/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190417.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 Wednesday, April 17, 2019, Vol. 20, No. 77 Headlines A R G E N T I N A INVERSIONES Y REPRESENTACIONES: S&P Affirms B Issuer Credit Rating B R A Z I L AVIANCA BRASIL: Still Selling Tickets on Routes it Plans to Cancel COMPANHIA SIDERURGICA: S&P Raises Rating to B- on Debt Refinancing E C U A D O R ECUADOR: Jilted Assange as U.S. Ties Strengthens J A M A I C A JAMAICA: PM Holness Wants Investors to Tap Into Tourism Industry P E R U PESQUERA EXALMAR: S&P Raises ICR to 'B' on Debt Refinancing P U E R T O R I C O ORGANIC POWER: Seeks to Hire Godreau & Gonzalez as Legal Counsel ORGANIC POWER: Voluntary Chapter 11 Case Summary V E N E Z U E L A VENEZUELA: To Reopen Border With Brazil As Soon As Possible - - - - - ================= A R G E N T I N A ================= INVERSIONES Y REPRESENTACIONES: S&P Affirms B Issuer Credit Rating ------------------------------------------------------------------ S&P Global Ratings, on April 15, 2019, downwardly revised Inversiones y Representaciones S.A.'s (IRSA) stand-alone credit profile (SACP) to 'b+' from 'bb-'. At the same time, it kept IRSA's subsidiary, IRSA Propiedades Comerciales S.A.'s (IRCP) SACP at 'bb'. S&P's also affirmed its 'B' issuer credit and issue-level ratings on IRSA and IRCP. IRSA's weaker financial risk profile is indicated by worsening credit metrics, mainly due to the Argentine peso's depreciation, Argentina's inflation rate, and poor GDP growth. Although the deprecation of the peso helps the office and hotel business segment because fees are denominated in dollars, it hurts leverage and credit metrics because almost 100% of IRSA's financial obligations are dollar-denominated. Peso depreciation increases the company's debt burden, so its cash generation has fallen amid higher interest costs. Additionally, higher inflation and lower consumption reduce shopping mall traffic, while negatively affecting tenant sales. In this context, S&P expects its adjusted EBITDA interest coverage (without netting interest income) at IRSA's level to underperform its previous expectations, with coverage around 1.6x versus previous expectation of 2.0x in 2019 and 2020. S&P said, "We now view IRSA's liquidity as more pressured, while IRCP's position remains more comfortable. Although we expect IRSA to successfully refinance its September 2019 bond maturity for around $184 million, its cash flow generation has become weaker against its overall short-term financial obligations. However, we acknowledge that high-quality real estate assets and investments in the U.S. could provide financial flexibility if the company sells them, as it's done in the past. "We expect IRSA to maintain stable debt levels in 2019 and 2020 amid its considerable investment plan, which includes expanding Alto Palermo, the company's flagship mall; and constructing the Catalinas office buildings. In the next 12 to 18 months, the new projects should mitigate debt levels by providing stronger cash flow generation once they're completed and fully running. "We view IRSA's business as resilient: it's the leading shopping mall operator in Argentina, with high-quality and strategic locations of assets, which should allow it to maintain occupancy rates of above 90%. Additionally, its long-term contracts with commercial and office property tenants include revenues linked to tenants sales and step-ups in rental fees that allow hedging against inflation (shopping malls) and foreign-exchange variation (offices). These factors increase the company's cash flow predictability and mitigate its limited geographic diversification. "We assess IRCP's SACP as 'bb', while IRSA's is 'b+', given the latter's larger debt amount. However, we cap our ratings on both companies at the sovereign rating on Argentina (B/Stable/B), because in our view, the companies are not sufficiently insulated from the country to merit a higher rating." =========== B R A Z I L =========== AVIANCA BRASIL: Still Selling Tickets on Routes it Plans to Cancel ------------------------------------------------------------------ Marcelo Rochabrun at Reuters, citing a letter, reports that struggling Brazilian airline Avianca Brasil had told regulators that it was permanently cancelling several routes despite continuing to sell tickets for them on its website. The airline, which has been fighting aircraft lessors in bankruptcy court, told civil aviation regulator ANAC in the letter sent that it was ending 48 flight frequencies -- around a quarter of its capacity -- due to a shrinking fleet, according to Reuters. The letter, which has not