issues have been
exacerbated by local currency depreciation against the dollar,
which Fitch expects to continue. The company is diversifying away
from its traditional mobile focus via double digit growth in the
business solutions, pay TV and broadband segments; however, the
former still accounts for 73% of revenues.
Strong Competitive Position: Many of Digicel's business operate in
duopoly markets where their market share exceeds 50%. Fitch does
not believe the risk of a sizable new entrant to be high, given the
relatively small size of each market amid mobile maturity. Under
this environment, Fitch expects the company's competitive position
to remain stable over the medium term. Digicel's high capex on
network upgrades should enhance competitiveness in the coming
years, though effectively monetizing these investments remains key
for the company's organic deleveraging prospects.
DERIVATION SUMMARY
Digicel's business profile, with leading mobile market shares in
its well-diversified operating regions is considerably stronger
than its highly speculative peers in more competitive markets, such
as Oi (B-). However, Digicel's financial profile is materially
weaker than its regional mobile telecom peers in the
speculative-grade rating categories, including Cable & Wireless
(BB-).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Muted overall revenue growth, as solid broadband and business
to business growth are offset by weak growth prospects for the
mobile segment;
- Continued appreciation of the U.S. dollar against the local
currencies in most of Digicel's countries of operation;
- Benefits from the restructuring program to increase EBITDA
margins by 1%-2% in the near term;
- No dividend payments to controlling shareholder.
In its recovery analysis, Fitch uses two waterfalls to reflect the
group's structure. The first, the Caribbean waterfall, would first
be applied to DIFL and DL creditors. For this, Fitch assumes a
going concern EBITDA of approximately USD750 million, which
represents approximately a 10% discount to Fitch-adjusted EBITDA
for these operating assets. Fitch uses a 5.0x enterprise
valuation/EBITDA multiple.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- A positive rating action on DIFL is unlikely at this time,
given the ratings differentials within the group and the weak
operating performance in key markets.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- A negative rating action on DIFL is unlikely at this time,
given the senior secured position of DIFL debt.
LIQUIDITY
Pressured Liquidity: DIFL had USD71 million of cash as of Dec. 31,
2018, with the proceeds from the notes adding approximately USD140
million to the balance sheets. The company's liquidity position is
pressured by persistently negative FCF, as operational performance
remains stagnant and financing expenses consume most of the
operating income. Furthermore, cash upstreams to service DL debt
will constrict financial flexibility.
FULL LIST OF RATING ACTIONS
Digicel International Finance Limited
- USD550 million senior secured notes due 2024 rated
'B(EXP)'/'RR4'.
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P U E R T O R I C O
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GYMBOREE CORP: Enters Into Asset Purchase Agreement
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The Children's Place, Inc., the largest pure-play children's
specialty apparel retailer in North America, on March 4, 2019,
disclosed that, as part of an auction held in connection with
Gymboree's bankruptcy proceeding, a wholly-owned subsidiary of the
Company has entered into an Asset Purchase Agreement with Gymboree
Group, Inc. and related entities to acquire intellectual property
and related assets of Gymboree and Crazy 8 (the "Gymboree Assets")
for $76 million in cash. The Gymboree Assets include the worldwide
rights to the names "Gymboree" and "Crazy 8" and other intellectual
property, including trademarks, domain names, design rights, and
customer databases.
The acquisition of the Gymboree Assets is subject to the approval
of the United States Bankruptcy Court for the Eastern District of
Virginia at a hearing scheduled for March 4 and other standard
closing conditions.
The purchase price is expected to be funded by cash on hand and
borrowings under the Company's revolving credit facility. The
acquisition is anticipated to be accretive to Adjusted EPS
beginning in Fiscal Year 2020 following low teens percentage
dilution to Fiscal Year 2019 Adjusted EPS as the Company makes
incremental investments to support the strategic opportunities
provided by the Gymboree Assets.
Jane Elfers, President and CEO said, "Gymboree's recent bankruptcy
announcement and our agreement to acquire the Gymboree Assets
significantly strengthens our long-term position. Control of the
Gymboree brand and IP will now allow us to meaningfully expand our
previously targeted market share opportunity. The acquisition will
be an attractive vehicle to expand our business across price and
channel. It will provide us with a path to revitalize the Gymboree
brand across various channels, including e-commerce, TCP stores,
wholesale, and international."
