/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190801.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, August 1, 2019, Vol. 20, No. 153 Headlines A R G E N T I N A ENJOY SA: Fitch Affirms B+ LT IDR; Alters Outlook to Negative ENTRE RIOS: Fitch Affirms B LT IDRs, Outlook Negative B R A Z I L BRAZIL: Sees Less Top Quality Coffee in 2019 Due to Weather JBS SA: Invests in New Biodiesel Plant Amid Clean Fuel Push MARFRIG GLOBAL: Fitch Rates Unit's US$500MM Sr. Unsec. Notes BB- D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Cheap Money Creates "Parallel Exchange Rate" DOMINICAN REPUBLIC: Coal-Fueled Power Plants Could Harm Tourism P U E R T O R I C O PUERTO RICO: Governor's Pick for Successor Faces Opposition SEARS HOLDINGS: Judge Threatens to Appoint Examiner in Lampert Row SOLUTIONS BY DESIGN: Unsecureds to Get $31K Total Payment V E N E Z U E L A PETROLEOS DE VENEZUELA: Petropiar Starts Operations VENEZUELA: Decline of Currency Accelerates Against US Dollar - - - - - ================= A R G E N T I N A ================= ENJOY SA: Fitch Affirms B+ LT IDR; Alters Outlook to Negative ------------------------------------------------------------- Fitch Ratings has affirmed Enjoy S.A.'s Long-Term Issuer Default Rating (IDR) at 'B+' and revised the Rating Outlook to Negative from Stable. In addition, Fitch has affirmed Enjoy's senior unsecured notes at 'BB-'/'RR3'. The Negative Outlook reflects higher leverage than expected due to poor results in 2018 as a result of the downturn in Argentina, which impacted the company's casino in Uruguay and the sluggish performance of the company's casino in Chile. The Outlook also factors in high capex requirements resulting from the addition of two new casinos, in addition to the previously incorporated municipal licenses won in 2018. The affirmation of Enjoys Long-Term IDR at 'B+' and international bond at 'BB-'/'RR 3' reflects the company's sound liquidity position and comfortable amortization schedule during the investment period prior to the new concession, which start in 2021. Enjoy's ratings also factor in the longstanding and leading position of its casinos in Chile. KEY RATING DRIVERS Poor Operational Results: Slow economic growth in the region and the recession in Argentina have impacted Enjoy's results. Furthermore, revenue and cost management efforts have not yielded positive results as expected. As such, Enjoy's revenues decreased to CLP275 billion in 2018 from CLP284 billion in 2018, and EBITDA to CLP59 billion from CLP61 billion in the same period. Fitch expects a further decrease for 2019, in line with industry results for the first half of 2019. Higher leverage than expected: The weak operating results, coupled with the additional capex requirements to improve future performance, led to higher leverage than previously expected. Enjoy is moving forward with improvements to its casinos, which were slated to occur later to help improve operational results, and will continue to pressure leverage. In addition, the acquisition of two casinos in Chile prevented further debt reduction as previously expected. As a result, Fitch projects that leverage will remain above 5.0x at least for the following two years. New Casinos: In August 2018, Enjoy announced the acquisition of two new casinos in Chile: in Los Angeles and San Antonio, for CLP7,754 million. These Casinos are expected to generate around CLP2 billion EBITDA in 2019, to increase in 2020 with a full year of operation under the Enjoy brand. In addition, the company expects synergies and benefits of fully incorporating those properties to the loyalty program and hotel offering. Slow Growth in the Industry: The gaming business in Chile is a mature industry, with low-single-digit growth. Enjoy's growth strategy is focused on developing underdeveloped locations, such as Santiago and Chiloe, as its other casinos post modest growth figures, as well as increasing its appetite for opportunities outside Chile. The expected recovery in Brazil should improve results at Enjoy's casino in Punta del Este, Uruguay, which has been affected by the weak economy. DERIVATION SUMMARY Enjoy's 'B+' IDR is in line with small casino operations in the Americas. Enjoy's leverage, at around 5x, is in line with other casinos in the category in the region, but the company shows lower margins than much larger operators such as Boyd Gaming Corporation, MGM Resorts International and Wynn Resorts, which leads to lower cash flow predictability. Enjoy's business factors are good, with a strong market position in Chile, profitability and an operating environment that limits new competition in Chile. Enjoy is a much smaller operator than the mentioned peers, with 70% of its EBITDA coming from Chile, and diversification only in Latin America. Additionally, after several years of financial stress, the company is in need of capex to revitalize its asset base. Enjoy owns all of its underlying real estate, with the exception of Vina del Mar, which lowers license renewal risk and is a positive for the credit. No country-ceiling, parent/subsidiary or operating environment aspects impact the rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Capex for around CLP100 billion for the next three years, including maintenance. -- Dividend policy of 30% of net income. -- The base case does not consider the refinancing of the international bond before its expiry date. KEY RECOVERY RATING ASSUMPTIONS -- The recovery analysis assumes that Enjoy would continue operating in case of default and that the company would be reorganized rather than liquidated. -- Fitch has assumed a 10% administrative claim. Going-Concern Approach Recovery analysis considers a post restricting EBITDA after default equivalent to 2018 EBITDA less 30%. The EV multiple of 2.7x used to calculate a post-reorganization valuation considers the latest casino and gaming saloon transactions in the market, with a haircut, as the latest transactions have been of ongoing healthy business with no financial distress. The waterfall results in an above-average recovery, corresponding to 'RR3' Recovery Rating, which allows for a one-notch upgrade of the issuance to 'B+' RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Higher international diversification; -- Adjusted Debt/EBITDAR below 4.0x on a consistent basis; -- FFO fixed charge coverage above 3x. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Adjusted Debt/EBITDAR above 5.0x on a consistent basis; -- FFO fixed charge coverage below 2x. LIQUIDITY Comfortable Liquidity: In November 2018 and April 2019, Enjoy issued local bonds to finance its capex needs and refinance its current debt. After this liability management, the company was left with no significant amortization for the following three years, except for CLP20 billion commercial papers due in 2020, which work as revolving debt. The main maturity after the commercial papers is the international bond for USD195 million due on 2022, which Enjoy intends to refinance earlier to take advantage of better rates and to reduce its financial costs. FULL LIST OF RATING ACTIONS Enjoy S.A. Fitch has taken the following rating actions: -- Long-Term IDR affirmed at 'B+'; Outlook revised to Negative; -- Senior unsecured USD300 million notes affirmed at 'BB-'/'RR3'. ENTRE RIOS: Fitch Affirms B LT IDRs, Outlook Negative ----------------------------------------------------- Fitch Ratings has affirmed the Province of Entre Rios Argentina's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'B'/Negative Outlook. The Negative Outlooks reflects the Outlook assigned to Argentina. In addition, Fitch has affirmed the issue rating on Entre Rios' senior unsecured bond issuance totalling $USD500 million at 'B'. The rating actions are based on Fitch's new "Rating Criteria for International Local and Regional Governments" published on April 9, 2019. Under the criteria, the key rating drivers for Argentinean LRGs are their risk profile and debt sustainability ratios. Fitch classifies Entre Rios as a type B LRG since the province must cover debt service from cash flow on an annual basis. The province's IDRs are aligned with Argentina's sovereign IDR (B/Negative). Fitch has assigned Entre Rios a Standalone Credit Profile (SCP) of 'b', which reflects a combination of 'Vulnerable' risk profile assessment and weak debt metrics, which resulted in a 'b' debt sustainability assessment. The SCP also factors in rated peers' positioning. Fitch does not apply any asymmetric risk or extraordinary support from upper-tier governments. KEY RATING DRIVERS Risk Profile Assessment: Vulnerable There are six weaker assessments for the risk factors, which in combination with sovereign rating of 'B', resulted in a Vulnerable risk profile assessment. Revenue Robustness: Weaker Entre Rios depends on stable transfers from 'B' rated counterparty, Argentina. Tax revenues represent around 22% of operating revenue, one of the lowest levels among Argentine peers. Moreover, revenue prospects are negative considering the weak economic performance of the national economy. Local revenue is strongly linked to the level of agricultural-related activities and price adjustments for provincial taxes on gross income. In its rating case assessment, Fitch expects tax revenues to grow slightly lower than inflation until 2021, taking into consideration expected poor economic performance. Revenue Adjustability: Weaker In Fitch's opinion, any additional revenue increase is unlikely considering that the province has low tax autonomy, justifying the weak assessment. Entre Rios cannot afford any additional taxation, and the subscription to the Fiscal Consensus, between subnationals and the nation, amended in the federal 2019 budget, has led to the postponement of some tax cuts. Expenditure Sustainability: Weaker Fitch expects operating expenditures to expand slightly higher than operating revenues until 2021. Despite recent efforts to curb expenditures, there are no balanced expenditure rules in place under an inflationary environment, with frequent updates in salaries. Moreover, the IMF deal signed with the national government in 2019 demanded the transfer of responsibility and subsidies regarding transport and differential electricity sectors to Entre Rios. Nevertheless, the transfers