/raid1/www/Hosts/bankrupt/TCRLA_Public/190514.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
Tuesday, May 14, 2019, Vol. 20, No. 96
Headlines
A R G E N T I N A
BANCO DE SERVICIOS: Moody's Assigns B2 Deposit Ratings
B R A Z I L
AVIANCA BRASIL: Azul Drops New $145MM Bid for Assets
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Agro Fair, Over 160 Companies Look to Export
P U E R T O R I C O
KONA GRILL: May 16 Meeting Set to Form Creditors' Panel
LABORATORIO ACROPOLIS: Case Summary & 19 Unsecured Creditors
MANUEL BABILONIA: Stipulation With BofA, Sale May Impact Value
PUERTO RICO: Oversight Board to Take Local Govts Under Its Wing
T R I N I D A D A N D T O B A G O
ATLANTIC LNG: Train I Faces Shutdown As BPTT Reports Gas Shortage
V E N E Z U E L A
PETROLEOS DE VENEZUELA: To Pay Bond With Uncollected Oil Revenue
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A R G E N T I N A
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BANCO DE SERVICIOS: Moody's Assigns B2 Deposit Ratings
------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo S.A.
assigned long- and short-term local currency deposit ratings of B2
and Not Prime, respectively to Banco de Servicios Financieros S.A.,
together with a standalone baseline credit assessment of caa1 and
an adjusted BCA of b2. In the Argentine national scale, Moody's
assigned A2.ar/Baa1.ar local and foreign currency deposit ratings,
respectively. Moody's also assigned BSF long- and short-term
counterparty risk assessment of B1(cr) and Not Prime(cr),
respectively. In addition, Moody's assigned B2 and A2.ar ratings to
BSF's class 20 local currency senior unsecured debt, which was
issued in December 2017 and matures in June 2019. The outlook on
all ratings is stable.
The following ratings and assessments were assigned to Banco de
Servicios Financieros S.A.:
Global scale, long- and short-term local currency deposit
rating of B2, stable outlook, and Not Prime.
Argentine national scale, long-term local currency deposit
rating of A2.ar, stable outlook.
Global scale, long- and short-term foreign currency deposit
rating of B3, stable outlook, and Not Prime.
Argentine national scale, long-term foreign currency deposit
rating of Baa1.ar, stable outlook.
Global scale, long- and short-term counterparty risk
assessment of B1(cr) and Not Prime(cr).
Baseline credit assessment of caa1
Adjusted baseline credit assessment of b2
The following ratings were assigned to Banco de Servicios
Financieros S.A.'s class 20 senior unsecured debt issued in
December 2017 and due in June 2019:
Global scale, long-term local currency senior unsecured
debt rating of B2, stable outlook
Argentine national scale, long-term local currency senior unsecured
rating of A2.ar, stable outlook
Outlook, Stable
RATINGS RATIONALE
BSF's B2 local currency deposit rating is underpinned by its caa1
baseline credit assessment and incorporates two-notches of
affiliate support uplift derived from its assessment that its
ultimate parent, Carrefour S.A. ((P)Baa1, negative), would likely
provide financial support in an event of stress. The bank's B3
foreign currency deposit rating is constrained on both the global
and national scales by Argentina's foreign currency deposit ceiling
of B3.
BSF's caa1 baseline credit assessment reflects the company's weak
asset risk metrics, which are consistent with its consumer finance
focus, its high reliance on wholesale sources of funding and very
low levels of liquidity, being all these challenges common to most
consumer finance peers operating in Argentina. These weaknesses are
partially offset by BSF's relatively strong capital position, which
has been preserved by the company's earnings generation and its
policy to retain earnings, as well as by the parent company's
willingness to contribute capital injections.
The bank's non-performing loans rose to 18.4% of gross loans as of
December 2018, from 17.4% in 2017 and 11.6% in 2016, a credit
negative development that reflects the challenging economic
conditions in Argentina that hurt borrowers' repayment capacity. As
a result, Moody's expects NPLs will remain high in the coming
quarters. Credit costs rose to an annualized 9.6% of gross loans as
of year-end 2018 from 9.1% in 2017 and 7.2% in 2016. In turn, BSF's
loan loss reserve coverage of problem loans fell to 68% in December
2018 from 75% in 2017 and 88% in 2016, which increases the bank's
vulnerability to rising delinquencies.
