/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190405.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, April 5, 2019, Vol. 20, No. 69 Headlines B R A Z I L AVIANCA BRASIL: Plans to Split Into Seven Units; Auction Separately JBS SA: Unit Discloses Offering of Senior Notes C O S T A R I C A AUTOPISTAS DEL SOL: Fitch Affirms B+ Note Rating, Outlook Neg. J A M A I C A NATIONAL COMMERCIAL BANK: To Establish a New Banking Division M E X I C O MAXCOM TELECOMUNICACIONES: S&P Cuts Issuer Credit Rating to 'SD' MEXICO: Foreign Firms Plan to Bid on Refinery Project, Pres Says P U E R T O R I C O 4J CUSTOM DESIGN: Unsecureds Recovery Raised to $16K at 4% AEROSTAR AIRPORT: Moody's Affirms Ba2 Bond Rating, Outlook Stable LA TRINIDAD ELDERLY: Case Summary & 18 Unsecured Creditors PUERTO RICO: Oversight Board May Seek Money Back From Bondholders V E N E Z U E L A PETROLEOS DE VENEZUELA: Oil Exports Stable in March - - - - - =========== B R A Z I L =========== AVIANCA BRASIL: Plans to Split Into Seven Units; Auction Separately ------------------------------------------------------------------- Marcelo Rochabrun at Reuters reports that Brazilian airline Avianca Brasil plans to split into seven units that it will auction off separately, with rivals LATAM Airlines and Gol Linhas Aereas Inteligentes both planning to bid for some of those parts in a bankruptcy auction. The plan to split up the carrier, filed in a Brazilian court is a significant departure from a previous proposal and adds fresh competition for some of the most-coveted airport slots in Brazil, according to Reuters. But it also shuts the door on a previous offer by competitor Azul SA, the report discloses. Azul signed a preliminary agreement this month to pay at least $105 million for a selection of Avianca Brasil's assets, a proposal that had been considered a coup by analysts who saw it as a way for Azul to challenge its bigger competitors: LATAM and Gol, the report says. Azul also last month gave Avianca Brasil a much-needed cash injection of BRL31.6 million ($8.21 million) after it fell behind on its payroll, the report notes. But Avianca Brasil's new plan involves dividing up the assets Azul sought, which include airport slots and its loyalty mileage program, into multiple new companies, the report relays. Gol and LATAM are now offering at least $70 million each, and both said their bids had been requested by Avianca Brasil's largest creditor, hedge fund Elliott Management, the report discloses. A person involved in the bankruptcy proceedings said that disagreements had emerged between Azul and creditors that threatened to derail the initial $105 million offer, the report notes. Azul declined to comment on the status of its potential bid. To be sure, Azul could still bid, but not under its initial proposal, which had also included taking over many of Avianca's aircraft leases, the report says. Azul Chief Executive Officer John Rodgerson told Reuters in March that he thought it was unlikely that LATAM or Gol could bid for Avianca Brasil, due to potential antitrust issues, the report relays. But splitting up Avianca Brasil into smaller chunks could help those carriers carve up desirable airport slots and avoid antitrust troubles, the report notes. Avianca Brasil, the country's fourth-largest airline, filed for bankruptcy in December after falling behind on payments to aircraft lessors, the report relays. Despite the lack of payments, Brazilian judges have repeatedly allowed the struggling carrier to keep flying its planes, the report adds. JBS SA: Unit Discloses Offering of Senior Notes ----------------------------------------------- JBS USA Lux S.A. has commenced a private offering of $650.0 million aggregate principal amount of senior notes due 2029 (the "Notes"). JBS USA, JBS USA Food Company and JBS USA Finance, Inc. will be Co-Issuers of the Notes. JBS S.A., certain other indirect parent companies of JBS USA and each of JBS USA's wholly-owned U.S. restricted subsidiaries that guarantee JBS USA's term loans will guarantee the Notes. JBS USA Food Company intends to use the net proceeds of the Notes, together with cash on hand, if necessary, to pay the tender price of any 7.250% Senior Notes due 2021 issued by the Co-Issuers (the "2021 Notes") tendered in connection with an offer to purchase and consent solicitation that JBS USA Food Company has announced separately. This press release is neither an offer to purchase nor a solicitation of an offer to sell or buy the Notes or the 2021 Notes. Any offer to purchase the 2021 Notes will be made solely on the terms and subject to the conditions set forth in a separate offer to purchase and consent solicitation that will be directed to holders