previously been reported, was the strongest sign yet of the operational impact of a bankruptcy process started in December by Brazil's fourth-largest airline, the report relays. The changes were due to take effect, according to the letter, but Avianca Brasil's website showed it was still selling tickets for several of the routes that it had told ANAC it would discontinue, the report notes. For example, Avianca Brasil said in the letter it would end flights between international airports serving the capitals of Sao Paulo and Minas Gerais states but its website was still selling two daily frequencies each way as far out as March 2020, the report discloses. A representative for Avianca Brasil told Reuters the letter to ANAC was just a preliminary plan and that it was working hard to reaccomodate its flights to affect the fewest passengers possible. Facing the imminent repossession of nearly a third of its fleet, the airline issued a news release saying some flights would be canceled on a case-by-case basis, starting with 179 flights from April 16 to 24. Avianca Brasil canceled an additional 150 flights from April 11 to April 13 but did not made public its plans for those routes afterwards. Currently, the company representative said Avianca Brasil is operating a fleet of 26 planes compared to 36 just a week ago, the report notes. ANAC said in a statement to Reuters that Avianca Brasil is required to "broadcast broadly its canceled and altered" flights and said that so far, the agency has not registered any violations. ANAC has already signaled it is concerned about Avianca Brasil's ability to keep its flight schedule. In court documents filed, it said there was "a real and considerable risk that (Avianca Brasil) would not honor" its ticket sales, affecting "hundreds of thousands" of travelers, the report relays. The regulator issued a press release saying it had banned Avianca Brasil from selling tickets on "affected routes," without specifying which routes or for how long, the report notes. Canceled flights entail additional costs for the struggling carrier, which has to either reimburse or re-accommodate affected passengers, the report discloses. In court papers, Avianca Brasil described the financial toll of canceled flights as "brutal," the report notes. The airline is already running low on cash, the report relays. It missed its payroll in recent weeks and several Brazilian airports now only allow its flights if they receive payment in advance, the report says. The carrier is paying its day-to-day expenses largely with short-term loans from two of its competitors, who hope to end up with some of Avianca Brasil's airport slots -- the coveted takeoff and landing rights at crowded terminals, the report notes. The carrier's assets, consisting mainly of its slots, are expected to be auctioned in May as part of the bankruptcy process, the report discloses. LATAM Airlines Group and Gol Linhas Aereas Inteligentes have already agreed to bid at least $70 million each for different sets of slots, the report adds. About Avianca Brasil Avianca Brazil, officially Oceanair Linhas Aereas S/A, is a Brazilian airline based in Sao Paulo, Brazil. It operates passenger services from more than 20 destinations. It is hailed as the fourth largest airline in Brazil. Synergy Group is the parent company of Avianca Brazil. On December 10, 2018, Avianca Brazil filed for bankruptcy when three lessors took a move to gain possession of 30% of the airline's 50 all-Airbus fleet. The airline further blamed high fuel prices and a strong dollar for its troubles. The airline noted at that time that flights won't be affected. COMPANHIA SIDERURGICA: S&P Raises Rating to B- on Debt Refinancing ------------------------------------------------------------------ S&P Global, on April 12, 2019, raised its global and national scale ratings on Companhia Siderurgica Nacional (CSN) to 'B-' from 'CCC+' and to 'brBBB+' from 'brBB+', respectively. At the same time, S&P raised its issue-level ratings on CSN Islands XI Corp., CSN Islands XII Corp., and CSN Resources S.A.'s senior unsecured notes to 'B-' from 'CCC+'. S&P also removed the ratings from CreditWatch with positive implications, where it placed them on April 5, 2019. The issue-level ratings remain at the same level as the long-term issuer credit rating, reflecting the holding company's unconditional guarantee and the recovery rating of '4', given the expected average recovery of 40% (rounded estimate). The upgrade reflects S&P's view of improved overall credit profile following the company's successful issuance of a $600 million bond and a $400 million add-on to its 2023 bond, which the company