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/raid1/www/Hosts/bankrupt/TCRLA_Public/190404.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, April 4, 2019, Vol. 20, No. 68 Headlines B R A Z I L BIOSEV SA: Fitch Affirms LT IDRs at B+, Outlook Stable BRAZIL: Looks to Defense Industry for Economic Boost COMPASS MINERALS: Moody's Puts Ba1 CFR on Review for Downgrade JALLES MACHADO: Fitch Affirms LT IDRs at 'BB-', Outlook Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Eyes Grid Fix With US$600MM From China DOMINICAN REPUBLIC: Rum Makers to Fight Tax Dodgers DOMINICAN REPUBLIC: Sluggish Economic Trend Concerns Experts E L S A L V A D O R TITULARIZADORA DE DPRS: Fitch Rates Series 2019-1 Notes 'BB-' J A M A I C A CABLE & WIRELESS: Fitch Rates Proposed $400MM Notes 'BB-' CABLE & WIRELESS: Moody's Rates Proposed $400MM Sr. Sec. Notes Ba3 CABLE & WIRELESS: S&P Rates New $400MM Sec. Notes 'BB-' M E X I C O GORE FREIGHT COMPANY: Hires Whitworth Law as Attorney P U E R T O R I C O FERMARALIZ CORP: Seeks to Hire Fraticelli as Accountant KONA GRILL: BBS-Zheng Group Has 37.3% Stake as of March 27 KONA GRILL: Hires Financial Advisor to Evaluate Alternatives V E N E Z U E L A VENEZUELA: Locals Break Through Blockade on Bridge to Colombia VENEZUELA: President Sacks Minister Amid Power Outages - - - - - =========== B R A Z I L =========== BIOSEV SA: Fitch Affirms LT IDRs at B+, Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed Biosev S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+' and its Long-Term National Scale Rating at 'A-(bra)'. The Rating Outlook is Stable. The ratings affirmation reflects Biosev's diversified product portfolio and its position as the second largest sugar and ethanol (S&E) producer in Brazil, and the company's important challenges to improve operating efficiency and fill its mills to their 34.6 million capacity. Biosev's heavy investments to improve agricultural yields are expected to hold back FCF amid a scenario of relatively depressed commodity prices in fiscal 2020 and fiscal 2021. Biosev's IDRs remain pressured by high business risk inherent to the S&E industry, which is very volatile and exposed to weather conditions. The ratings also incorporate Biosev's affiliation with Louis Dreyfus Company and the important operational synergies and financial support, either directly through capital injections or through access to long-term credit lines. Following the improvements to Biosev's financial profile in 2018, Fitch forecasts a relatively stable net adjusted leverage around 3.4x up to fiscal 2021. KEY RATING DRIVERS Challenging Business Environment: In Fitch's opinion, 2019 will be a challenging year for Brazilian S&E producers. High global inventory is expected to hold back a more significant increase in sugar prices despite a more balanced global supply and demand expected for the year. Fitch's base case projections incorporate average global raw sugar prices of USD13 cents per pound in 2019, fairly unchanged compared to 2018, and USD13.7 cents per pound in 2020. Ethanol prices are also not expected to increase, as they should remain indirectly constrained by a relatively stable combination of international oil prices and the Brazilian FX rate, which should limit any significant increase in gasoline prices in the year. Fitch expects price stability for ethanol in fiscal 2020 and lower prices in fiscal 2021, as average brent prices are expected to drop to USD62/b from USD64/b. Challenges to Improve Operating Efficiency: Biosev still faces challenges to improve yields and to advance in key operating indicators. Fitch acknowledges the company efforts to improve operational results in the past three years, though the pace of recovery has been slower than anticipated. Despite some improvements, Biosev still operates with higher cash cost structure and lower capacity utilization compared to peers. Fitch forecasts the company to report crushed volumes of 30 million tons and 28 million tons in fiscal 2019 and fiscal 2020, respectively, out of total crushing capacity of 34.6 million tons. Biosev crushed 28 million tons of sugar cane in the nine months through the third quarter of 2019, comparing unfavourably with 29.1 million tons in the same period of previous year, and implying an annualized capacity utilization of only 86%. As per the agency's calculations, the company's cash cost (including crop care spending and investments to renew the cane fields) reached BRL982/ton in the LTM through Dec.31, 2018, comparing favourably with BRL1,018/ton in fiscal 2018. However, operating performance declined in the 2018/2019 crop season after three years of recovering yields, negatively affected by dry weather conditions in the beginning of 2018. Biosev reported average agricultural yield of around 73.3 ton/ha in the nine months through the 3Q19, below the industry's average, while total recoverable sugar was 3.7 million tons in the 9M19, a 2.5% reduction compared to the previous year. Positive Affiliation with Louis Dreyfus Company: Fitch believes the affiliation of Biosev with Louis Dreyfus Company is credit positive as it enhances its business model and financial flexibility, with better access to long-term credit lines. Louis Dreyfus Company owns 94% of Biosev and supports the company both operationally and financially, as demonstrated by the BRL3.5 billion capital injection and the extension of BRL3.6 billion debt amortization profile concluded in 2018. This affiliation also translates into positive synergies and gives Biosev access to a broad range of data and information, as well as the adoption of efficient risk management practices that has been reflecting positively on the attractive level of hedged sugar prices and helped to reduce the impact of FX volatility. Stable Leverage Expected: Fitch expects Biosev to report net adjusted leverage at around 3.0x in fiscal 2019 and 3.4x in fiscal 2020, comparing with 2.9x on March 31, 2018. Fitch's projected leverage incorporates the expectation of lower EBITDA generation, while net adjusted debt should remain relatively stable at about BRL4.1 billion. As of Dec. 31, 2018, Biosev had total adjusted debt of BRL8.3 billion, including BRL2.3 billion of obligations related to land lease as per Fitch's methodology, of which USD-denominated debt accounted for about 65%. The company's debt consists of exchange contract advance (48% of total debt), export prepayment (24%), restructured debt (18%) and others (10%), of which 47% is unsecured. FCF to Remain Negative: Fitch expects Biosev to report negative annual FCF of BRL100 million over the next three years, in the absence of material improvement in crushed volumes and amid a depressed commodity price scenario. Base case scenario projects EBITDAR of BRL2.1 billion in fiscal 2019, with a 32% margin, and BRL1.9 billion in fiscal 2020. In the LTM ended December 2018, Biosev generated BRL2.2 billion of EBITDAR and BRL611 million of cash flow from operations (CFFO). FCF will remain pressured by average investments of about BRL1 billion per year, which should be necessary to increase agricultural yields and capacity utilization of its mills. High Industry Risks: The Brazilian S&E industry is characterized by intense price volatility and below average access to liquidity. International sugar prices can fall below the marginal cash cost of Brazil's lowest cost producers, which combined with the industry's capital intensive nature can lead to negative FCF and rapidly erode liquidity positions across the board. Price volatility is also present in the Brazilian ethanol market following Petrobras's fuel policy of setting domestic gasoline prices on a daily basis. S&E companies' performance is also affected by weather conditions and their impact on yields and cost dilution. Other risk is the FX exposure due to Biosev's export orientation. DERIVATION SUMMARY The ratings reflect Biosev's challenge to rapidly advance in key operating indicators and improve FCF generation. Biosev's heavy investments to improve agricultural yields and fill its mills to capacity are expected to keep FCF in negative territory amid a scenario of relatively depressed commodity prices in fiscal 2020 and fiscal 2021. Biosev's affiliation with Louis Dreyfus Company is perceived as highly accretive for the ratings and Fitch expects the support to remain in place over the next years. While access to liquidity in the industry is typically scarce, Biosev differentiates itself through its proven track record and ability to access funding from either the parent or local banking market, as observed in 2018. Biosev's IDR is positioned one notch below Tereos Union de Cooperatives Agricoles a Capital Variable (Tereos; IDR BB-/Stable) due to Tereos's strong business model underpinned by high degree of geographic and product diversification and capacity to use raw materials from many different sources and countries. Biosev's ratings are the same as Corporacion Azucarera del Peru S.A. (Coazucar, IDR B+/Stable) as both companies report weak and volatile operating performance whereas their liquidity remains supported by their shareholders mostly. Biosev is also rated the same as Usina Santo Angelo Ltda. (USA, A-(bra)/Stable), as Biosev's higher scale and product mix flexibility is tempered by USA's performance excellence on a low cash cost base that enables the company to generate neutral to positive FCF amid relatively depressed sugar price scenarios. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Average sugar prices of USD15 cents/pound for 2018/2019 are based on hedged prices and volumes as of Dec. 31, 2018. Fitch assumes average sugar prices of USD14 cents/pound in fiscal 2020 and 2021 including polarization premium for Brazilian sugar. -- Average Brent crude prices of USD65/b in 2019 and USD62.5/b in 2020. The combination of oil prices and the FX rate will lead Petrobras to keep adjusting domestic gasoline prices, directly affecting hydrous and anhydrous ethanol prices. -- Average FX rate of BRL3.90/USD in the forecasted period. -- Fitch forecasts 30 million tons of sugar cane crushed in fiscal 2019 and 28 million tons in 2020 due to divestitures carried out in Brazil's Northeast. As from fiscal 2020, the agency forecasts annual increases of 2% in crushed volumes. -- Product mix favouring ethanol over sugar production. -- Capex of BRL1.2 billion in fiscal 2019 and BRL900 million in fiscal 2020. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Further improvements on the company's key operational indicators; -- FCF neutral or positive following a lower cash cost structure. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Any demonstration of diminishing support from Louis Dreyfus Company would be viewed negatively by Fitch. LIQUIDITY Satisfactory Liquidity: Fitch forecasts Biosev to report satisfactory liquidity in fiscal years 2019 and 2020 due manageable bank debt maturities in the period. The agency estimates that the company will close fiscal 2019 with cash position of BRL865 million and short-term debt of BRL570 million, comparing unfavourably with BRL1.5 billion and BRL600 million reported in fiscal 2018. As of Dec. 31, 2018, when inventories for S&E players are typically high, Biosev reported satisfactory liquidity with cash of BRL900 million and short-term debt of BRL560 million, on top of inventories of finished goods at market value estimated at BRL688 million. Biosev's liquidity benefited from the BRL3.5 billion capital increase and renegotiation of terms and conditions of about BRL3.6 billion of debt concluded in fiscal 2018. Biosev has about BRL500 million of debt maturities in fiscal 2020 and BRL400 million in fiscal 2021. Higher debt maturities of more than BRL4.5 billion are due between April 2021 and March 2023, and Fitch expects Louis Dreyfus Company to continue to financially support the company either directly through capital injections or through access to long-term credit lines. FULL LIST OF RATING ACTIONS Fitch has affirmed Biosev's ratings as follows: -- Long-Term Foreign Currency IDR at 'B+'; -- Long-Term Local Currency IDR at 'B+'; -- Long-Term National Scale Rating at 'A-(bra)'. The Rating Outlook is Stable. BRAZIL: Looks to Defense Industry for Economic Boost ---------------------------------------------------- EFE News reports that the Brazilian government hopes that President Jair Bolsonaro's push for the modernization and re-equipping of the armed forces will bolster the defense industry and help Brazil's economy recover. The new policy was disclosed by the vice president, reserve army Gen. Hamilton Mourao, as well as by the defense minister, Gen. Fernando Azevedo e Silva, during the opening ceremony of the new edition of LAAD Defense & Security, the biggest defense industry expo in Latin America, being held in Rio de Janeiro, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Nov. 14, 2018, S&P Global Ratings lowered its long-term foreign and local currency ratings on Argentina to 'B' from 'B+' and affirmed its short-term foreign and local currency ratings at 'B'. S&P said, "We also removed the long-term ratings from CreditWatch, where we placed them on Aug. 31, 2018, with negative implications. The outlook on the long-term ratings is stable. At the same time, we lowered our national scale ratings to 'raAA-' from 'raAA'. We also lowered our transfer and convertibility assessment to 'B+' from 'BB-'." S&P said, "The stable outlook reflects our expectation that the government will implement difficult fiscal, monetary, and other measures to stabilize the economy over the coming 18 months, gradually staunching the deterioration in the sovereign's financial profile and debt burden, reversing inflation dynamics, and restoring investor confidence. The combination of lower government financing needs, declining inflation and interest rates, and expectations of continuity in key economic policies after national elections in October 2019 could set the stage for economic recovery and contain external vulnerability. Fitch Ratings affirmed on May 8, 2018, Argentina's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' and revised the Outlook to Stable from Positive. On December 4, 2017, Moody's Investors Service upgraded the Government of Argentina's local and foreign currency issuer and senior unsecured ratings to B2 from B3. The senior unsecured shelves were upgraded to (P)B2 from (P)B3. The outlook on the ratings is stable. At the same time, Argentina's short-term rating was affirmed at Not Prime (NP). The senior unsecured ratings for unrestructured debt were affirmed at Ca and the unrestructured senior unsecured shelf affirmed at (P)Ca. As previously reported by the TCR-LA, Argentina defaulted on some of its debt late July 30, 2014, after expiration of a 30- grace period on a US$539 million interest payment. Earlier that , talks with a court-appointed mediator ended without resolving a standoff between the country and a group of hedge funds seeking full payment on bonds that the country had defaulted on in 2001. A U.S. judge had ruled that the interest payment couldn't be made unless the hedge funds led by Elliott Management Corp., got the US$1.5 billion they claimed. The country hasn't been able to access international credit markets since its US$95 billion default 13 years ago. On March 30, 2016, Argentina's Congress passed a bill that will allow the government to repay holders of debt that the South American country defaulted on in 2001, including a group of litigating hedge funds that won judgments in a New York court. The bill passed by a vote of 54-16. COMPASS MINERALS: Moody's Puts Ba1 CFR on Review for Downgrade -------------------------------------------------------------- Moody's Investors Service placed the Ba1 corporate family rating, Ba1-PD probability of default rating and instrument ratings of Compass Minerals International, Inc. under review for downgrade following the company's announcement that it plans to acquire the remaining 65% ownership in Brazilian specialty plant nutrition company, Produquimica Industria e Comercio S.A. (Produquimica). The expected price for the remaining 65 percent of equity in Produquimica is expected to range from $460million to $480 million, including assumption of debt. The company plans to finance the transaction with debt. "Weaker earnings as a result of a mild 2015-2016 winter, weak agricultural markets, continued elevated capital spending for capacity expansions in 2016 and 2017 combined with the high valuation multiple associated with the acquisition of the remaining equity in Produquimica elevates the risk that leverage could remain above expected levels for the Ba1 rating for an extended period of time," said Moody's analyst, Anastasija Johnson. RATINGS RATIONALE On Review for Downgrade: Issuer: Compass Minerals International Inc -- Probability of Default Rating, Placed on Review for Downgrade, currently Ba1-PD -- Corporate