Ms. Elfers concluded, "We have always had a great deal of respect
for the loyal Gymboree customer. We heard her passionate response
to Gymboree's merchandising changes loudly and clearly and we are
prepared for the opportunity to fill the void for this product in
the marketplace. Importantly, the Gymboree customer, like our
customer, is digitally savvy, and our accelerated investment in
digital capabilities in 2018 puts us in a stronger position to be
able to bring these new customers into our omni-channel ecosystem.
We look forward to maximizing the multiple opportunities that this
acquisition will provide to create value for our shareholders."
About The Children's Place
The Children's Place is the largest pure-play children's specialty
apparel retailer in North America. The Company designs, contracts
to manufacture, sells at retail and wholesale, and licenses to sell
fashionable, high-quality merchandise at value prices, primarily
under the proprietary "The Children's Place," "Place" and "Baby
Place" brand names. As of February 2, 2019, the Company operated
972 stores in the United States, Canada and Puerto Rico, an online
store at www.childrensplace.com, and had 217 international points
of distribution open and operated by its eight franchise partners
in 20 countries.
About Gymboree Group
Gymboree Group, Inc., is a portfolio of children's brands operating
specialty retail stores with high-quality clothing and accessories
for children. The Company currently operates 380 Gymboree stores
in the United States and Canada. Gymboree Group's family of brands
includes Gymboree, Janie and Jack and Crazy 8, with hundreds of
retail stores across the United States, Canada and Puerto Rico as
well as online stores at http://www.gymboree.com/,
http://www.janieandjack.com/and http://www.crazy8.com/
In October 2010, The Gymboree Corp. was acquired by Bain Capital
Private Equity, LP and certain of its affiliated investment funds
or investment vehicles managed or advised by it for approximately
$1.8 billion.
The Gymboree Corp. and seven affiliates each filed a Chapter 11
voluntary petition (Bankr. E.D. Va. Lead Case No. 17-32986) on June
11, 2017. Kirkland & Ellis LLP served as the Company's legal
counsel, AlixPartners LLP was the financial advisor and Lazard
Freres was the investment banker. Prime Clerk was the claims and
noticing agent.
In September 2017, Gymboree Corp. successfully completed its
financial restructuring and emerged from Chapter 11 as a new
corporation under the name Gymboree Group, Inc. The Company's
court-confirmed Plan of Reorganization which went into effect Sept.
29, eliminated more than $900 million of debt from its balance
sheet and claimed to have right-sized the company's store
footprint.
KONA GRILL: Renaissance Technologies Has 6.5% Stake as of Dec. 31
-----------------------------------------------------------------
Renaissance Technologies LLC and Renaissance Technologies Holdings
Corporation reported in a Schedule 13G/A filed with the Securities
and Exchange Commission that as of Dec. 31, 2018, they
beneficially
own 858,959 shares of common stock of Kona Grill, Inc., which
represents 6.48 percent of the shares outstanding. A full-text
copy of the regulatory filing is available for free at:
https://is.gd/4JdmWB
About Kona Grill
Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill,
Inc. -- http://www.konagrill.com/-- currently owns and operates 44
restaurants in 22 states and Puerto Rico. Its restaurants feature
a global menu of contemporary American favorites, award-winning
sushi and craft cocktails. Additionally, Kona Grill has two
restaurants that operate under a franchise agreement in Dubai,
United Arab Emirates, and Vaughan, Canada.
Kona Grill incurred a net loss of $23.43 million in 2017 and a net
loss of $21.62 million in 2016. As of Sept. 30, 2018, Kona Grill
had $78.59 million in total assets, $75.74 million in total
liabilities, and $2.84 million in total stockholders' equity.
The Company has incurred losses resulting in an accumulated deficit
of $88.5 million and outstanding borrowings under a credit facility
of $33.5 million as of Sept. 30, 2018. As of Sept. 30, 2018, the
Company has cash and cash equivalents and short-term investment
balance totaling $4.0 million and net availability under the credit
facility of $2.2 million, subject to compliance with certain
covenants. The Company has implemented various initiatives to
increase sales and reduce costs to increase profitability.
"Management expects to utilize existing cash and cash equivalents
and short-term investments, along with cash flow from operations,
and the available amounts under the credit facility, to provide
capital to support the business, to maintain and refurbish existing
restaurants, and for general corporate purposes. Any reduction of
cash flow from operations or an inability to draw on the credit
facility may cause the Company to take appropriate measures to
generate cash. The failure to raise capital when needed could
impact the financial condition and results of operations.