of the 2021 Notes. There shall not be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The Notes will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States or to any U.S. persons absent registration under the Securities Act, or pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered only to "qualified institutional buyers" under Rule 144A of the Securities Act or, outside the United States, to persons other than "U.S. persons" in compliance with Regulation S under the Securities Act. =================== C O S T A R I C A =================== AUTOPISTAS DEL SOL: Fitch Affirms B+ Note Rating, Outlook Neg. -------------------------------------------------------------- Fitch Ratings has affirmed the 'B+' rating on the international notes that Autopistas del Sol, S.A. has placed in the international markets. The Rating Outlook is Negative. The notes are supported by the cash flow generation of the Costa Rican toll road Ruta 27 (the project). Fitch has also affirmed the 'AA(cri)' rating with a Stable Outlook on the local notes. KEY RATING DRIVERS The ratings reflect the asset's stable traffic and revenue profile, supported by an adequate toll adjustment mechanism. Mostly used by commuters, the project may face significant competition in the short-to-medium term in case the main competing road is substantially improved and its tariff is significantly lower than that of the project. Toll rates are adjusted quarterly to exchange rates and annually to reflect changes in the U.S. Consumer Price Index (CPI).The ratings also reflect pari passu, fully amortizing senior debt with a fixed interest rate and a cash trap mechanism that mitigates an early termination of the concession before debt is fully repaid. Fitch's rating case average Debt Service Coverage Ratio (DSCR) of 1.2x is generally in line with its criteria guidance for the rating category but is currently limited by the sovereign risk. The presence of a minimum revenue guarantee (MRG) provides an additional layer of comfort to the ratings. The Negative Outlook continues to reflect Fitch's view on Costa Rica's sovereign risk, given the toll road's exposure to the country's economic conditions and links to the sovereign credit quality through the MRG. Mostly Commuter Traffic Base [Revenue Risk - Volume: Midrange] Light vehicles account for approximately 90% of all users, which have proven to be the most stable and resilient traffic base. The road is used by commuters on workdays and by residents of the capital city, San Jose, travelling to the nearby beaches on the weekends. The road could face significant competition if major improvements to the existing and congested San Jose-San Ramon Route are made and the road is untolled or materially cheaper than the project. The concession agreement provides a MRG mechanism that compensates the Issuer if revenue is below certain thresholds, alleviating this risk to a certain extent. Adequate Rate Adjustment Mechanism [Revenue Risk - Price: Midrange] Toll rates are adjusted quarterly to reflect changes in the Costa Rican Colon (CRC) to USD exchange rate and also annually to reflect changes in the U.S. Consumer Price Index (CPI). Tolls may be adjusted prior to the next adjustment date if the U.S. CPI or the CRC/USD exchange rate varies by more than 5%. Historically, tariffs have been updated appropriately. Suitable Capital Improvement Program [Infrastructure Development & Renewal: Midrange] Brownfield asset operated by an experienced global company with a higher-than-average expense profile due to the geographical attributes of the project. The majority of the investments required by the concession have been made. The concession requires lane expansions when congestion exceeds 70% of the ideal saturation flow, which triggers the need for of further investments. However, the project would only be required by the grantor to perform these investments to the extent they do not represent a breach in the debt coverage ratios assumed by the issuer in the financing documents. Structural Protections Against Shortened Concession [Debt Structure: Midrange] Debt is senior secured, pari passu, fixed rate and fully amortizing. The debt will be denominated in USD. Nonetheless, no significant exchange rate risk exists due to the tariff adjustment provisions set forth in the concession and to the fact that CRC-denominated toll revenues will be converted to USD on a daily basis. The structure includes a cash trap mechanism to prepay debt if revenue outperforms the base case revenue indicated in the issuer's financial model, which largely mitigates the risk of the concession maturing before the debt is fully repaid. Typical project finance features include six-month