Family Rating, Placed on Review for Downgrade, currently Ba1 -- Senior Secured Revolving Credit Facility due July 2021, Placed on Review for Downgrade, currently Ba1 (LGD3) -- Senior Secured Term Loan, Placed on Review for Downgrade, currently Ba1 (LGD3) -- Senior Unsecured Notes due July 2024, Placed on Review for Downgrade, currently Ba2 (LGD5) Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Ratings Unchanged: -- Speculative Grade Liquidity Rating, unchanged at SGL-3 The placement of Compass Minerals ratings under review reflects expectations that leverage could remain elevated due to the high multiple paid for Produquimica and the lack of free cash generation at Compass. Additionally, the company will likely face increased headwinds in 2017 due to lower crop prices, as well as weaker earnings from its salt segment following a mild 2015-2016 winter season. Pro forma for the acquisition, leverage increases to 3.5 times in the twelve months ended June 30, 2016, from 2.7 times actual. However, Moody's expects leverage to rise close to 4 times by the end of 2016 as a result of the expected decline in salt and specialty potash fertilizer volumes and prices. Leverage is also rising at a time when the company continues to have elevated capital expenditures for its capacity expansion projects and is not expected to generate free cash flow for debt repayment. In addition, it is acquiring a lower margin business. Therefore, deleveraging over the next two years would depend on a recovery in salt pricing and volume increases to generate higher than expected earnings and cash flow. The review will focus on the target company's audited financials and liquidity arrangements. The review will also focus on Compass Minerals projections, its ability to reduce leverage below 3.5 times within two years and expected liquidity given seasonal nature of working capital needs in both salt and fertilizer businesses. If Moody's determines that subsequent to the acquisition of Produquimica Compass' leverage is likely to remain above 3.5x for more than two years, the company's CFR could be lowered by a notch. Compass Minerals' Ba1 corporate family rating reflected historically low leverage and strong margins over most of the cycle. The rating also reflected Compass Minerals' secure access to high quality and low-cost salt deposits, and efficient distribution network that utilizes low-cost water transportation. The company is also the largest North American producer of sulfate of potash (SOP) fertilizer and benefits from its low-cost production of SOP from naturally occurring brines. The ratings are limited by Compass Minerals small scale as measured by net sales, net assets, as well as a narrow product portfolio that is significantly exposed to weather-driven demand volatility for rock salt. Compass Minerals' salt segment represents approximately 80% of net sales, while the plant nutrition fertilizer business contributes roughly 20%. The weather-dependent highway deicing business, which is a part of the salt segment, alone generates around 50% of the company's net sales. The warm winter of 2015/16 has put pressure on rock salt prices in the current contract season and volumes may decline further if the beginning of the 2016/17 winter is warm as well. Additionally, Compass' credit profile reflects the mature and seasonal nature of the highway deicing business in the US, as well as the company's need to pursue capital projects or acquisitions in order to provide a more attractive increase in revenue and earnings growth for its shareholders. The principal methodology used in these ratings was Global Chemical Industry Rating Methodology published in December 2013. Headquartered in Kansas, US, Compass Minerals International, Inc. is a leading North American producer of salt used for highway deicing, agriculture applications, water conditioning, and other consumer and industrial uses. The company is also a significant producer of SOP used on specialty crops, such as fruits and nuts, in the US and Canada. For the twelve months ended June 30 2016, Compass Minerals generated net sales (gross revenues after shipping and handling) and a Moody's-adjusted EBITDA of $792 million and $306 million, respectively. JALLES MACHADO: Fitch Affirms LT IDRs at 'BB-', Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Jalles Machado S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-'. At the same time, Fitch has upgraded the company's long-term National Scale Rating to 'A+(bra)' from 'A(bra)'. The Rating Outlook is Stable. The affirmation of the IDRs reflects Fitch's expectation that Jalles Machado will keep generating robust cash flow from operations (CFFO) and operating margins in the next four years, with a moderate net leverage comparable with its peers at the 'BB-' rating level. Fitch also views positively Jalles Machado's liquidity profile underpinned by its track record and ability to access different sources of finance at adequate tenors. The ratings also incorporate Fitch's view that the company will gradually increase crushed volumes, generating positive FCF while it invests to raise total capacity to 5 million tons. The intrinsically high volatility of the sugar and ethanol (S&E) industry continues to constrain the IDRs. The national scale rating upgrade reflects Jalles Machado's strong business model relative to peers that allows it to operate on a low cash cost structure and bear the intrinsic price volatility of its products. The company is able to offer a more balanced product mix while it benefits from a premium portfolio of products that includes branded organic and crystal sugar sold in the Brazilian retail market. Low land lease costs and presence of fiscal incentives also benefits the company's business model. KEY RATING DRIVERS Positive FCF: Fitch forecasts Jalles Machado will report positive FCF over the next three years as capacity utilization is expected to remain high and the focus on ethanol and presence of organic sugar in the product portfolio mitigate the impact of relatively depressed sugar prices. While diverting 60% of all sucrose into ethanol, Fitch expects the company to sell relatively large volumes of retail white and organic sugar at attractive prices, the latter estimated at 1.7 million bags as from FY20, comparing to 1.6 million bags expected for FY19. Fitch also expects Jalles Machado to report agricultural yields in line with historical average and to crush an average of 4.6 million tons of sugar cane as from the 2019/2020 crop season, up 6% from 4.3 million tons in 2018/2019. Fitch projects Jalles Machado to report BRL556 million of EBITDAR in FY19 and BRL602 million in FY20, with margins around 72%, benefiting from the company's good operating performance. In the LTM ended Dec. 31, 2018, Jalles Machado reported BRL576 million of EBITDAR and cash flow from operations (CFFO) was BRL479 million. Base case projections incorporate annual investments of about BRL400 million, including investments in crop care and planting as the company is self-sufficient in sugar cane. Strong Business Model: Jalles Machado has a strong business model that allows it to operate with a low cash cost structure and more stable operating margins, comparing favorably with the industry average. Fitch estimates the company will close FY19 with cash costs plus maintenance investments of USD12 cents/pound, some USD3 cents/pound below industry average. High operating margins also reflect the fiscal incentives provided by the State of Goias on the sale of sugar and ethanol. On top of receiving state fiscal tax rebates, leased-land costs are lower when compared to Sao Paulo. In addition, the warmer climate of the state and the use of irrigation benefits agricultural yields. Jalles Machado offers a differentiated product portfolio, including the sale of branded organic and crystal sugar. Prices for both products command large premiums compared to Very High Polarizaton (VHP) sugar. Product mix also includes sale of hydrous, anhydrous, industrial ethanol, sanitizers, and dry yeast. The company has good flexibility to switch production between sugar and ethanol, according to prevailing commodity prices. In the 2019/2020 crop season, ethanol is expected to represent about 60% of product mix and sugar 40%, compared to 62% and 38%, respectively, in 2018/2019. Challenging Business Environment: In Fitch's opinion, 2019 will be a challenging year for Brazilian S&E producers. High