will mostly use to tender the outstanding amounts of its 2019 and 2020 bonds. This, coupled with the improving operating performance and the already announced bilateral debt refinancing with Brazilian banks, the sale of CSN LLC in the U.S., and the prepayment transaction with Glencore, will cover most of the company's liquidity gap for the next 24 months. The positive outlook reflects the potential further improvement in CSN's creditworthiness stemming from its stronger cash flows following the gradual recovery in the domestic steel market volumes and international prices that allow price adjustments, as well as the recent spike in iron ore prices. The company also announced that it could sell its German operations and preferred shares in Usinas Siderurgicas de Minas Gerais S.A. (B/Positive/--). These actions, which in combination with the higher cash generation, will allow CSN to deleverage over the next few years, although the still high debt and interest burden remain an issue. However, an upgrade would only be possible if the company maintains a track record of more conservative financial policies, including shareholder remuneration and investments, focus on deleveraging, and if CSN addresses the amortization schedules at its holding-company level without jeopardizing its own balance sheet. Despite the substantial improvement following with the recent bond issuance, S&P continues to view CSN's liquidity as less than adequate. Sources over uses of cash for the next 24 months are evenly matched, due to the improving operating performance, asset sales, and debt refinancing, including the new bond issuances totaling $1 billion. ============= E C U A D O R ============= ECUADOR: Jilted Assange as U.S. Ties Strengthens ------------------------------------------------ EFE News, citing Dow Jones Newswires, reports that Ecuador's diplomatic protection of Julian Assange once allowed the small Andean nation's leftist government to antagonize its United States foe and argue that it was defending free speech, while cracking down on the press at home. But after seven years and a new government, that relationship frayed, as President Lenin Moreno sought to improve Ecuador's relations with the US, according to EFE News. ============= J A M A I C A ============= JAMAICA: PM Holness Wants Investors to Tap Into Tourism Industry ---------------------------------------------------------------- RJR News reports that Jamaica Prime Minister Andrew Holness wants more investors to tap into development opportunities in Jamaica, particularly in the tourism industry. Mr. Holness said the trajectory of the value of the industry is going to take off rapidly, according to RJR News. The Prime Minister was speaking at the Amaterra Group's groundbreaking ceremony for the construction of an 800-room resort in Stewart Castle, Trelawny, the report notes. This will be followed by another 400 rooms in the second phase and over time will see an estimated 8,000 hotel rooms to be constructed on the 1,000-acre property, the report adds. Mr. Holness also reaffirmed the Government's commitment to create a culture of inclusion in the industry so that more Jamaicans will feel they benefit from the tourism industry, the report relays. As reported in the Troubled Company Reporter-Latin America on Sept. 27, 2018, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, S&P Global Ratings affirmed its 'B' long- and short-term foreign and local currency sovereign credit ratings, and its 'B+' transfer and convertibility assessment on the country. ======= P E R U ======= PESQUERA EXALMAR: S&P Raises ICR to 'B' on Debt Refinancing ----------------------------------------------------------- S&P Global Ratings, on April 15, 2019, raised its global scale issuer credit and issue-level ratings on Peru-based fishing company Pesquera Exalmar S.A.A. (Exalmar) to 'B' from 'B-' and removed them from CreditWatch, where it placed them with positive implications on Jan. 16, 2019. After refinancing its senior unsecured notes for $109 million due 2020, Exalmar has improved sharply its financial risk profile, capital structure, and liquidity position with a debt maturity profile above 3.5 years on a pro forma basis. Exalmar used a $110 million five-year syndicated loan and cash on hand to refinance the senior unsecured notes due 2020 and repay a $19 million syndicated loan. S&P believes the new syndicated loan will help the company reduce its debt at a faster pace than it had previously expected, given the manageable amortizations that the company would face for this loan. The upgrade also reflects the company's better-than-expected operating and financial performance during