The main drivers of BSF's asset quality deterioration are (i)
Argentina's ongoing economic recession; (ii) the sharp increase in
inflation, which rose to an annual 48% in 2018 and 55% as of March
2019 from 25% in 2017, and its impact on real wages, which declined
by about 20% in 2018; and (iii) extraordinarily high interest
rates. BSF's focus on consumer finance has left it more exposed to
asset risk deterioration than more diversified peers.
Subdued loan growth in previous years, the absence of dividend
payments and capital injections have allowed the bank to maintain
its capital metrics, even as those of many of its peers have
deteriorated. Moody's preferred capital ratio, measured as tangible
common equity to risk-weighted assets increased to 17.9% as of
December 2018, from 13.9% as of September 2018, due to a capital
injection by BSF's shareholders. However, as economic and credit
conditions change in Argentina, BSF's capital may experience
reductions if additional provisioning and write-offs are required.
Despite a significant increase in credit costs in line with
deteriorating asset quality, still ample interest margins and
favorable efficiency metrics have prevented a larger drop in BSF's
profitability, with annualized net income equal to 1.1% of tangible
assets through December 2018. This was down from 5.1% in 2017 and
an average of 3.9% over the preceding four years. However, as with
other Argentine banks, BSF's earnings metrics are exaggerated by
the high rate of inflation.
BSF's ratings also incorporate BSF's limited business
diversification. BSF's well established franchise within Carrefour
S.A. Argentine operation provides access to a significant captive
client base, but the monoline nature of its business exposes BSF to
potential credit negative earnings and asset quality volatility.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Considering the strong credit interlinkages between the sovereign
and banks, an upgrade of the Argentine sovereign rating accompanied
by an improvement in operating conditions could put positive
pressures on BSF's ratings, provided the bank's asset quality
stabilizes and funding access is restored. Also, an improvement in
BSF's asset risk metrics and profitability could put positive
pressure on the ratings.
On the other hand, BSF's ratings could face downward pressure if
the operating environment deteriorates further and/or the Argentine
sovereign ratings were downgraded. The ratings could also face
downward pressure if BSF's asset quality deteriorates sharply,
leading to capital charges and weakening profitability, which could
lead to a downgrade of its BCA.
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B R A Z I L
===========
AVIANCA BRASIL: Azul Drops New $145MM Bid for Assets
----------------------------------------------------
Marcelo Rochabrun at Reuters reports that Brazilian airline Azul SA
made a new attempt to purchase some of bankrupt airline Avianca
Brasil's most coveted routes, offering $145 million and reversing a
decision not to participate.
Avianca Brasil filed for bankruptcy protection in December, setting
off a fierce battle for its airport slots, the rights to land and
depart in crowded airports, which were expected to be sold at a
bankruptcy auction that was suspended indefinitely, according to
Reuters.
The report notes that Azul had been out of the picture for weeks
regarding the auction, outbid by competitors Gol Linhas Aereas
Inteligentes SA and Latam Airlines Group, which had caused a rift
among the carriers. They had signed a binding commitment to bid at
least $70 million each before the auction, the report relays.
Azul's proposal is $5 million higher than what Gol and Latam
offered, the report discloses. But it was unclear if it will be
accepted and remains in the hands of a Brazilian judge, the report
says.
Gol and Latam's plan caused a rift among the carriers, and led Azul
to leave airline industry group ABEAR, in which Gol and Latam are
also members, and to deny any further interest in the assets and
criticize its competitors, the report notes.
"Essentially what they did was they had a shutdown plan to keep us
out," Chief Executive Officer John Rodgerson told Reuters,
referring to Gol and Latam, the report discloses. "I think the way
they acted was inappropriate," he added.
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.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Agro Fair, Over 160 Companies Look to Export
----------------------------------------------------------------
Dominican Today reports that over 160 exporting companies visited
the Dominican Republic to do business, promoted by the
International Food, Tobacco and Agrifood Beverages Fair 2019.