global inventory is expected to hold back a more significant increase in sugar prices despite a more balanced global supply and demand expected for the year. Fitch's base case projections incorporate average global raw sugar prices of USD13 cents per pound in 2019, fairly unchanged compared to 2018, and USD13.7 cents per pound in 2020. Ethanol prices are also not expected to increase, as they should remain indirectly constrained by a relatively stable combination of international oil prices and the Brazilian FX rate, which should limit any significant increase in gasoline prices in the year. Fitch expects price stability for ethanol in FY20 and lower prices in FY21, as average brent prices are expected to drop to USD62/b from USD64/b. Moderate Leverage: Fitch expects Jalles Machado to report net adjusted leverage at around 1.9x in fiscal 2019 and 1.7x in fiscal 2020, comparing slightly better with 2.1x on March 31, 2018. Fitch's projected decline in net leverage ratios in the ongoing crop season reflects the expectation of higher EBITDAR and a gradual reduction in net adjusted debt. As of Dec. 31, 2018, consolidated adjusted debt was BRL1.6 billion, including obligations related to land lease, of which USD-denominated debt accounted for 25%. FX risk is well managed as about 25% of revenues come from exported organic sugar and principal and interest payments up to 2020/2021 are protected through a combination of USD-denominated assets and derivatives. Jalles Machado remains with good access to long-term financing both in the domestic banking and capital markets on an unsecured basis. High Industry Risks: The Brazilian S&E industry is characterized by intense price volatility and below average access to liquidity. International sugar prices are highly volatile and can fall below the marginal cash cost of Brazil's lowest cost producers. Price volatility and the industry's capital intensive nature can lead to negative FCF and erode liquidity positions across the board. Price volatility is also present in the Brazilian ethanol market following Petrobras's fuel policy of setting domestic gasoline prices on a daily basis. S&E companies' performance is also affected by weather conditions and their impact on yields and cost dilution. Other risks include the FX exposure due to Jalles Machado's export orientation. DERIVATION SUMMARY Jalles Machado has a robust business model, with low cash cost structure and differentiated product portfolio, which enables the company to generate resilient CFFO and above average operating margins in an industry characterized by intense price volatility and performance exposure to weather conditions. While access to liquidity in the industry is typically scarce, Jalles Machado differentiates itself through its proven track record and ability to access different sources of finance. Jalles Machado's IDR is positioned at the same level as Tereos Union de Cooperatives Agricoles a Capital Variable (Tereos; IDR BB-/Stable) due to Tereos's strong business model underpinned by high degree of geographic and product diversification and capacity to use raw materials from many different sources and countries, tempered by Tereos' higher leverage. Jalles Machado's ratings are one notch above Corporacion Azucarera del Peru S.A. (Coazucar, IDR B+/Stable) due to Coazucar's weaker and more volatile performance, high leverage and weak liquidity position that it is primarily bolstered by its shareholders. Despite Biosev S.A. (IDR B+/Stable) position as the second largest S&E producer in Brazil, the company has important challenges to improve operating efficiency, and agricultural yields and cash cost are weaker than Jalles Machado. Biosev also benefits from its affiliation with Louis Dreyfus Company. Jalles Machado is also rated above Usina Santo Angelo Ltda. (USA, A-(bra)/Stable) given its larger scale, better product mix and superior financial flexibility. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Average raw sugar prices of USD14 cents/pound for the next four years including polarization premium for Brazilian sugar. Fitch projections assume organic sugar will keep paying high premiums compared to VHP and crystal sugar. -- Average Brent crude prices of USD65/b in 2019 and USD62.5/b in 2020. The combination of oil prices and the FX rate will lead Petrobras to keep adjusting domestic gasoline prices, directly affecting hydrous and anhydrous ethanol prices. -- Average FX rate of BRL3.90/USD. -- Crushed volumes flat at 4.6 million tons from 2019/2020 on with agricultural yields at the historical levels. -- While 60% of all sucrose its expeted to be diverted into ethanol, Fitch expects Jalles Machado to maximize white and organic sugar as much as possible. Fitch expects Jalles to report average sales volumes of 2.5 million bags and 1.7 million bags, respectively, as from FY20. -- Average capex of BRL390 million as from FY20. CAPEX is estimated at BRL420 million in FY19. -- Dividends of 20% of net profts as from FY21. Fitch expects dividends of BRL8.6 million for FY19. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- An upgrade of the IDR is unlikely in the medium term due to intrinsically high volatility and funding limitations in this sector. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Net adjusted debt to EBITDAR above 3.0x on a sustainable basis; -- Consistently negative FCF; -- Any signs of deterioration in financial flexibility. LIQUIDITY Comfortable Liquidity: Fitch expects Jalles Machado to report cash and short-term debt of BRL425 million and BRL205 million, respectively, in fiscal year ended March 31, 2019, resulting in robust cash to short-term debt coverage ratio of over 2.0x. The strong cash position of BRL394 million in the third quarter of fiscal 2019, exceeding short-term debt of BRL319 million, incorporated the sale of 60% participation in the cogeneration asset located at the Jalles Machado mill to Albioma Participaoes do Brasil (Albioma) for BRL66 million. Jalles Machado has an extended debt amortization profile, with BRL309 million of debt maturing during 2020 and BRL372 million during 2021. Fitch expects the company to use FCF generation to amortize part of debt maturities. Jalles Machado also has good access to long-term financing in the domestic banking and capital markets. Liquidity also benefitted from the company's strategy to accelerate ethanol sales in November in order to capitalize on the biofuel's relatively high market prices. This strategy proved to pay off considering the decline in ethanol prices seen in January and February of 2019 in the State of Goias. In volume terms Jalles Machado reported a 45% decline in ethanol inventories in Dec 31 2018 compared to the same period of previous year. Overall, inventories at market value amounted to BRL329 million as of 3Q19, down 5% from 3Q18. FULL LIST OF RATING ACTIONS Jalles Machado S.A Fitch has affirmed the following ratings -- Long-Term Foreign Currency IDR at 'BB-'; -- Long-Term Local Currency IDR at 'BB-'. Fitch has upgraded the following rating: -- Long-Term National Scale Rating to 'A+(bra)' from 'A(bra)'. The Rating Outlook is Stable. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Eyes Grid Fix With US$600MM From China ---------------------------------------------------------- Dominican Today reports that the draft for the US$600 million financing agreed with China's government last November in Shanghai to be used to rebuild the electricity grid isn't ready yet. They're working on it, however, according to government sources who revealed that a National Palace meeting dealt with the financing, according to Dominican Today. Currently, the Dominican Government continues to work on the project to then send it to Congress and for the funds to enter the economy, through the State Electric Utility (CDEEE), the report notes. During the meeting in Shanghai, Dominican officials affirmed that the interest rate will be preferential and between 2% and 3%, the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. DOMINICAN REPUBLIC: Rum Makers to Fight Tax Dodgers --------------------------------------------------- Dominican Today reports that rum distillers praised Internal Taxes' (DGII) high security measure to combat evasion and the black market in alcohols, beers and cigars, through the "Control and Trazabilization System." The Dominican Rum Producers Association (Adopron) said they'll support the DGII to combat bootleg alcoholic