Debt Service Reserve Account (DSRA), three-month O&M Reserve Account (OMRA), six-month backward and forward looking 1.20x distribution trigger and limitations on investments and additional debt. Financial Profile: Under Fitch's rating case, the project's yields a minimum and average DSCR of 0.9x and 1.2x, respectively, with a Loan Life Coverage Ratio (LLCR) of 1.2x and Net Debt to CFADS of 6.1x. Considering this scenario, the concession will last until its final maturity date in July 2033 and will receive MRG payments from 2025 to 2032, which amounts in average 6.9% of annual revenues. Also, under this scenario, restricted payment conditions are not expected to be met for six consecutive periods, which would trigger mandatory prepayments. Debt repayment is not dependent on the MRG payment, as should it not be received, toll revenues and reserve funds would be sufficient to cover debt service. The metrics are in line with Fitch's applicable criteria for the rating category, although constrained by the sovereign risk. PEER GROUP There are no peers rated locally by Fitch that are comparable with the project. The closest peer is Mexico's Concesionaria Mexiquense, S.A. de C.V. (Conmex) rated 'BBB'/Positive, as both assets provide access to the capital cities of their respective countries with a significant commuting traffic base, and have similar risk assessments at Midrange. Nevertheless, the rating difference is due to Autopistas del Sol's much lower coverage metrics (LLCR of 1.2x vs LLCR 2.6x). RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Negative Rating Action: -- Negative rating action on Costa Rica's sovereign ratings could trigger a corresponding negative action on the rated notes; -- Traffic volumes below Fitch's base case over a prolonged period; Future Developments That May, Individually or Collectively, Lead to Positive Rating Action: -- Positive rating action on Costa Rica's sovereign ratings could trigger a corresponding positive rating action on the rated notes, as long as project's fundamentals support this view. CREDIT UPDATE Performance Update In 2018, Ruta 27's equivalent weighted average annual daily traffic (WAADT) reached 54,388 vehicles, which represented a slight decrease of 0.9% from 2017. Actual traffic performance was below Fitch's base and rating case expectations of 58,819 and 58,178 vehicles, respectively. According to the concessionaire, the decline was mainly because of higher traffic in Section I during the first months of 2017, as a bridge in a nearby route was under maintenance, causing the deviation of traffic to Ruta 27 until May 2017, when the bridge was fully re-opened. Additionally, the concessionaire informed that the September 2018 six-week national strike derived from the legislature's tax and spending reform, in conjunction with Costa Rica's economic downturn have had a negative impact on traffic. The latter has been particularly observed in trucks, which decreased 3.9% in the second half of 2018. Fitch has revised the traffic assumptions used in its cases as to reflect the lower than expected traffic performance during the last two years, by keeping its original traffic growth rates but applied to the smaller traffic base observed in 2018. This is consistent with Fitch's view of more limited growth prospects for the project as a reflection of a lower economic activity in Costa Rica that might hinder future vehicles' performance. Toll revenues in 2018 had a minor increase of 0.8% to reach USD75.5 million, which was lower than Fitch's base and rating case expectations of USD82.1 million and USD81.2 million, respectively. Although traffic had a negative performance, toll revenues grew mainly due to the annual tariff inflation adjustment performed in January 2018. In January 2019, tariffs were adjusted according to prior year U.S. inflation to obtain a base tariff of USD3.91 for light vehicles considering the whole length of Ruta 27. In addition, charged tariffs have been adjusted each quarter by exchange rate movements and any time exchange rate varies by 5% or more, as occurred in November 2018 when CRC depreciated for approximately 8.0%. Operation and maintenance (O&M) and major maintenance expenses in 2018 were USD20.4 million, slightly above Fitch's base case expectation of USD19.8 million mainly due to higher than expected major maintenance expenses. These expenses represented 27.0% of toll revenues, similar to the previous two-year average of 26.5%. Fitch was provided with the O&M and major maintenance budgets for 2019, which were prepared by the concessionaire, and has updated its cases with these budgets. DSCR was 1.3x for the six months ending in June 2018 and 1.4x for the six months ending