correspond to less than 2% of Entre Rio's opex. Expenditure Adjustability: Weaker Entre Rios has a high share of inflexible costs. Fitch notes that capex levels have averaged the equivalent to 6.5% over the last five years in a decreasing trend. As verified across provinces in Argentina, Entre Rios also has very limited flexibility in its provincial workforce, in which commissioned/flexible headcount corresponds to less than 5% of total provincial workforce. Liabilities and Liquidity Robustness: Weaker In Fitch's opinion, there is a weak framework for debt and liquidity in Argentina. The country has weak accountability and disclosure practices for off-balance sheet risks, including public sector entities and unknown pension liabilities. As of December 2018, external debt corresponded to around 82.5% of total debt with moderate maturity concentration starting in 2020. Fitch notes that Entre Rios has not entered into hedge agreements for the external debt. Entre Rios's public sector entities (PSE) have generally produced positive results, and the province does not guarantee any PSE debt. Liabilities and Liquidity Flexibility: Weaker In Fitch's opinion, there is very limited emergency liquidity support from upper tiers (sovereign counterparty below BBB-). Emergency liquidity support would come from the central government via the anticipation of transfers (Coparticipaciones). Outstanding gross cash positions have represented a low coverage of operating expenditures. In addition to cash, the province has unified funds (FUCO, the Spanish acronym for this mechanism) of ARS3.5 billion, which should be used in 2019. Fitch assesses Entre Rios's debt sustainability at 'b'. Fitch's rating case forward-looking scenario indicates net direct risk corresponding to more than 25x of operating balance by 2021. Fitch expects under its rating case scenario debt service coverage (operating balance/debt service, including short-term debt maturities) close to zero, corroborating the 'b' assessment. KEY ASSUMPTIONS Fitch's rating case scenario is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on the 2018 estimated figures and 2019-2021 projected ratios. Fitch's rating case scenario for Entre Rios assumes income tax and transfers growing slightly lower than salaries under a recessionary environment. RATING SENSITIVITIES Any negative rating actions affecting Argentina (B/Negative) would result in a similar action for Entre Rios. Entre Rios's ratings would be downgraded if the SCP were downgraded by one notch, which would occur if the province misses a debt service payment. A similar action would occur for Entre Rios senior unsecured bond ratings. FULL LIST OF RATING ACTIONS Fitch has affirmed Entre Rios's ratings as follows: -- Long-term Foreign and Local-currency IDR at 'B'; Outlook Negative; -- USD500 million 8.75% senior unsecured notes at 'B'. Fitch has assigned Entre Rios a Standalone Credit Profile of 'b'. =========== B R A Z I L =========== BRAZIL: Sees Less Top Quality Coffee in 2019 Due to Weather ----------------------------------------------------------- Richard Mann at Rio Times Online reports that Brazil is producing less top quality coffee this year, despite a bumper crop overall, because of unusual pre-harvest weather, which has affected some traders who rely on the product, according to sources in the sector. The market for Brazilian fine coffee is tighter than normal, causing a premium paid for the current crop against New York futures, which is particularly rare at this time of the year, said traders, who requested anonymity to discuss the market-sensitive matter, according to Rio Times Online. "Some trading houses are scavenging the market. Those coffees are trading at a premium in New York, and this is only July. It's going to be a long, painful season for these people," said a London-based trader, the report notes. The trader said that Brazil's fine cups for shipment in August are being traded four cents above New York futures when they usually trade between five and nine cents below the reference contract, the report relays. Rio Times Online says that some trading houses that made anticipated sales expecting negative differentials at delivery time are now forced to buy at a premium, taking losses. The various flowerings in Brazil's plantations have raised concerns about the quality of the current crop, as reported by Reuters earlier, but the issue may be worse than many expected, the report notes. Exporter Escritorio Carvalhaes said that trading was unusually slow at the peak of harvest, the report relays. According to him, the erratic climate in the second half of 2018 confused the coffee trees, and the flowerings occurred in four to five stages, the report notes. "In the summer, the growing and ripening period of the fruit, again the weather did not help. The weather was dry in January and quite rainy from mid-February," said Carvalhaes, noting that temperatures were above average, including at night, for long periods in the summer of 2019, the report discloses. "These repeated storms led to early and uneven ripening of the fruits . . . These rains brought down ripe fruit, the 