beverages, according to Dominican Today. "The members of this guild will collaborate with the collecting entity in the implementation of this initiative, confident of its compliance by all actors in the alcoholic beverage sector, regardless of the tax regime in which they operate," said Adopron president Mario Pujol, 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: Sluggish Economic Trend Concerns Experts ------------------------------------------------------------ Dominican Today reports that the current economic slowdown concerns economists of the State University UASD, who cautioned that if the trend continues, growth would reach only 4% by 2023. "If by 2023 the economy falls to a growth that we estimate of 4%, we'll face difficulties in meeting international commitments," said Juan Del Rosario, of the UASD Economic Faculty, according to Dominican Today. "After weighing the risk, the downward trend in the projected real GDP growth rate for 2019 for the Dominican economy is explained by the global uncertainty related to the moderate slowdown in the economy of the United States, which grew 3.0% in 2018 and is projected to be 2.7% in 2019, in the European Union and in mainland China," indicates the report by Del Rosario and researchers Eduardo Vasquez, Teresa Amelia Pelletier and Juan Leonel, 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. ===================== E L S A L V A D O R ===================== TITULARIZADORA DE DPRS: Fitch Rates Series 2019-1 Notes 'BB-' ------------------------------------------------------------- Fitch Ratings has affirmed the outstanding series issued by Titularizadora de DPRs Limited. Fitch has also assigned final ratings to the up to USD85 million series 2019-1 variable funding loan to be issued under the same program considering a maximum program size of USD150 million. The future flow program is backed by existing and future U.S. dollar-denominated diversified payment rights (DPRs) originated by Banco Cuscatlan de El Salvador, S.A. (BC). The majority of DPRs are processed by designated depository banks (DDBs) that have signed acknowledgement agreements (AAs). The series 2019-1 variable fund loan closed on April 2, 2019 and is expected to fund in one single drawdown during the next 12 months known as the commitment period. Upon the funding of the 2019-1 series, the total program size will be approximately USD150 million. Fitch's ratings address timely payment of interest and principal on a quarterly basis. KEY RATING DRIVERS Originator's Credit Quality: The rating of the transaction is tied to the credit quality of the originator, BC's Long-Term (LT) Issuer Default Rating (IDR) is limited by El Salvador's Country Ceiling of 'B' and is driven by the potential support that Fitch believes BC would receive from its shareholder, Grupo Terra, if needed. Fitch's assessment of the group's financial ability is strongly linked to that of Petroholding, S.A. de C.V. Going Concern Assessment (GCA): Fitch uses a GCA score to gauge the likelihood that the originator of a future flow transaction will stay in operation throughout the transaction's life. Fitch assigned BC a going concern assessment (GCA) score of 'GC2' based on the bank's moderate systemic importance and potential support from Petroholdings, allowing for a maximum uplift of four notches. However, Fitch tempers notching uplift for this transaction taking into account the constraints. Uplift from LT IDR: The GCA score of 'GC2' allows for a maximum uplift of four notches from the originator's IDR, but uplift is tempered to two notches due to factors mentioned below, including that BC's IDR is support-driven, the program size as a percentage of non-deposit funding, the potential exposure to diversion risk and El Salvador's lack of last resort lender. Future Flow Debt Size: Considering the maximum program size of USD150 million, BC's total outstanding future flow debt is estimated to represent around 11% of the bank's consolidated liabilities and 60% of non-deposit funding. While Fitch considers these ratios adequate enough to differentiate the credit quality of the transaction from the originator's LT IDR, the future flow debt size is a constraint on the DPR rating. Strong Program Performance: The reported quarterly maximum debt service coverage ratio (DSCR) has been close to 70x on average since the 2016 disbursement. BC's DPR business line is supported by the bank's well-regarded franchise, branch network, and longstanding relationships with key corporate clients. Potential Redirection/Diversion Risk: The structure mitigates certain sovereign risks by collecting cash flows offshore until collection of periodic debt service amount. In Fitch's view, diversion risk is partially mitigated by the acknowledgments signed by two designated depositary banks (DDBs). The largest DDB, Citibank N.A., has been processing more than 80% of DPR flows this past year. While the trend is decreasing, Fitch believes the DDB concentration still exposes the transaction to a higher degree of diversion risk than other Fitch-rated Central American DPR programs. The future flow rating reflects this exposure. RATING SENSITIVITIES The credit strength of the transaction is linked to the performance of BC. The future flow ratings are sensitive to changes in the credit quality of Banco Cuscatlan de El Salvador, S.A., the ability of the DPR business line to continue operating (as reflected by the GCA score) and the performance of the DPR program. A downgrade of the bank's IDRs may trigger a downgrade to the future flow ratings. In addition, severe reductions in coverage levels or an increase in the level of future flow debt as a percentage of the bank's liabilities could result in rating downgrades. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. Fitch has affirmed the following rating: -- Series 2016-1 due 2021 at 'BB-'; Outlook Stable. Fitch has assigned the following final rating: -- Series 2019-1 due 2024 'BB-'; Outlook Stable. ============= J A M A I C A ============= CABLE & WIRELESS: Fitch Rates Proposed $400MM Notes 'BB-' --------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB-'/'RR4' to Cable & Wireless Communications Limited (CWC) proposed USD400 million notes issuance due 2027. The notes will be issued out of Sable International Finance Limited (SIFL), an indirect subsidiary of CWC. The notes will be guaranteed on a senior basis by CWC, Cable & Wireless Limited, as well as other guarantors in the CWC corporate structure. The proceeds from the notes will be used to partially refinance an existing term loan, as well as partially repay existing SIFL unsecured notes. CWC's ratings reflect its leading market positions across well-diversified operating geographies and offerings, underpinned by solid network competitiveness. The long-term growth opportunities for data use and the concentrated nature of these markets -- often with only one major competitor -- provide additional support for the 'BB-' ratings. Further factored in the ratings are the company's strong liquidity position and manageable debt amortization schedule. Pressured growth in its mobile and fixed-voice segments due to unfavorable near-term industry trends, high leverage, and cash flow leakage remain credit concerns that constrain the rating at 'BB-'. KEY RATING DRIVERS Strong Diversified Operator: The company's operations are well diversified into mobile and fixed services, and it has the No. 1 or No. 2 market position in the majority of its markets. The company's revenue mix per service is well balanced, with mobile accounting for 29% of total sales during 2018, fixed-line at 24%, and business to business services (B2B) at 46% of revenues. The company's geographic diversification is also solid, with a substantial fixed and mobile presence in line operations in both Panama and Jamaica, which together account for approximately 77% of mobile and 49% of fixed subscribers. Finally, the company's B2B and subsea networks across the Caribbean provide strong growth prospects. Favorable Market Structure: The market structure in the Caribbean is mostly a duopoly between CWC and Digicel Group Limited (Digicel). Due to Digicel's stressed capital structure, pricing is expected to remain rational in the near term and Fitch does not believe the risk of a sizable new entrant to be high, given the relatively small size of each market amid the increasing market maturity, especially for mobile services. Under