in December 2018, which were slightly above Fitch's base case expected coverages of 1.3x for both payment dates. The difference is explained by higher outflows assumed in Fitch's base case, which offset higher assumed toll revenues; thus generating lower coverage metrics. Fitch Cases Fitch's Base Case assumes 2018 traffic level as the starting point for projections, a growth of 1.7% in 2019 and traffic growth Compounded Annual Growth Rate (CAGR) of 1.6% from 2020 to 2033, which considers, amongst other, that the competing route will charge 50% of the tariff initially stablished when the concession was granted. U.S. CPI reflects Fitch's forecast of 2.2% for 2019, 2.3% for 2020 and 2.0% afterwards. O&M and major maintenance expenses were projected following the budget provided plus 5.0%. Fitch's base case resulted in a minimum DSCR of 1.2x in 2021, an average DSCR and LLCR of 1.3x, and Net debt to CFADS in 2019 of 6.1x. Fitch's base case expects no MRG collections and a single mandatory redemption payment to be made as restricted payment conditions will not be met for six consecutive periods. Under this case, the concession will end in May 2033, practically at concession's maturity, due to the project reaching the Net Present Value (NPV) specified in the concession agreement. Fitch's rating case also assumes 2018 traffic levels as the starting point for projections and a growth of 1.7% in 2019, traffic growth at a CAGR of 0.9% from 2020 to 2033, which considers, amongst others, that the competing route will be untolled. U.S. CPI rates as utilized in Fitch's base case. O&M and major maintenance expenses were projected following the budget provided plus 7.5%. Fitch's rating case resulted in a minimum DSCR of 0.9x in 2023, average DSCR and LLCR of 1.2x, and Net debt to CFADS in 2019 is 6.1x. Under this scenario, MRG will be received from 2025 to 2032, representing 6.9% of annual revenues on average, and two mandatory redemption payments are expected to occur. Fitch's rating case expects the concession will end in July 2033, i.e. at concession's maturity. Asset Description The asset serves as a connection between the city of San Jose and its metropolitan area with Puerto Caldera, along the Pacific coast. The asset is operated by Globalvia, one of the world leaders in infrastructure concession management, which manages 28 concessions in seven countries. The company was established in 2007 by FCC Group and Bankia Group. In March 2016, Globalvia was acquired by pension funds OPSEU Pension Plan Trust Fund (40%), PGGM N.V. (40%) and Universities Superannuation Scheme Ltd (20%). ============= J A M A I C A ============= NATIONAL COMMERCIAL BANK: To Establish a New Banking Division ------------------------------------------------------------- RJR News reports that organizational changes are coming at National Commercial Bank Jamaica Limited. Effective today, April 5, the Retail and Corporate Banking Divisions will be consolidated. The combined division will be called the Consumer, SME and Corporate Banking Division, according to RJR News. It will be led by Brian Boothe who currently heads the Retail Banking Division, the report notes. A news release from NCB says the current head of the Corporate Banking Division, Andrew Simpson, will demit office, the report says. As reported in the Troubled Company Reporter-Latin America on March 1, 2017, Fitch Ratings has affirmed National Commercial Bank Jamaica Limited's 'B' longterm and shortterm foreign and local currency Issuer Default Ratings. =========== M E X I C O =========== MAXCOM TELECOMUNICACIONES: S&P Cuts Issuer Credit Rating to 'SD' ---------------------------------------------------------------- On April 3, 2019, S&P Global Ratings lowered its issuer credit rating on Maxcom Telecomunicaciones S.A.B. de C.V. to 'SD' (selective default) from 'CCC+'. At the same time, S&P lowered its issue-level credit ratings on the company's step-up senior notes due 2020 to 'D' from 'CCC+'. The downgrade follows Maxcom Telecomunicaciones S.A.B. de C.V.'s (Maxcom) announcement on April 1, 2019, that the company has repurchased an additional US$9 million of its step-up senior notes 2020 through open markets. These transactions considered an average payment of US$59.75 for every US$100.0 as fair value, followed by the cancelation of these repurchased notes. Maxcom has reached up to $72 million in note repurchases, which represent 41.2% of the total issued amount, maintaining an updated outstanding amount of around $103 million. S&P said, "We view the transaction as a distressed exchange because, in our view, the company offered less than the original promise on the bonds given the continuous repurchase of step-up notes below