The entrepreneurs aim to acquire local products such as coffee,
pineapple, mango, cocoa, bananas, aromatic herbs, tropical flowers,
processed products and oriental vegetables and especially produced
in greenhouses, the Dominican Agribusiness Board (JAD) said in a
statement, according to Dominican Today.
JAD executive director Claudia Chez said the fair is a space that
promotes the country's export products, the report notes. "This is
the result of the efforts of more than 15 institutions, which shows
that the public-private partnership creates synergy and promotes
improvements," he added.
As reported in the Troubled Company Reporter-Latin America in
September 2018, Fitch Ratings affirmed Dominican Republic's
Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook.
=====================
P U E R T O R I C O
=====================
KONA GRILL: May 16 Meeting Set to Form Creditors' Panel
-------------------------------------------------------
Andy Vara, United States Trustee, for Region 3, will hold an
organizational meeting on May 16, 2019, at 10:00 a.m. in the
bankruptcy case of Kona Grill, Inc.
The meeting will be held at:
The Doubletree Hotel
700 King Street
Wilmington, DE 19801
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtors' case.
The organizational meeting is not the meeting of creditors pursuant
to Section 341 of the Bankruptcy Code. A representative of the
Debtor, however, may attend the Organizational Meeting, and provide
background information regarding the bankruptcy cases.
To increase participation in the Chapter 11 proceeding, Section
1102 of the Bankruptcy Code requires that the United States Trustee
appoint a committee of unsecured creditors as soon as practicable.
The Committee ordinarily consists of the persons, willing to serve,
that hold the seven largest unsecured claims against the debtor of
the kinds represented on the committee.
Section 1103 of the Bankruptcy Code provides that the Committee may
consult with the debtor, investigate the debtor and its business
operations and participate in the formulation of a plan of
reorganization. The Committee may also perform other services as
are in the interests of the unsecured creditors whom it
represents.
About Kona Grill
Kona Grill, Inc. -- https://www.konagrill.com -- owns and operates
27 casual dining restaurants in 18 states, as well as Puerto Rico,
serving contemporary American favorites, sushi, and alcoholic
beverages throughout the United States and Puerto Rico.
Kona Grill, Inc., and its subsidiaries sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. Del. Lead Case No.
19-10953) on April 30, 2019. As of Dec. 31, 2018, the Debtors'
total assets is 53,613,000 and total liabilities of $74,049,000.
The petition was signed by Christopher J. Wells, chief
restructuring officer.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as counsel;
Piper Jaffray as investment banker; Alvarez & Marsal North America,
LLC as restructuring advisor and Epiq Corporate Restructuring, LLC
as claims and noticing agent.
LABORATORIO ACROPOLIS: Case Summary & 19 Unsecured Creditors
------------------------------------------------------------
Debtor: Laboratorio Acropolis, Inc.
PMB 200 PO Box 30500
Manati, PR 00674
Business Description: Laboratorio Acropolis, Inc. was incorporated
in 2004 to purchase as a going concern a
business named "Laboratorio Acropolis," a
provider of clinical laboratory services.
The Company previously sought bankruptcy
protection on June 9, 2016 (Bankr. D.P.R.
Case No. 16-04609).
Chapter 11 Petition Date: May 8, 2019
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Case No.: 19-02601
Judge: Hon. Mildred Caban Flores
Debtor's Counsel: Gloria Justiniano Irizarry, Esq.
JUSTINIANO'S LAW OFFICE
Ensanche Martinez
8 Calle A Ramirez Silva
Mayaguez, PR 00680
Tel: 787 831-2577
Fax: 787 805-7350
Email: justinianolaw@gmail.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Rebeca Daniel Leduc, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 19 unsecured creditors is available for free
at http://bankrupt.com/misc/prb19-02601.pdf
MANUEL BABILONIA: Stipulation With BofA, Sale May Impact Value
--------------------------------------------------------------
Manuel Babilonia and Mirta Cortes fine-tuned their Disclosure
Statement ahead of a hearing scheduled for Oct. 26, 2016.