Additional equity financing, to the extent available, may result in
dilution to current stockholders and additional debt financing, if
available, may involve significant cash payment obligations or
financial covenants and ratios that may restrict the Company's
ability to operate the business. There can be no assurance that
the Company will be successful in its plans to increase
profitability or to obtain alternative capital and financing on
acceptable terms, when required or if at all," the Company stated
in its Quarterly Report for the period ended Sept. 30, 2018.
KONA GRILL: Richard Hauser Has 4.8% Stake as of Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, Richard J. Hauser reported that as of Dec. 31, 2018, it
beneficially owns 641,788 shares of common stock of Kona Grill,
which represents 4.8 percent of the shares outstanding. This
Amount includes (i) 48,000 shares issuable upon the exercise of
stock options, and (ii) 386,893 shares owned by the Reporting
Person's spouse, 100,000 shares owned by Kona MN, LLC, of which the
Reporting Person and the Reporting Person's spouse are control
persons, and 4,000 shares owned by a trust for the benefit of the
Reporting Person's children. A full-text copy of the regulatory
filing is available for free at https://is.gd/QqFN1E
About Kona Grill
Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill,
Inc. -- http://www.konagrill.com/-- currently owns and operates 44
restaurants in 22 states and Puerto Rico. Its restaurants feature
a global menu of contemporary American favorites, award-winning
sushi and craft cocktails. Additionally, Kona Grill has two
restaurants that operate under a franchise agreement in Dubai,
United Arab Emirates, and Vaughan, Canada.
Kona Grill incurred a net loss of $23.43 million in 2017 and a net
loss of $21.62 million in 2016. As of Sept. 30, 2018, Kona Grill
had $78.59 million in total assets, $75.74 million in total
liabilities, and $2.84 million in total stockholders' equity.
The Company has incurred losses resulting in an accumulated deficit
of $88.5 million and outstanding borrowings under a credit facility
of $33.5 million as of Sept. 30, 2018. As of Sept. 30, 2018, the
Company has cash and cash equivalents and short-term investment
balance totaling $4.0 million and net availability under the credit
facility of $2.2 million, subject to compliance with certain
covenants. The Company has implemented various initiatives to
increase sales and reduce costs to increase profitability.
"Management expects to utilize existing cash and cash equivalents
and short-term investments, along with cash flow from operations,
and the available amounts under the credit facility, to provide
capital to support the business, to maintain and refurbish existing
restaurants, and for general corporate purposes. Any reduction of
cash flow from operations or an inability to draw on the credit
facility may cause the Company to take appropriate measures to
generate cash. The failure to raise capital when needed could
impact the financial condition and results of operations.
Additional equity financing, to the extent available, may result in
dilution to current stockholders and additional debt financing, if
available, may involve significant cash payment obligations or
financial covenants and ratios that may restrict the Company's
ability to operate the business. There can be no assurance that
the Company will be successful in its plans to increase
profitability or to obtain alternative capital and financing on
acceptable terms, when required or if at all," the Company stated
in its Quarterly Report for the period ended Sept. 30, 2018.
NAVEGAR NETWORK: Hires McConnell Valdes as Bankruptcy Counsel
-------------------------------------------------------------
Navegar Network Alliance, LLC, seeks authority from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ
McConnell Valdes LLC, as bankruptcy counsel to the Debtor.
Navegar Network requires McConnell Valdes to:
a. advise the Debtor of its rights, powers and duties as
the Debtor and debtor-in-possession;
b. assist the Debtor in preparing the schedules and statements
of financial affairs;
c. assist the Debtor to formulate a business plan and resolve
its Chapter 11 case with the Debtor's various creditor
constituencies;
d. assist the Debtor in analyzing its executor contracts;
e. render any requested pension, tax, or labor advice that may
be required to effectuate or maximize the efficiency of the
Debtor's Chapter 11 case;
f. prepare, file, and prosecute a plan of reorganization and
disclosure statement;
g. prepare on behalf of the Debtor all necessary and
appropriate applications, motions, pleadings, proposed
orders, notices, and other documents, and review all
financial and other reports to be filed by the Debtor in
its Chapter 11 case;
h. represent the Debtor in proceedings and hearings in the
Bankruptcy Court; and
i. perform all other legal services for and on behalf of the
Debtor that may be necessary or appropriate in the
administration of the Debtor's Chapter 11 case.
McConnell Valdes will be paid at these hourly rates:
Partners $185 to $380
Associates $145 to $190
Paralegals $135 to $155
McConnell Valdes will be paid a retainer in the amount of $10,000.
McConnell Valdes will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Nayuan Zouairabani, partner of McConnell Valdes LLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
McConnell Valdes can be reached at:
Nayuan Zouairabani, Esq.