the past 12 months due to a significant recovery in the fishing quotas in Peru since 2017 and higher purchases from third parties. The company posted EBITDA margins of around 35%, a debt-to-EBITDA ratio of 3.0x, and an EBITDA interest coverage of 4.4x as of Dec. 31, 2018. Given the refinancing and a robust EBITDA, S&P forecasts these metrics below 4.0x and above 3.0x, respectively, in the next 12 months. S&P said, "Our rating on Exalmar continues to reflect its vulnerability to external factors such as weather conditions, the start of fishing seasons, and the quota approval process by Peruvian authorities. In addition, given that Exalmar has a limited scale of operations and is heavily dependent on production volumes along the Peruvian coast, we believe the company has limited flexibility to withstand adverse dynamics beyond its control that could impair its performance. Exalmar is the third-largest producer of fishmeal and fish oil in Peru, with a 15% participation of the total biomass determined by the Institute of the Peruvian Sea (IMARPE); comprised of an anchovy extraction quota of 7.77% and third-party share of 7.23%. The company's current processing capacity and ability to buy third-party catch have increased its production, revenue, and EBITDA, strengthening its profitability in the past few quarters. We expect the company's EBITDA margins to remain between 25% and 30% in the next 12 months." ===================== P U E R T O R I C O ===================== ORGANIC POWER: Seeks to Hire Godreau & Gonzalez as Legal Counsel ---------------------------------------------------------------- Organic Power, LLC, seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Godreau & Gonzalez Law, LLC as its legal counsel. The firm will assist the Debtor in the preparation of its plan of reorganization, represent the Debtor in adversary proceedings and provide other legal services in connection with its Chapter 11 case. The firm will charge these fees: Partners $175 Associates $125 Rafael Gonzalez Valiente, Esq., at Godreau & Gonzalez, disclosed in court filings that he and other employees of his firm are "disinterested" as defined in Section 101(14) of the Bankruptcy Code. Godreau & Gonzalez can be reached through: Rafael Gonzalez Valiente, Esq. Godreau & Gonzalez Law, LLC P.O. Box 9024176 San Juan, PR 00902-4176 Tel: (787)726-0077 Email: rgv@g-glawpr.com About Organic Power Organic Power LLC -- https://prrenewables.com/ -- is a supplier of renewable energy and a provider of environmentally sustainable food waste recycling services based in Puerto Rico. It offers food processing companies, restaurants, pharmaceuticals and retail outlets an alternative to landfill disposal. Organic Power sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 19-01789) on April 1, 2019. At the time of the filing, the Debtor estimated assets and estimated liabilities of between $10 million and $50 million. Aimee I. Lopez Pabon, Esq. of Godreau & Gonzalez LLC has been tapped as counsel for the Debtor. ORGANIC POWER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Organic Power LLC 267 Sierra Morena Street PM 632 San Juan, PR 00926 Business Description: Organic Power LLC -- https://prrenewables.com -- is a supplier of renewable energy and a provider of environmentally sustainable food waste recycling services based in Puerto Rico. Organic Power offers food processing companies, restaurants, pharmaceuticals and retail outlets an alternative to landfill disposal; a low cost & environmentally friendly recycling option. Chapter 11 Petition Date: April 1, 2019 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Case No.: 19-01789 Debtor's Counsel: Aimee I. Lopez Pabon, Esq. GODREAU & GONZALEZ, LLC PO BOX 9024176 San Juan, PR 00902 Tel: 787-726-0077 Email: al@g-glawpr.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by Miguel E. Perez, president. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at: http://bankrupt.com/misc/prb19-01789.pdf ================= V E N E Z U E L A ================= VENEZUELA: To Reopen Border With Brazil As Soon As Possible ----------------------------------------------------------- EFE News reports that the Venezuelan government is working to reopen the border crossings with Brazil, which have been closed since February, as quickly as possible, the foreign minister said. Jorge Arreaza said that the government of embattled president Nicolas Maduro had agreed to look into reopening the border points with Brazil, which Venezuela blocked after tons of humanitarian aid was provided by the international community, including the United States, 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 * * *