par, reaching a significant amount, higher than 40.0%, which according to our criteria we view as a distressed. "We will likely raise the rating on Maxcom back to the 'CCC' category shortly after considering the updated capital structure. We will also assess the issue ratings based on traditional recovery analysis and considering the company's refinancing plans on its $103 million notes due June 2020." MEXICO: Foreign Firms Plan to Bid on Refinery Project, Pres Says ---------------------------------------------------------------- EFE News reports that the four foreign consortia and firms that qualified to build the Dos Bocas refinery in southeastern Mexico have agreed to bid on the project and will submit proposals in about two weeks, President Andres Manuel Lopez Obrador said. "The bidding process for the new Dos Bocas refinery has started, according to EFE News. As you know, the call for bids went out on March 18 and the four firms that qualified responded, it's a process and they said they would participate," Lopez Obrador said during his morning press conference, the report notes. The president, popularly known as AMLO, said the bidders were expected to submit "their proposals" before April 18, the report relays. The Dos Bocas refinery, located in the southeastern state of Tabasco, will cost about MXN160 billion (some $8.26 billion) to construct, AMLO said, the report discloses. After visiting the refinery in the port city of Ciudad Madero, the president said his administration's goal was to upgrade Mexico's six oil refineries, which are operating at only 30 percent of capacity, the report relays. "This will mean investment of about 25 billion pesos in the six refineries," the founder and leader of the leftist National Regeneration Movement (Morena) said, noting that the Ciudad Madero refinery was offline all of last year and will need MXN3.5 billion ($180 million) in investment to resume operating, the report relays. With the six existing refineries upgraded and the new one in Dos Bocas online, Mexico will be "self-sufficient, (no longer needing) to buy gasoline abroad and reducing costs," AMLO said, the report notes. The consortia formed by US-based Bechtel and Italy's Techint, and Australia's WorleyParsons and US-based Jacobs, along with US-based KBR and France's Technip were invited to bid to construct Dos Bocas, the government said, the report says. Lopez Obrador said that to fight corruption, one of his administration's priorities, he would speak directly with executives of the winning bidder and with the leader of the country where it is based to ensure that the firm will fulfill the terms of the contract and "act responsibly," the report notes. "Even with President Donald Trump," the Mexican leader said in response to a question from a reporter, the report discloses. Questions were raised last month about the financing of the Dos Bocas project, the report says. In an interview with the Financial Times, Finance and Public Credit Secretary Arturo Herrera said the refinery's groundbreaking was delayed so that more capital could be injected into state-owned oil giant Petroleos Mexicanos (Pemex), allowing the energy company to increase production, the report notes. Lopez Obrador, however, said during his March 12 press conference that Mexico had the resources needed to build the refinery, refuting his finance secretary's statements to the FT, the report discloses. "We have 50 billion pesos (about $2.6 billion) for the refinery. We do have a budget," the president said, the report adds. ===================== P U E R T O R I C O ===================== 4J CUSTOM DESIGN: Unsecureds Recovery Raised to $16K at 4% ---------------------------------------------------------- 4J Custom Design, Inc. filed an amended disclosure statement in support of its proposed plan of reorganization dated March 24, 2019. The purpose of the amended plan is: (a) to make only one impaired class that contains all general unsecured creditors; (b) to add a clause that debtor will pay within one year counting from the effective date, the general unsecured creditors that would receive $200 or less in the plan and (c) to increase general unsecured creditors class distribution to $16,000 plus 4% interest within 60 months counting from the effective date. Previously classified in Class 3, general unsecured creditors are now classified in Class 2. On the consummation date, the entire Class 2 claimants and creditors will receive from the Debtor a non-negotiable, non-interest bearing promissory note, dated as of the Effective Date, providing for a total amount of $16,000 plus 4% annual interest which will be payable in consecutive monthly installments of $294.66 during a