The holders of unsecured claims may receive any dividends or
payment in the plan from proceeds generated from the normal course
of operation of Debtor's hostel Business, Home Away income and
other income. The Debtor will dedicate all available income to
pay unsecured claims after operating expenses and payment to
secured claimants. General unsecured creditors are impaired under
the Plan, and thus have a right to vote in favor or against the
Plan.
The Amended Disclosure Statement notes of an ALTERNATIVE SCENARIO,
once the matter regarding the payment to the secured claimant Banco
Popular, be, through the reduction of the secured claims due to the
sale of all or certain of the properties encumbered or the
acceptance of the properties in payment of the allowed secured
claim. The unsecured creditors will receive dividend payments from
the Debtor's salary and the proceeds from the Hostel Business.
According to the Liquidation Analysis, the liquidation value of the
Estate is $4,000,000. This Liquidation Analysis may change
substantially depending on the outcome of the terms of the
stipulation with Banco Popular and if the properties are sold or
turnover. Upon the sale or turnover of any of the properties, the
Debtor will submit a Liquidation Analysis that will reflect the
changes in the value of the Estate and its effect on distribution
to unsecured claimants.
The Debtors disclosed total assets of $5,620,000. The Debtor
disclosed only total liabilities of $1,559,766, with unsecured
claims totaling $63,182.
A copy of the Amended Disclosure Statement is available for free at
http://bankrupt.com/misc/prb16-01148_Am_DS_Babilonia.pdf
About Manuel Babilonia
Manuel Babilonia and Mirta Cortes manage a motel business, which is
incorporated and doing business as Motel Tropical Inc., a related
entity that filed for relief on Feb. 11, 2016 (Bankr. D.P.R. Case
No. 16-00966). There is also another related entity which filed
for protection B & D Enterprises S.E. (Bankr. D.P.R. Case No.
16-00978). Ms. Cortes presently rents out her home under the Home
Away programs. In it personal capacity, Mr. Babilonia also has a
Hostel comprising of six rooms which are rented on short term
basis.
Following a foreclosure proceeding filed by Banco Popular, Mr.
Babilonia and Mirta Cortes filed for Chapter 11 bankruptcy
protection (Bankr. D.P.R. Case No. 16-01148) on Feb. 18, 2016.
The Debtor's counsel, Garcia-Arregui & Fullana PSC, was appointed
per order dated April, 22, 2016.
The 11 U.S.C. Sec. 341 hearing was held and closed on April 12,
2016.
PUERTO RICO: Oversight Board to Take Local Govts Under Its Wing
---------------------------------------------------------------
Luis Valentin Ortiz at Reuters reports that Puerto Rico's financial
oversight board unexpectedly added the island's towns and cities to
its mandate, a move that it said was aimed at trying to help them
avoid insolvency.
To date, the federally created board has only focused on the
central government of the U.S. territory, which filed for
bankruptcy in 2017 as it sought to restructure about $120 billion
of debt and pension obligations, according to Reuters.
Board officials said the move was not aimed at eliminating local
governments or pushing them into bankruptcy, the report notes.
"This is absolutely not a takeover of anything," Jose Carrion, the
board's chairman, told reporters, adding that the purpose was to
help cities improve their finances and services, the report
discloses.
However, Christian Sobrino, Governor Ricardo Rosselló's
representative on the board, questioned if the board had the
capacity to fully oversee municipal governments, the report says.
"I would not recommend designating all 78 municipalities as covered
entities. But that is the board's prerogative," Mr. Sobrino said,
the report relays.
"The board lacks the personnel and resources. It is a lot of work,"
he added.
The board said it will launch a pilot program with 10 local
governments, the report notes.
The 10 will be required to submit fiscal plans by June 7 that
include spending cuts, efficiency measures like shared services, as
well as programs to improve revenue collection and boost economic
development, the report says. Central government subsidies to
municipalities are expected to be phased out by 2024, the report
notes.
Luis Hernandez, mayor of Villalba, one of the municipalities in the
pilot program, said board officials had told the mayors that they
would provide technical resources to help, the report discloses.