'cherries' . . . ", commented Carvalhaes, pointing out that the result "is a smaller crop than expected and of poorer quality," the report notes. Producer Daniella Pelosini, a regular supplier to Italian roaster Illy, said she would strive to produce the coffees that top quality brands seek, the report says. "We're not sure what happened, but the beans went quickly from green to dry. I'm finding it very difficult to make volumes of cherries for peeled lots," she said during a visit to her farm in Pardinho, in the state of Sao Paulo, the report relays. One of the outcomes will be a more massive production of lower quality coffees, weaker cups, and Rio or Riado types, which many roasters use for blending, the report discloses. For farmers who are already facing historically low prices, the additional lower quality impact will only increase the problem, the report adds. Coffee producers in Peru and Honduras are benefiting from the quality shortfall in Brazil, with prices between five and ten cents over futures, according to the London-based trader, the report relays. Beans from those locations usually trade level with futures, the report says. The trader said that futures in New York could be affected if buyers turn to exchange stocks, which are not perfect substitutes but are washed Arabicas at least, the report adds. As reported in the Troubled Company Reporter-Latin America on May 27, 2019, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. JBS SA: Invests in New Biodiesel Plant Amid Clean Fuel Push ----------------------------------------------------------- Roberto Samora at Reuters reports that a unit of Brazil's JBS SA plans to invest BRL180 million ($47.5 million) to build a biodiesel plant entering service by 2021, as the company looks to cash in on Brazil's accelerating clean fuel drive, according to a statement. Seara Alimentos, JBS' processed foods unit, will use fat and scraps from pork and poultry as raw material for biodiesel. JBS, the world's largest meat producer, added the new plant in Santa Catarina state will double the company's biodiesel capacity to over 600 million liters per year, according to Reuters. "By 2023, the RenovaBio (cleaner fuel program) will require a 15% biodiesel mix in the diesel," Alexandre Pereira, JBS Biodiesel director, said, the report relays. Currently the mandatory mix is 10%, the report notes. Soybean is the main raw material for biodiesel production in Brazil, the report says. JBS already operates two other biodiesel plants in Brazil running mainly on bovine fat. With its third unit under way, JBS will seek to strengthen its position among Brazil's 10 largest biodiesel producers, the report discloses. Last year, JBS sales of that type of fuel went up by 25% to 260 million liters, the statement said, the report adds. As reported in the Troubled Company Reporter-Latin America on June 19, 2019, Fitch Ratings has upgraded JBS S.A.'s Long-Term Foreign- and Local Currency Issuer Default Ratings and senior unsecured notes issued by JBS Investments GmbH and JBS Investments II GmbH to 'BB' from 'BB-'. The National Scale rating was upgraded to 'AA+ (bra)' from 'A(bra)'. The Rating Outlook is Stable. The upgrade reflects JBS expected deleveraging and strong free cash flow generation and improved financial flexibility due to recent liability management. MARFRIG GLOBAL: Fitch Rates Unit's US$500MM Sr. Unsec. Notes BB- ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to NBM US Holdings, Inc.'s USD 500 million senior unsecured notes with a maturity up to 10 years. NBM US Holdings Inc. is a wholly-owned subsidiary of Marfrig Global food S.A., which unconditionally and irrevocably guarantees the notes, as does MARB BondCo PLC, Marfrig Holdings (Europe) B.V. and Marfrig Overseas Limited. The notes will be unsecured senior obligations and will rank pari passu with all unsecured and unsubordinated obligations of Marfrig and the other guarantors. Net proceeds will be used to fund sustainable projects and will involve the ordinary acquisition of cattle in Brazil from selected and monitored cattle farmers located in the Amazon Biome and the States of Mato Grosso, Rondonia and Para, according to the environmental and social requirements under Marfrig's internal system, Marfrig Club, and its cattle purchase policy. KEY RATING DRIVERS Evolving Business Profile: Marfrig divested Keystone to Tyson Foods, Inc (BBB/Stable) for a total enterprise value (EV) of USD2.4 billion at the end of 2018. The Keystone divestment came on the heels of Marfrig's acquisition of 51% of National Beef Packing Company, LLC (National Beef) for USD969 million in June 2018. Through these transactions Marfrig has increased its exposure to beef; some of the risks related to a single commodity, however, are offset by the lack of a strong correlation between U.S. and Brazilian cattle cycles. Further, Marfrig will own 51% of much larger National Beef versus 100% of Keystone, and although National Beef's EBITDA will be consolidated 100%, there will be cash flow leakage due to substantial minority interests. Gradual Deleveraging: Fitch estimated that pro forma adjusted net debt/ EBITDA (excluding minority dividends) was 3.5x in 2018, a decline from 5.1x during 2017. Fitch expects Marfrig's net leverage to move to below 3.5x during 2019 due to positive consumption trends in the USA and Brazil and the reopening of export markets, which should boost operating cash flow. Uruguay and Japan entered into a sanitary agreement during February that authorized exports of fresh beef between the two countries, which will benefit Marfrig, as it is the largest beef exporter in Uruguay. Bolt-on acquisitions made by Marfrig in early 2019 which included Quickfood in Argentina (USD55 million), Varzea Grande from BRF in Brazil (BRL100 million) and Iowa Premium LLC (USD150 million) in the United States. Product Concentration: While helping the company achieve its credit leverage targets, the sale of Keystone increased the company's product concentration and therefore business risk, as Keystone provided relatively stable cash flow as most of its sales were processed poultry products sold to McDonalds in the U.S.; the company is now a pure beef player with a processing capacity of 33,500 head/day. National Beef is the fourth largest beef processor in the United States with approximately 13% of the beef processing capacity in the U.S. (12,000 head/day). In South America business, Marfrig is one of the region's leading beef producers, with a primary processing capacity of over 21,000 head/day. The company has nine accredited plants for exporting to China. Geographical diversification: Marfrig's ratings incorporate the company's geographic diversification in the volatile protein commodity industry. Fitch estimated that National Beef represented about 65% of the group EBITDA and the remaining in South America (mostly in Brazil). The geographic diversification helps to decrease risks related to disease and currency fluctuation. In addition, most of beef produced by National Beef is consumed in the U.S. and a small part exported to Japan and South Korea, which reduces the risks of tariffs and quotas faced by the company's operations in South America. Favorable Beef Outlook: Marfrig's competitive advantages stem from a favorable environment to raise cattle in Brazil and the U.S., the large scale of operations, access to exports markets from Brazil and the U.S. and long-term relationship with farmers, customers, and distributors. Global beef fundamentals are expected to remain positive in the next couple years for Brazilian and U.S. producers due to increased demand and better cattle availability. U.S. beef production is forecast to grow by nearly 2% in 2019 according to the USDA. In exports, Brazil and Argentina are poised to remain top suppliers to China as the country makes a concerted effort to boost its beef supplies as pork production will be hindered by disease issues. An outbreak of the African swine fever virus in China has severely hurt pork production there. The disease will likely result in more protein products, including chicken, directed to China in 2019.Among the significant industry risks are a downturn in the economy of a given export market, the imposition of increased tariffs or sanitary barriers, and strikes or other events that may affect the availability of ports and transportation. DERIVATION SUMMARY Marfrig ratings reflect its solid business profile and geographic diversification as a pure play in the beef industry with a large presence in South America (notably Brazil) and in the U.S. with National Beef. Marfrig is well positioned to compete in the global protein industry due to its size and geographic diversification. The business compares favorably regarding size with its regional peer Minerva S.A. (BB-/Stable), which is mainly a beef processor in South America. JBS S.A. (BB/Stable) and Tyson Foods (BBB/Stable) enjoy a higher level of scale of operations, stronger FCF, and higher product and geographical diversification than Marfrig. JBS's rating is constrained by ongoing litigation issues. Regarding net leverage, Marfrig compares favorably to Minerva (BB-). Marfrig's leverage is higher than Tyson's. Marfrig is subject to a put option from minorities' shareholders. The put option related to National Beef could be exercised in January 2023 (payable one-third each year). The put option would be accelerated in the event of a change in control of Marfrig Global Foods S.A. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Sales are driven by positive consumer demand in the U.S. and Brazil; -- Bolt-on acquisitions; -- Adjusted Net debt/ EBITDA trending below 3.5x at YE2019. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Sustainable and positive FCF; -- Improved and resilient operating margins in Marfrig Beef; -- Substantial decrease in gross and net leverage to below 4.5x and 3.0x, respectively, on a sustained basis. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Negative FCF on a sustained basis; -- Net leverage above 4.5x on a sustainable basis. LIQUIDITY Adequate Liquidity: As of 1Q19 Marfrig had USD1.7 Billion of cash and cash equivalent compared to USD1.1 Billion of short-term debt. The short-term debt is mainly related to trade finance lines. The next main bond maturity is due in 2023 (USD446 million outstanding) ESG CONSIDERATION: The company will use net proceeds from the bond to fund ordinary acquisition of cattle in Brazil, from selected and monitored cattle farmers located in the Amazon Biome and the States of Mato Grosso, Rondonia and Para, according to the environmental and social requirements under Marfrig internal system. Cattle must be acquired from a full cycle supplier, which is a supplier of cattle whose cattle is both born and raised on the same farm; and if Marfrig acquires cattle from a supplier that is not a full cycle supplier, a Request Form of Information (RFI) must be used. An RFI is a form where non-full cycle supplier of cattle discloses the tax number and original farm information during the purchase process. For ESG consideration, unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch assigns a score of 3 for the factor regarding the use of animal production; food quality and safety and labor relations. Marfrig has an ESG Relevance Score of 4 on governance for ownership concentration due to the control of the company by the Molina's family and the lack of a detailed succession plan. The shareholder's strong influence upon management could result in decisions being made to the detrimental to the company's creditors. FULL LIST OF RATING ACTIONS Fitch has assigned a 'BB-' rating to the proposed senior unsecured green notes guaranteed by Marfrig Global Food S.A. Fitch currently rates Marfrig as follows: Marfrig Global Foods S.A. -- Long-Term Foreign and Local Currency IDR 'BB-'; -- National Long-Term Rating 'A(bra)'. The Rating Outlook is Stable. Marfrig Holdings (Europe) B.V. -- Senior unsecured notes due 2021, 2023 'BB-'. MARB BondCo PLC -- Senior unsecured notes due 2024 and 2025 'BB-'. NBM US Holdings, Inc -- Senior unsecured notes due 2026 'BB-'. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Cheap Money Creates "Parallel Exchange Rate" ---------------------------------------------------------------- Dominican Today reports that Regional Sustainable Economic Strategies Center (CREES) executive vice president Ernesto Selman, said that the new, "easy and cheap" money that the Central Bank has released as part of its monetary measures could exert more pressure on the exchange rate of the peso Dominican against the dollar. "New, easy and cheap money in an economy . . . as made available with the release of the bank reserve implies greater pressure on exchange rates and that's what we have seen, a parallel exchange rate that has been created in the market, outside the official exchange rate," the report quoted Mr. Selman as saying. Nonetheless, the leading organization of the business sector, the National Private Enterprise Council (Conep) affirms that the exchange rate has remained fluctuating within typical levels of supply and demand, the report notes. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). DOMINICAN REPUBLIC: Coal-Fueled Power Plants Could Harm Tourism --------------------------------------------------------------- Dominican Today reports that at the conference he led recently in the city of Bani (south), American expert, Ernie Niemi, warned that the use of coal to generate electricity could affect the country's tourism activity. He said more and more tourists from developed countries prefer environmentally sustainable destinations, with environments without pollution, and which contribute to reduce carbon dioxide emissions that cause global warming and climate change, according to Dominican Today. He said that a country whose electricity matrix is predominantly based on mineral coal and in relative terms large emitter of CO2, "is not an attractive destination for tourism, especially as the other destinations in the region that promote environmental sustainability and nature conservation as a brand," the report notes. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). ===================== P U E R T O R I C O ===================== PUERTO RICO: Governor's Pick for Successor Faces Opposition ----------------------------------------------------------- Luis Valentin Ortiz at Reuters reports that the lawyer tapped by Puerto Rico's outgoing governor to lead the bankrupt U.S. territory faced opposition from legislators, two days before the island's top executive plans to bow to the demands of protesters and resign. Current Governor Ricardo Rossello formally nominated the island's former non-voting representative in the U.S. Congress, Pedro Pierluisi, as secretary of state, which would position him to take over the government if he is confirmed by lawmakers, according to Reuters. But some members of Rossello's party voiced opposition to the pick, citing Pierluisi's role advising the federally created financial oversight board overseeing the island's bankruptcy, which is highly unpopular with Puerto Rico residents, the report relays. Anger over the bankruptcy, the handling of back-to-back 2017 hurricanes that killed some 3,000 people, the filing of federal corruption charges against two former administration officials and the publication of profane chat messages