period of five years, starting on the Effective Date; with a monthly pro-rata distribution among all members of this Class 2. Debtor proposes that for practical purposes, and to avoid to issue check payment of less than $2, the corporation will pay claimholders 2, 3, 4, and Quality Water Service proposed distribution within one year counting from the effective date. In all these claims debtor will receive less than $200 for their respective entire claim. In the initial plan, the Debtor proposed that general unsecured creditors will receive from the Debtor a non-negotiable, non-interest bearing promissory note, dated as of the Effective Date, providing for a total amount of $10,000 plus 4% annual interest which shall be payable in consecutive monthly installments of $184.17 during a period of five years, starting on the Effective Date; with a monthly pro-rata distribution among all members of this Class 3. A copy of the Amended Disclosure Statement dated March 24, 2019 is available at http://tinyurl.com/y4rk7q4pfrom Pacermonitor.com at no charge. About 4J Custom Design Inc. 4J Custom Design Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 18-05704) on Sept. 28, 2018, estimating under $1 million in assets and liabilities. Jaime Rodriguez Perez, Esq., at Hatillo Law Office, PSC, is the Debtor's counsel. AEROSTAR AIRPORT: Moody's Affirms Ba2 Bond Rating, Outlook Stable ----------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 assigned to $400 million (original outstanding amount) of senior secured bonds issued by Aerostar Airport Holdings, LLC ("Aerostar") and changed the rating outlook to stable from negative. Outlook Actions: Issuer: Aerostar Airport Holdings, LLC. Outlook, Changed To Stable From Negative Affirmations: Issuer: Aerostar Airport Holdings, LLC. Senior Secured Notes, Affirmed Ba2 RATINGS RATIONALE Aerostar's Ba2 rating affirmation and outlook stabilization reflects the company's credit strengths that partially mitigate the economic prospects and population trends of the Commonwealth of Puerto Rico (Ca negative), as well as a limited impact of Hurricane Maria on enplanement levels at San Juan Luis Muñoz Marín Airport. Aerostar benefits from an Airport Use Agreement (AUA) with airlines that sets a revenue floor for the airport regardless of actual enplanements. In addition, Moody's expects that tourism related travel will continue to recover over the next two years. The rating also incorporates the airport's dominant market position as the largest airport in Puerto Rico, serving San Juan, the Commonwealth's capital. Despite the recent negative enplanement trends over two consecutive years, Aerostar's revenue generation has not been materially affected. Total revenues in 2018 increased 2.4% compared to those of 2017 notwithstanding the effects of Hurricane Maria. Moody's funds from operations to debt ("FFO/Debt") as of December 2018 was 14.1%, reflecting the airports moderate leverage, and cash interest coverage ("CIC") was 3.38x, indicating that SJU is generating sufficient cash to maintain operations and meet borrowing costs. Going forward, Moody's would expect these metrics to improve even under low enplanement scenarios, backed by tariff increases and the amortizing profile of the debt. Moody's outlook change to stable from negative incorporates its expectation that enplanement levels will remain resilient to Puerto Rico's weak economic conditions and operating environment, and that revenues will continue to grow as a result of inflation-indexed tariffs. WHAT COULD CHANGE THE RATING UP/DOWN A solid recovery of tourism leading to strong traffic performance that result in projected cash interest coverages above 3.5x and FFO/Debt above 14% on a sustained basis would exert upward credit pressure on the rating. Downward pressure on the ratings would be triggered by a material reduction on enplanement levels due to a slow recovery of tourism or lower revenues that lead to cash interest coverages below 2.0x and FFO/Debt below 8% on a sustained basis. The principal methodology used in these ratings was Privately Managed Airports and Related Issuers published in September 2017. LA TRINIDAD ELDERLY: Case Summary & 18 Unsecured Creditors ---------------------------------------------------------- Debtor: La Trinidad Elderly, LP, SE PO Box 12032 San Juan, PR 00914 Business Description: La Trinidad Elderly LP SE is a privately held company in San Juan, Puerto Rico engaged in activities related to real estate. Chapter 11 Petition Date: September 25, 2018 Case No.: 18-05549 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Brian K. Tester Debtor's Counsel: Wigberto Lugo Mender, Esq. LUGO MENDER GROUP, LLC Centro Internacional De Mercadeo 100 Carr 165 Suite 501 Guaynabo, PR 00968 Tel: 787 707-0404 Email: wlugo@lugomender.