Antonio A. Arias, Esq.
MCCONNELL VALDES LLC
270 Munoz Rivera Avenue, Suite 7
Hato Rey, PR 00918
Tel: (787) 250-5619
Fax: (787) 759-9225
E-mail: nzt@mcvpr.com
aaa@mcvpr.com
About Navegar Network Alliance
Navegar Network Alliance LLC aka Navigant Network Alliance LLC,
based in San Juan, PR, filed a Chapter 11 petition (Bankr. D.P.R.
Case No. 19-00558) on Feb. 4, 2019. In the petition signed by
Brian Campbell, vice-presient of operations, the Debtor estimated
$50,000 to $100,000 in assets and $100 million to $500 million in
liabilities. The Hon. Brian K. Tester oversees the case. Nayuan
Zouairabani, Esq., at McConnell Valdes LLC, serves as bankruptcy
counsel.
PRESERBA-COMPANIA: Condado Wants to Prohibit Cash Collateral Use
----------------------------------------------------------------
Condado 2, LLC asks the U.S. Bankruptcy Court for the District of
Puerto Rico to (i) prohibit Preserba-Compania De Desarrollos, Inc.
from using its cash collateral and (ii) allow Condado to seek and
collect the rental proceeds that constitute its cash collateral.
Initially, Firstbank Puerto Rico, predecessor in interest of
Condado, and the Debtor executed a Construction Loan Agreement,
whereby Firstbank extended to the Debtor certain credit facilities
in the amount of $5.2 million. Afterwards, the Debtor and Firstbank
entered into a First Amendment to Construction Loan Agreement
whereby the terms of the Loan were amended to, inter alia, increase
the commitment amount, extend the maturity dates and terms of
repayment, and to restructure the balance of the Loan into a
promissory note in the amount of $5.6 million.
Additionally, the Debtor and Firstbank entered into a Second
Amendment to Construction Loan Agreement whereby the terms of the
Loan were amended to, inter alia, increase the commitment amount,
extend the maturity dates and terms of repayment, and to
restructure the balance of the Loan into a promissory note in the
amount of $6.3 million.
The Loan is secured, inter alia, by a real property. Additionally,
the Property also secures Condado’s claim in the case of
Inversiones Caribe Delta, Inc., filed with the US Bankruptcy Court
for the District of Puerto Rico, Case No. 19- 00388. The Debtor
also pledged any and all proceeds derived from the Property in
favor of Firstbank, now Condado.
Pursuant to its Schedule, the Debtor currently has various lease
agreements. Condado asserts that such rental proceeds secure the
Loan and constitute Condado's cash collateral. The Debtor, however,
has not sought authorization to use Condado's Cash Collateral and
nor has Condado consented to its use.
Condado submits that it is not adequately protected because, inter
alia, the Debtor has been using its cash collateral without its
consent and without seeking authorization to do so in contravention
to the requirements of the Bankruptcy Code.
Attorneys for Condado 2, LLC:
Sonia E. Colon, Esq.
Gustavo A. Chico-Barris, Esq.
Camille N. Somoza, Esq.
Ferraiuoli LLC
PO Box 195168
San Juan, PR 00919-5168
Tel: (787) 766-7000
Fax: (787) 766-7001
About Preserba-Compania De Desarrollos
Preserba-Compania De Desarrollos, Inc. is a Single Asset Real
Estate Debtor (as defined in 11 U.S.C. Section 101(51B)). It owns
in fee simple a lot located at State Road #156, Georgetti Street
Puebnlo Ward Comerio, PR 00782 having an appraised value of $3
million.
Preserba-Compania De Desarrollos filed a Chapter 11 petition
(Bankr. D.P.R. Case No. 19-00387) on Jan. 29, 2019. In the
petition signed by Carlos F. Muratti, president, the Debtor
disclosed $3,022,253 in assets and $2,888,061 in liabilities. The
case is assigned to Judge Mildred Caban Flores. The Debtor is
represented by Carmen D. Conde Torres, Esq. at C. Conde & Assoc.
===========================================================
S T . V I N C E N T A N D T H E G R E N A D I N E S
===========================================================
ST. VINCENT AND THE GRENADINES: Economy Recovering, IMF Says
------------------------------------------------------------
On February 15, 2019, the Executive Board of the International
Monetary Fund (IMF) concluded the Article IV consultation [1] with
St. Vincent and the Grenadines. The 2018 Article IV consultation
focused on policies to achieve stronger and sustainable growth,
build fiscal buffers, bolster resilience to natural disasters, and
ensure financial stability
The economy of St. Vincent and the Grenadines has been recovering.