this environment, Fitch expects the company's market positions to remain stable over the medium term. CWC's continued high investment for network upgrades should bode well for its network competitiveness in the coming years. High Leverage: Fitch expects that EBITDA leverage will likely remain above 4.0x in the medium term, as CWC employs a leveraged equity return model, where excess cash is upstreamed to parent company LLA for dividends and/or M&A activity. Fitch expects leverage should remain below recent highs following an aggressive investment cycle during a period of stagnant cash flows. Fitch forecasts modest EBITDAR (subtracting for dividends paid to minority shareholders) growth and average capex of approximately USD350 million-USD400 million, which should result in improved FCF. Stagnant Cash Flow: Fitch believes that CWC's broadband and managed services segments will be the main growth drivers backed by its increasing subscriber base and relatively low service penetrations, and growing corporate/government clients' IT service demands. Fitch does not expect data ARPU improvements in the mobile segment to fully mitigate voice ARPU trends. Legacy fixed-voice revenue erosion is also unlikely to abate due to waning demand given cheap mobile voice or Voice-over-internet-protocol (VoIP) services. Potential Refinancing and Restructuring Activities: CWC intends to simplify its capital structure in the future in a manner that would lead to the creation of a new holding company, as well as the refinancing of all existing CWC senior notes. Fitch expects the group to continue holding debt through its credit facilities at SIFL and Coral-US Co-Borrower LLC (Coral), as well as the proposed SIFL notes, and the SPV notes. The group's SPV notes have been structured in a manner that would allow them to be moved to the new holding company. At that time, the SPV notes would be both subordinated to CWC's credit facilities, including its Term Loan B-4 (TLB), revolving credit facility (RCF), the proposed notes, and operating company debt, and would likely be downgraded, based on their diminished recovery prospects. Capped Recovery Ratings: The ratings have been capped at 'RR4' due to Fitch's Country-Specific Treatment of Recovery Rating Criteria, which does not allow uplift for issuance of by companies that operate in countries where concerns exists about whether the law is supportive of creditor rights, and/or where there is significant volatility in the enforcement of the law and legal claims. DERIVATION SUMMARY CWC's leading market position and diversified operations and relatively stable EBITDA generation compare in line or favourably against other regional telecom operators in the 'BB' category. This strength is offset by its higher leverage than most peers in the 'BB' rating category, as well as LLA's financial strategy, which could limit any material deleveraging. The company's overall financial profile is stronger than its regional competitor, Digicel Group Limited (B-/Stable), which recently restructured its debt. The company has a weaker financial profile and higher leverage than Millicom Group (BB+/Stable), which supports a multi-notch differential. No country ceiling, parent-subsidiary linkage, or operating environment aspects impact the ratings. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Low single-digit revenue growth, primarily driven by B2B segment as residential revenue growth remains stagnant; -- EBITDA margin to remain stable at 35% in medium term; -- Capex to sales ratio of 15%-17% in the medium term. For the purposes of projecting recovery rates, Fitch makes estimates for maintenance capex, interest and rent payments. Stressed EBITDA from operating entities in Panama and the Bahamas have been excluded from the recovery analysis, based on CWC's minority ownership stake and expected treatment in a default scenario. Fitch uses a 5.5x multiple, based on historical precedent and the duopoly structure in CWC's main markets. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action is not like to occur given management's history of maintaining moderately high levels of leverage, which have been in excess of 4.0x. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- Sustained EBITDAR-based adjusted net leverage ratios above 5.0x; -- An erosion of the company's strong business position or liquidity position. LIQUIDITY CWC's liquidity profile is sound, backed by its long-term debt maturities profile, relatively stable operational cash flow generation, as well as committed revolving credit facility. As of Dec. 31, 2018, the company held cash and equivalents of USD416 million, against current portion of debt and capital leases of USD201 million. Since that time, the group has completed the repayment of the 2019 Sterling bonds (USD107 million), issued an additional USD300 million of SPV notes due 2027, and partially repaid USD115 million of existing SIFL notes. The proceeds from the proposed transaction would be used to continue paying down SIFL debt, as well as the company's Term Loan B-4 facility. Fitch expects cash and cash equivalents of USD314 million following the proposed transaction. The company has an undrawn USD625 million revolving credit facility due 2023, which bolsters its financial flexibility. The company has good access to international capital markets, when in need of external financing. FULL LIST OF RATING ACTIONS Fitch has assigned the following rating: Sable International Finance Limited -- USD400 million senior notes due 2027 'BB-'/'RR4'. CABLE & WIRELESS: Moody's Rates Proposed $400MM Sr. Sec. Notes Ba3 ------------------------------------------------------------------ Moody's Investors Service has assigned a Ba3 rating to the proposed USD400 million senior secured notes due 2027, to be issued by Sable International Finance Limited (SIFL), an indirect wholly-owned subsidiary of Cable & Wireless Communications Limited (CWC). At the same time, Moody's has affirmed the Ba3 corporate family rating (CFR) of CWC, and the ratings of all other debt instrument ratings within the group. The outlook on all ratings is stable. CWC will use the issuance proceeds to repay USD150 million of its existing 2022 notes at SIFL (rated B2) and about USD235 million of its existing term loan (rated Ba3), and pay fees and expenses related to the issuance and debt repayments. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and that these agreements are legally valid, binding and enforceable. The following rating actions were taken: Assignment: Issuer: Sable International Finance Limited USD400 million Senior Secured Regular Bond/Debenture, Assigned Ba3 Affirmations: Issuer: Cable & Wireless Communications Limited Corporate Family Rating, Affirmed Ba3 Issuer: CORAL-US CO-BORROWER LLC Senior Secured Bank Credit Facility, Affirmed Ba3 Issuer: Sable International Finance Limited Senior Secured Bank Credit Facility, Affirmed Ba3 Senior Unsecured, Affirmed B2 Issuer: C&W Senior Financing Designated Activity Senior Unsecured, Affirmed B2 Rating withdrawn: Issuer: Cable & Wireless Communications Limited Probability of Default Rating, previously rated Ba3-PD Outlook Actions: Issuer: C&W Senior Financing Designated Activity Outlook, Remains Stable Issuer: Cable & Wireless Communications Limited Outlook, Remains Stable Issuer: CORAL-US CO-BORROWER LLC Outlook, Remains Stable Issuer: Sable International Finance Limited Outlook, Remains Stable RATINGS RATIONALE The Ba3 rating of the proposed USD400 million senior secured notes reflects their pari passu ranking with the existing term loan and revolving credit facility (RCF) at SIFL, both rated Ba3. The USD400 million notes will have the same guarantors and share the same collateral as the term loan and RCF. The USD400 million notes, as well as the term loan and RCF, rank ahead of the 2026 and 2027 notes issued by C&W Senior Financing Designated Activity Company and the 2022 notes issued by SIFL, all rated B2. The issuance proceeds will serve to repay a portion of the group's term loan rated Ba3 and a portion of the 2022 notes rated B2 and will not materially change the proportion of debt of each class, leaving notching unchanged. Proceeds of the USD400 million issuance will essentially be used to repay existing debt of the group and has therefore no material impact on the group debt level. The affirmation of CWC's Ba3 corporate family rating reflects its effective business model, strong profitability