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Jorge A. Rios Pulperio, president-managing partner. A full-text copy of the petition containing, among other items, a list of the Debtor's 18 unsecured creditors is available for free at: http://bankrupt.com/misc/prb18-05549.pdf PUERTO RICO: Oversight Board May Seek Money Back From Bondholders ----------------------------------------------------------------- Luis Valentin Ortiz at Reuters reports that Puerto Rico's federally created oversight board believes it can recover payments to bondholders possibly in the billions of dollars if certain debt sold by the bankrupt U.S. commonwealth is found to be invalid, according to a motion filed in federal court. Critics called the board's targeting of bondholder payments another attempt to pressure creditors to settle, according to Reuters. The board, which filed bankruptcy for the island in May 2017 to restructure about $120 billion of debt and pension obligations, had sought approval in January to void more than $6 billion of defaulted general obligation bonds sold in 2012 and 2014 on the basis they were issued in violation of debt limits in Puerto Rico's constitution, the report notes. Other creditor groups in the bankruptcy are also trying to invalidate pension bonds and debt sold by the island's Public Buildings Authority, the report relays. U.S. Judge Laura Taylor Swain, who is overseeing the bankruptcy, has yet to rule on those requests, Reuters says. The report notes that the board's latest filing asks the court to extend a statute of limitations, which expires next month, until there is a ruling on the bonds' validity and because more time is needed to prepare "potentially hundreds" of lawsuits seeking principal and interest repayments. Swain will address the extension at an April 24 hearing. James Spiotto, a municipal bankruptcy expert and managing director of Chapman Strategic Advisors, said the board is trying to step up pressure on creditors, the report discloses. Because Puerto Rico bonds were widely held by municipal bond funds and other investors due to their attractive exemption from all local, state and federal income taxes, it would be "a nightmare figuring out who got paid what when, and how you get the money back," he said, adding that doing so would be a costly endeavor, the report relays. Dan Solender, a portfolio manager at Lord Abbett, said the board was likely seeking a more advantageous debt restructuring rather than "a long and expensive fight" with bondholders, the report notes. "If they really believe this issuance is not legal the responsible parties would be the lawyers and underwriters and not the bondholders," he said, Reuters discloses. Several Democratic members of Congress sent a letter to oversight board Chairman Jose Carrion urging legal action to recoup fees paid to underwriters and advisers involved in selling the GO bonds, the report relays. A board spokesman said all potential claims are being reviewed, the report adds. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by Puerto Rico and other instrumentalities. White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative Capital LP. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed an official committee of retirees and an official committee of unsecured creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Oil Exports Stable in March ---------------------------------------------------- Marianna Parraga at Reuters reports that Venezuela's state-run energy company, Petroleos de Venezuela S.A. (PDVSA), kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data. The OPEC member stabilized exports in March after shipments fell about 40 percent in February from the prior months, in the immediate aftermath of the United States announcing it would impose sanctions on oil sales to choke off the main source of revenue for socialist President Nicolas Maduro, according to Reuters. The United States and many Western governments have recognized Venezuelan opposition leader Juan Guaido as the country's rightful leader, the report notes. Guaido in January invoked the constitution to assume an interim presidency on the grounds that Maduro's 2018 re-election was illegitimate, the report discloses. March's exports of 980,355 barrels per day (bpd) of crude and fuel were only slightly below February's shipments of 990,215 bpd, according to the documents seen by Reuters and the Refinitiv Eikon data, the report says. U.S. restrictions on Venezuelan exports will tighten further in May, when the grace period for winding down purchases expires for importers of Venezuelan oil who use