"The board understood that towns are the ones that directly provide
services to citizens. They vowed to help us," Mr. Hernandez said,
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.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
ATLANTIC LNG: Train I Faces Shutdown As BPTT Reports Gas Shortage
-----------------------------------------------------------------
The Trinidad and Tobago Guardian reports that Atlantic LNG Train 1
faces shutdown as BP Trinidad and Tobago (BPTT) may not have enough
natural gas to supply Train 1. The plant may have to close down for
at least two years, the report notes.
BPTT said there are challenges to their supply of gas to Train 1
after 2019, the report says.
"Recent disappointing results from our infill drilling programs
have had a material impact on our forecasted production, especially
in 2020 and 2021. This means there are challenges to our supply of
gas to Train 1 after 2019. BP along with Atlantic and its
shareholders are working through options for the future of the
train," BPTT said in response to questions from the media,
according to The Guardian. Infill drilling is used to increase
production in a field that is already operating, the report notes.
This potentially means a loss of hundreds of millions of dollars in
government revenue and could put any economic recovery at risk,
since Finance Minister Colm Imbert has consistently said he expects
increased natural gas production to drive economic growth, The
Guardian relays.
BPTT added while the company, along with Atlantic LNG and its
shareholders, are working through options for the future of Train
1, the other three trains of Atlantic LNG remain unaffected, the
report notes.
Train 1 began commercial operation on March 13, 1999, being the
first LNG facility to operate in the Atlantic Basin and the second
in the Western Hemisphere, The Guardian notes. The first shipment
of LNG left Trinidad and Tobago on May 1, 1999, bound for Boston,
Massachusetts, the report discloses.
BPTT is Trinidad and Tobago's largest natural gas producer,
accounting for more than 50 per cent of the total supply, The
Guardian cites. It is also the largest supplier to Train 1,
providing close to 400 million standard cubic feet of gas per day
to the plant, the report adds.
=================
V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: To Pay Bond With Uncollected Oil Revenue
----------------------------------------------------------------
Kallanish Energy reports that Venezuela state-owned oil company
Petroleos de Venezuela S.A. (PDVSA) will pay for its 2020 bond
issue interest payments with uncollected revenue from oil sales.
The decision was made by PDVSA's board, appointed by opposition
leader Juan Guaido, local media reported, according to Kallanish
Energy.
The report notes that Mr. Guaido appointed himself President in
January after declaring President Nicolas Maduro's election
invalid, and has been officially recognized in the post by 54
countries worldwide.
The $71 million interest payment will be collected from "PDVSA's
overseas accounts receivable," an official statement said,
according to local media, and will be paid within the grace period
of 30 days from the original deadline of April 27, the report
says.
PDVSA's 2020 bond interest payment was authorized last month by the
National Assembly, the opposition body led by Mr. Guaido, the
report relays.
The National Assembly previously said they did all they could to
further delay the bond interest payment, but reiterated the
consequences of not paying would be far worse than paying it, the
report discloses.
The main concerns are with Texas-based refiner Citgo Petroleum, a
subsidiary of PDVSA, the report notes. Half of its shares were put
up as collateral for the 2020 bond when it was issued in October
2016, meaning shareholders could seize them should the bond
interest payment not be paid, the report says.
U.S. sanctions on Venezuela don't apply to Citgo, which acts as a
proxy for U.S. companies looking to purchase from Venezuela, the
report relays. For Venezuela, losing control over this asset means
losing an important source of revenue, the report notes.
"The National Assembly made this decision in the form of a protest
because, despite approving its payment, we continue working to
demonstrate the illegality of this bond," said Juan Andres Mejía,
president of the Public Credit subcommittee of the National
Assembly, in a release, the report adds.
As reported in the Troubled Company Reporter-Latin America on Aug.
24, 2018, S&P Global Ratings affirmed its 'SD' global scale issuer
credit rating and 'D' issue-level ratings on Petroleos de Venezuela
S.A. (PDVSA).
*********
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
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USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2019. All rights reserved. ISSN 1529-2746.
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