and leading market positions throughout the Caribbean and Panama. At the same time, the rating also takes into consideration the company's large exposure to emerging economies, high competitive pressures in most of its markets and its fairly high leverage (i.e. gross debt/EBITDA, including Moody's adjustments) for the Ba3 rating, at about 4.5x. The stable outlook on CWC's rating reflects Moody's expectations that the company's revenue growth will be modest, with its EBITDA margin (including Moody's adjustments) maintained at around 40% and liquidity remaining adequate in the next 12-18 months. The outlook also incorporates slightly positive free cash flow for the next 12-18 months and a gradual decline in adjusted debt/EBITDA. A rating upgrade could be considered if more conservative financial policies lead to deleveraging to under 2.5x (adjusted debt/EBITDA) on a consolidated basis, while maintaining a stable adjusted EBITDA margin and generating strong positive free cash flow, all on a sustained basis. CWC's ratings could be downgraded if (1) the company's adjusted debt/EBITDA remains over 4.0x (on a consolidated basis) on a sustained basis; (2) its adjusted EBITDA margin declines toward 35% on a sustained basis; (3) the company's market shares decline or its liquidity position weakens; (4) it makes a large cash distribution to its parent company. CWC is an integrated telecommunications provider offering mobile, broadband, video, fixed-line, business and IT services in Panama, Jamaica, the Bahamas, Trinidad and Tobago, and Barbados in addition to 13 other markets in the Caribbean and Seychelles. In 2018, the company generated revenue of USD2.3 billion. CWC is a subsidiary of Liberty Latin America Ltd., which was split off from Liberty Global plc (Ba3 stable) on December 29, 2017, and is listed on the NASDAQ. Moody's has decided to withdraw the probability of default rating for its own business reasons. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. CABLE & WIRELESS: S&P Rates New $400MM Sec. Notes 'BB-' ------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating on Sable International Finance Ltd.'s new $400 million secured notes due 2027. Sable International Finance is a subsidiary of Cable & Wireless Communications Limited (CWC; BB-/Stable/B). S&P said, "We view the transaction to be debt neutral because CWC will use proceeds to repay $235 million of the existing $1.875 billion term loan B-4 due 2026 at Coral-US Co-Borrower LLC, the $150 million principal amount of its $360 million at Sable International Finance's notes due 2022, and pay any fees in connection with the new notes. The new notes will also have several incurrence covenants in line with those of CWC's current notes: net senior proportionated debt incurrence ratio of maximum of 4.0x and net proportionated debt ratio maximum of 5.0x. "Our ratings on CWC reflect its leading position as a wireline and wireless telecommunications and cable TV provider in most of the markets in which it operates; solid profitability; wide geographic, product, and customer diversification; intense competitive pressures; and overall relatively high country risk. The stable outlook on CWC reflects our expectations that its performance has recovered from damage following Hurricanes Irma and Maria in 2017. The company bolstered its EBITDA despite the stiff competition it continues to face in some markets. We expect CWC's adjusted debt to EBITDA ratio to remain closer to 4.0x and funds from operations to debt of 20%." RATINGS LIST Cable & Wireless Communications Limited Issuer credit rating BB-/Stable/B Rating Assigned Sable International Finance Ltd. Senior secured BB- =========== M E X I C O =========== GORE FREIGHT COMPANY: Hires Whitworth Law as Attorney ----------------------------------------------------- Gore Freight Company, LLC, seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ JS Whitworth Law Firm, as attorney to the Debtor. Gore Freight Company requires Whitworth Law to: (a) provide legal advice with respect to Debtor's rights and duties as debtor-in-possession and continued business operations; (b) assist, advise and represent the Debtor in analyzing the Debtor's capital structure, investigating the extent and validity of liens, cash collateral stipulations or contested matters; (c) assist, advise and represent the Debtor in post-petition financing transactions; (d) assist, advise and represent the Debtor in the sale of certain assets; (e) assist, advise and represent the Debtor in the formulation of a disclosure statement and plan of reorganization and to assist the Debtor in obtaining confirmation and consummation of a plan of reorganization; (f) assist, advise and represent the Debtor in any manner relevant to preserving and protecting the Debtor's estate; (g) investigate and prosecute preference, fraudulent transfer and other actions arising under Debtor's bankruptcy avoiding powers; (h) prepare on behalf of the Debtor all necessary applications, motions, answers, orders, reports, and other legal papers; (i) appear in Court and to protect the interests of the Debtor before the Court; (j) assist the Debtor in administrative matters; (k) perform all other legal services for the Debtor which may be necessary and proper in these proceedings; (l) assist, advise and represent the Debtor in any litigation matters, including, but not limited to, adversary proceedings; (m) continue to assist and advise the Debtor in general corporate and other matters related to the successful reorganization of the Debtor; and (n) provide other legal advice and services, as requested by the Debtor, from time to time. Whitworth Law will be paid at these hourly rates: Attorney $300 Legal Assistants $125 The Debtor paid Whitworth Law the sum of $20,000: (i) with an initial payment for a comprehensive bankruptcy analysis of $2,278 (fees of $2,250 and expenses of $28); (ii) $1,7170 to be applied to the filing fee; and (iii) the balance of $16,005, deposited into the attorney fee retainer held in the Firm's Trust Account. Whitworth Law will also be reimbursed for reasonable out-of-pocket expenses incurred. Jana Smith Whitworth, a partner at JS Whitworth Law Firm, 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. Whitworth Law can be reached at: Jana Smith Whitworth, Esq. JS WHITWORTH LAW FIRM, PLLC P.O. Box 2831 McAllen, TX 78502 Tel: (956) 371-1933 Fax: (956) 265-1753 E-mail: jana@jswhitworthlaw.com About Gore Freight Company Gore Freight Company, LLC is a general freight trucking company specializing in the delivery and shipments between Mexico, the United States, and Canada. The Company offers door-to-door delivery, cross-border shipping, fleet service, trans-loading, bonded freight services, and cross-docking. http://www.gorefreight.com/ Gore Freight Company, LLC, based in San Juan, TX, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 19-70090) on March 20, 2019. In the petition signed by Eduardo Castano, member, the Debtor disclosed $2,241,213 in assets and $1,917,084 in liabilities. The Hon. Eduardo V. Rodriguez oversees the case. Jana Smith Whitworth, Esq., at JS Whitworth Law Firm, serves as bankruptcy counsel. ===================== P U E R T O R I C O ===================== FERMARALIZ CORP: Seeks to Hire Fraticelli as Accountant ------------------------------------------------------- Fermaraliz Corp has filed an amended application with the U.S. Bankruptcy Court for the District of Puerto Rico seeking approval to hire Cynthia Garcia Fraticelli, as accountant to the Debtor. Fermaraliz Corp requires Fraticelli to: -- prepare its monthly operating reports and periodic statements of its operations; -- represent the Debtor in tax investigation; provide tax and management counseling; -- prepare tax returns; and -- provide other accounting services necessary to administer its bankruptcy estate. Fraticelli will be paid $150 per month. Fraticelli will also be reimbursed for reasonable out-of-pocket expenses incurred. Fraticelli 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 Debtors and their/its estates. Fraticelli maintains an office at: Cynthia I. Garcia Fraticelli Urb. Bella Vista 4111 Calle Nuclear Ponce, PR 00716 Tel: (787) 613-0411 Fax: (787) 812-3409 About Fermaraliz Corp. Fermaraliz Corp., based in Coamo, PR, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 18-06456) on Nov. 1, 2018. In the petition signed by Jose F. Espada Colon, president, the Debtor disclosed $389,300 in assets and $1,046,703 in liabilities. The Hon. Edward A. Godoy oversees the case. Modesto Bigas Mendez, Esq., at Modesto Bigas Law Office, is the Debtor's bankruptcy counsel. KONA GRILL: BBS-Zheng Group Has 37.3% Stake as of March 27 ---------------------------------------------------------- In a Schedule 13D filed with the Securities and Exchange Commission, these entities reported beneficial ownership of shares of common stock of Kona Grill, Inc. as of March 27, 2019: Shares Percent Beneficially of Reporting Person Owned Class ---------------- ------------ --------- BBS Capital Fund, LP 1,330,000 10% BBS Capital Management, LP 1,330,000 10% BBS Capital GP, LP 1,330,000 10% BBS Capital, LLC 1,330,000 10% Berke Bakay 2,290,581 17.2% Bakay Family Trust 152,602 1.2% Zheng, Nanyan 2,701,261 20.3% Ahwanova Limited 2,651,261 19.99% Wisdom Sail Limited 2,651,261 19.99% Audrey & Aaron Holdings Limited 2,651,261 19.99% This Schedule 13D is being filed jointly by the BBS-Zheng Reporting Persons pursuant to Rule 13d-1(k) promulgated by the SEC under Section 13 of the Securities Exchange Act of 1934, as amended. The BBS-Zheng Reporting Persons are making this single joint filing because they may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to the transactions described in Item 4 of this statement. The "group" may be deemed to beneficially own the total of 4,991,842 shares of Common Stock beneficially owned by all the BBS-Zheng Reporting Persons, or 37.3% of the outstanding shares of Common Stock. A full-text copy of the regulatory filing is available for free at: https://is.gd/AeneL4 About Kona Grill 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: Hires Financial Advisor to Evaluate Alternatives ------------------------------------------------------------ Kona Grill, Inc. has retained Piper Jaffray as its financial advisor to assist the Company in exploring and evaluating potential strategic alternatives focused on maximizing stockholder value such as a sale of the Company, merger, financing transactions, or other potential alternatives, according to a Form 8-K filed with the Securities and Exchange Commission. Director Appointment Shawn Hassel was appointed to Kona Grill's Board of Directors, effective March 21, 2019. Mr. Hassel is the co-founder and managing partner of Bestige Holdings, LLC, a private investment firm focused on building and developing a portfolio of debt and long-term equity investments in high potential businesses. Prior to founding Bestige in 2016, Mr. Hassel was a managing director with Alvarez & Marsal where he led the Phoenix Turnaround and Restructuring Practice. Before joining A&M in 2001, Mr. Hassel was a senior director with the Corporate Finance and Restructuring practice of Arthur Andersen. He has served and continues to serve as a member of multiple boards. Mr. Hassel earned a bachelor's degree in finance and accounting from the University of Arizona. Mr. Hassel will serve as Chair of the Company's Strategic Alternatives Committee, utilizing his experience to advise the Company in reviewing certain strategic alternatives for the purpose of maximizing the enterprise value of the Company. Mr. Hassel is to receive $50,000 for his first month of service on the Board of Directors, with a minimum of $25,000 for each month thereafter. Mr. Hassel is to receive no less than $150,000 for his services. Officers' Resignations Marcus Jundt informed the Company on March 22, 2019, that he was resigning as chief executive officer and as a director effective March 31, 2019. The Company's Board of Directors agreed at its Jan. 31, 2019 Board meeting to provide Marcus Jundt, the Company's chief executive officer, cash compensation effective Jan. 1, 2019 at the rate of $360,000 per year. Given Mr. Jundt's resignation effective March 31, 2019, Mr. Jundt received an aggregate of $90,000 pursuant to this annual cash compensation. Berke Bakay, the Company's executive chairman, informed the Company on March 27, 2019, that he was resigning as the Company's executive chairman effective immediately. Alex Nanyan Zheng informed the Company on March 27, 2019 that he was resigning as a director effective immediately. The Company's Board of Directors resumed the annual cash retainer of $30,000 for each non-employee director, except for Shawn Hassel, and resumed the annual cash retainer for the Chairperson of the Audit Committee of $10,000 and Chairperson of the Compensation Committee to $5,000. On March 24, 2019, Kona Grill, Inc. and Continental Stock Transfer & Trust Company entered into Amendment No. 2 to Rights Agreement which amended the Final Expiration Date of that Plan from Sept. 6, 2019 to March 24, 2019. A full-text copy of the Amended Agreement is available for free at: https://is.gd/SpBCFz 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. ================= V E N E Z U E L A ================= VENEZUELA: Locals Break Through Blockade on Bridge to Colombia -------------------------------------------------------------- Spain's News reports that hundreds of Venezuelans crossed the Simon Bolivar international bridge, which communicates the state of Tachira with Cucuta, after breaking the security barriers of the Bolivarian National Guard (GNB, militarized police) to reach Colombian territory. The people were dammed at the border of their country because they could not go through the trails, which were flooded by the rising Tachira River, so they threw themselves on the containers that the president of Venezuela, Nicolas Maduro, had placed to obstruct the bridge, according to Spain's News. In this regard, the director of Migration Colombia, Christian Kruger, blamed the Government of Maduro and the GNB "against what may happen to the people who daily travel between Colombia and Venezuela, due to the blockades" at the border crossings, the report notes. "As we had said almost a month ago, the decision of the usurper Maduro to block bridges with containers and restrict the passage of people through them, all he does is encourage irregularity," Kruger told reporters, the report relays. Spain's News discloses that many of the people climbed into the cargo containers that were located on the Venezuelan side on February 27 and that block the center of the bridge that connects the Colombian city of Cucuta with the Venezuelan city of San Antonio. Four days earlier, Maduro broke relations with Colombia and closed the three border crossings with Cucuta after the frustrated attempt of opposition leader Juan Guaido, recognized by more than 50 countries as interim president of Venezuela, to bring humanitarian aid, an initiative that ended in an outbreak of violence, the report says. Faced with this situation, thousands of people are daily engaged in illegal steps, known as trails, seeking supplies in Colombia of food, medicine and hygiene products, the report relays. Mr. Kruger said that "Venezuelans have been forced to go on the trails to cross into Colombia and back to their country," where "not only are victims of bribery by the Bolivarian National Guard, but now, in addition, They expose their life in front of the torrential waters of the Tachira River," the report notes. "Maduro is playing with the lives of Venezuelans and this must be rejected by the international community," the official said, the report discloses. On March 15, the Colombian Police implemented controls for migrants crossing the illegal crossings, the report says. As part of the operation, they are tracking antecedents, "verifying the legality of their identity documents, and is verifying what elements they bring," then explained to reporters the Metropolitan Police Commander of Cucuta, Colonel Jose Luis Palomino, 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'. VENEZUELA: President Sacks Minister Amid Power Outages ------------------------------------------------------ EFE News reports that President Nicolas Maduro has fired Electric Energy Minister Gen. Luis Motta Dominguez and replaced him with Igor Gavidia, an engineer whose top priority will be dealing with the continuing power outages across Venezuela. "I want to thank comrade . . . Motta Dominguez, who has gone through four years of constant wars at the head of the Electricity Ministry and Corpoelec. I have asked him to rest for a while, I have asked him to prepare for other responsibilities in the field of revolution," Mr. Maduro said, 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 * * *