The closure of Buccament Bay Resort (the largest hotel on the main
island) and heavy rains with flooding and landslides slowed down
growth in the second half of 2016 and early 2017. Following the
opening of the new airport, however, tourist arrivals have
recovered, boosting tourism-related services (such as hotels,
restaurants, and retail). Increased demand for reconstruction
materials from Dominica (struck by Hurricane Maria in September
2017) also helped the recovery. As a result, quarterly data show
that output growth (year-on-year) has turned positive since the
third quarter of 2017. Over the past year, inflation has remained
around 2-3 percent.
The growth outlook is positive. Staff expects real GDP growth to
rebound from 0.7 percent in 2017 to 2 percent in 2018, and further
to 2.3 percent in 2019, driven by increases in tourist arrivals,
tourism-related activities (including investment in hotels and
resorts), and related local production. Beyond 2020, growth would
be sustained at around 2.3 percent, assuming steady tourism and
investment growth.
This outlook is subject to both external and domestic risks.
External risks include weaker-than-expected global growth, tighter
global financial conditions, and higher oil prices. Domestic risks
include more severe and frequent natural disasters, the loss of
correspondent banking relationships, and materialization of
financial sector risks. There is also upside potential stemming
from stronger-than-expected tourist arrivals, investor interest,
concessional financing for capital projects, and the successful
completion of the geothermal power plant.
Executive Board Assessment
Executive Directors commended the authorities for successfully
reinvigorating the St. Vincent and the Grenadines' economy.
Nonetheless, they noted the continuing challenges in terms of
making economic growth more sustainable, reducing public debt, and
increasing resilience to natural disasters.
Directors stressed the importance of advancing structural reforms
to raise longer‑term growth. They urged the authorities to
capitalize on the growth opportunities created by the new airport.
They recommended vigorously implementing policies to foster private
sector activity, by improving the investment climate and
strengthening human and physical capital, including investing in
climate‑resilient infrastructure.
Directors emphasized the importance of bolstering fiscal buffers.
They welcomed the authorities' commitment to meeting the 60 percent
of GDP debt target by 2030 and underscored the need for fiscal
consolidation that does not jeopardize economic growth. They
recommended prioritizing capital projects taking into account
capacity and budget constraints and seeking concessional financing.
Directors also encouraged taking additional fiscal measures,
including broadening the tax base and reforming the pension
system.
Directors welcomed the establishment of the Contingency Fund as an
important instrument to protect public finances from the impact of
natural disasters and climate change. They underscored the need to
legislate the Contingency Fund's governance and operational
framework to ensure its effectiveness and transparency. Directors
also suggested expanding the coverage of disaster insurance,
especially against floods. More generally, they recommended
continuing to strengthen disaster preparedness, including reviewing
the National Emergency and Disaster Act, updating river basin flood
risk maps, and enhancing public education and awareness.
Directors encouraged the authorities to strengthen the
institutional fiscal framework. Priorities include adopting a
medium-term fiscal framework, strengthening revenue administration
by moving toward a risk-based approach and completing the various
reform initiatives, issuing regulations to strengthen the oversight
of state-owned enterprises, and establishing a legal and
institutional framework to assess potential risks from
public-private partnerships.
Directors highlighted the need to further strengthen financial
sector oversight. They urged the authorities to enact pending
legislation to strengthen the Financial Services Authority's
enforcement power. Directors urged the authorities to move ahead
with preparing a crisis management plan for the non‑bank
financial sector and setting up a Financial Crisis Management
Committee, building on earlier technical assistance provided by
CARTAC.
Directors commended progress in addressing remaining legal
deficiencies in the AML/CFT framework. Going forward, they
recommended focusing on ensuring the effectiveness of AML/CFT
preventative measures and completing the National Risk Assessment.
=================
V E N E Z U E L A
=================
VENEZUELA: Guaido Seeks Public Workers' Support
-----------------------------------------------
EFE News reports that Juan Guaido, the head of Venezuela's
opposition-controlled Parliament and self-proclaimed interim
president, met with union representatives and disclosed that he
will launch a staggered strike within the public administration to
continue exerting pressure to leave office on President Nicolas
Maduro, whose government the opposition considers illegitimate.
"We're definitively moving toward a staggered strike in the public
administration, a proposal made by the unions," Guaido said at a
press conference, according to EFE News.
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'.
*********
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 * * *