U.S. subsidiaries or the U.S. financial system for transactions, the report relays. "(We will) continue to take action to ensure Venezuela's energy resources are preserved for the legitimate government of interim president Juan Guaido, for the people of Venezuela, and the reconstruction of a country destroyed through mismanagement and corruption," a senior U.S. administration official told Reuters. U.S. President Donald Trump is considering imposing sanctions on companies from other countries that do business with Venezuela, White House national security adviser John Bolton told Reuters. The report relays that most oil shipments in February and March were destined for Asia. Until the sanctions, the United States was Venezuela's largest crude buyer, the report says. "Given the new set of challenges that landed on PDVSA's lap, we were surprised to see a rebound in exports amid the nationwide power blackouts," said Samir Madani, co-founder of TankerTrackers.com, a service that tracks oil shipments and storage, the report notes. Exports dipped below 650,000 bpd during the blackouts, TankerTrackers estimates, the report says. Two massive power outages in March caused Jose port, the country's largest crude terminal, to shut for at least six full days, according to the Eikon data, the report relays. PDVSA was able, however, to offset delays caused by the blackouts by loading larger vessels bound for Asia. Shipping data shows the company plans to do the same again in April, the report discloses. Cargoes sent to India, China and Singapore, a hub for storage and re-exports, made up 74 percent of total exports in March, compared with almost 70 percent in February, the report notes. Exports to Europe accounted for 17 percent of the total, versus 22 percent the previous month, the report discloses. PDVSA also continued exporting oil to Maduro's ally Cuba. At least seven small cargoes were sent from its ports in March, totaling 65,520 bpd of crude and fuel, according to the data, the report says. Guaido last month said shipments to Cuba should be halted. But PDVSA, controlled by a military leadership loyal to Maduro, has continued exports to the island, the report notes. The state-run company did not respond to a request for comment. The report notes that Venezuela's oil production once surpassed 3 million bpd, but years of what critics say is mismanagement and corruption have caused that output to dwindle. The reduction in oil revenue has led the once-prosperous nation into recession and created conditions for hyperinflation, the report says. Millions have fled the country and many who remain cannot afford food or basic goods, the report discloses. Sanctions have made it difficult for PDVSA to take payment for its exports, said a PDVSA source, who did not want to be identified for fear of retaliation, the report says. "The largest problem is not to load and ship the vessels," the source said, declining to be identified due to the sensitivity of the matter. "It is to get paid." India Remains Top Destination India was once again Venezuela's main destination for exports in March, with a third of total cargoes sent to refineries operated by Reliance Industries and Nayara Energy, the report relays. U.S. imports of Venezuelan oil have dropped to zero since mid-March due to sanctions, according to the U.S. Energy Information Administration, the report notes. The report says that the largest individual recipient of Venezuelan barrels last month was China National Petroleum Corp (CNPC) and its subsidiaries with some 234,000 bpd, followed by Russia's Rosneft, which received 214,000 bpd, according to the data. New customers including trading firms Sahara Energy and MS International also received access to Venezuelan crude, the report relays. Rosneft has increased its share of Venezuelan oil shipments since the sanctions, mainly for reselling to refiners, the report discloses. Venezuela's oil minister, Manuel Quevedo, last month traveled to Moscow to negotiate larger sales of Venezuelan oil to Russian companies, the report relays. Rosneft has also boosted fuel supplies to Venezuela, according to the data, the report notes. Venezuela imported 184,500 bpd of fuel last month, with the largest portion provided by the Russian company, followed by cargoes sent by Reliance and Spain's Repsol, the report says. Following U.S. pressure, Reliance turned to selling fuel to Venezuela from India and Europe to circumvent sanctions. Repsol in March swapped gasoline and other fuel for Venezuelan crude as part of an agreement to collect on dividends owed it by PDVSA, 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'. ********* 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 * * *