between Rossello and his close advisers sparked nearly two weeks of street protests this month demanding his ouster, the report relays. The report notes that the largest protest drew an estimated 500,000 demonstrators to the streets of San Juan, capital of the island of 3.2 million people. House Speaker Carlos Mendez said he favored Senate President Thomas Rivera Schatz over Pierluisi, citing Pierluisi's role at O'Neill & Borges, one of the two law firms representing the financial oversight board in the bankruptcy, the report discloses. "There are some issues that have to do with the fiscal oversight board," Mendez said in a local radio interview, without elaborating, the report relays. He suggested that Pierluisi does not have enough support from House lawmakers for his confirmation, the report notes. A source close to the Rossello administration told Reuters that Pierluisi's nomination may be "dead on arrival" as a result of his connection to the oversight board, the report relays. To be confirmed, Pierluisi will need votes that equate to a majority of the 51 members of the Puerto Rico House and of the 27 senators. Lawmakers are expected to vote in a special session Rossello called when he made the nomination, the report notes. "After much analysis and taking into account the best interests of our people, I have selected Mr. Pedro Pierluisi Urrutia to fill the vacancy of secretary of state," Rossello said in a statement, the report discloses. Pierluisi said his goal is to transform the energy shown by Puerto Ricans into constructive actions, the report notes. "I have listened to the people's messages, their demonstrations, their demands and their concerns," he said in a statement. "And in this new challenge in my life, I will only answer to the people," he added. Replacing the first-term governor became complicated after Secretary of State Luis Rivera Marin, who would have been first in line to assume the office, resigned on July 13 because of his participation in the group chat, the report relays. Afterward, the second in line for the top government post, Secretary of Justice Wanda Vazquez, said she did not want the position, the report adds. Pierluisi was on a leave of absence from his job as a corporate lawyer for O'Neill & Borges. He previously served as Puerto Rico's attorney general and the territory's non-voting representative in Congress from 2008 to 2016. He unsuccessfully ran against Rossello in the 2016 primary for governor. 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. SEARS HOLDINGS: Judge Threatens to Appoint Examiner in Lampert Row ------------------------------------------------------------------ Soma Biswas, writing for The Wall Street Journal, reported that Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York threatened to appoint an examiner to resolve disputes involving the new company controlled by Edward S. Lampert, former leader of Sears Holding Corporation. Mr. Lampert's Transform Holdco LLC purchased the best-performing Sears stores out of chapter 11 in March, the Journal related. According to the Journal, Judge Robert Drain gave a deadline for Transform and the Sears chapter 11 estate to reach agreements about how much money they owe each other under Transform's $5.2 billion deal to take over hundreds of Sears and Kmart stores. Judge Drain said he would appoint an examiner at the expense of both entities if they can't reach an agreement on their outstanding issues. He said they should have resolved their differences months ago, the Journal further related. Dueling lawsuits were filed in recent weeks as the old Sears prepares to settle up with creditors, the Journal noted. The old Sears is seeking a court order to force Mr. Lampert to pay it more than $200 million to hold up his end of the store-acquisition deal, the Journal said. The old Sears said the money belongs to the bankruptcy estate and that Transform has held up paying $28.5 million of cashed checks for five months since the deal's close, the Journal added. The adversary proceeding is captioned SEARS HOLDINGS CORPORATION, et al., Plaintiffs, v. EDWARD SCOTT "EDDIE" LAMPERT, et al., Defendants, Adv. Proc. No. 19-08250 (RDD). Mr. Lampert is represented by: Philip D. Anker, Esq. Noah A. Levine, Esq. WILMER CUTLER PICKERING HALE AND DORR LLP 7 World Trade Center 250 Greenwich Street New York, NY 10007 Telephone: (212) 230-8800 Facsimile: (212) 230-8888 Email: philip.anker@wilmerhale.com noah.levine@wilmerhale.com About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as investment banker; DLA Piper LLP as real estate advisor; and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors, including the Pension Benefit Guaranty Corp., and landlord Simon Property Group, L.P., to serve on the official committee of unsecured creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel; FTI Consulting as financial advisor; and Houlihan Lokey Capital, Inc. as investment banker. The U.S. Trustee for Region 2 on July 9, 2019, appointed five retirees to serve on the committee representing retirees with life insurance benefits in the Chapter 11 cases. SOLUTIONS BY DESIGN: Unsecureds to Get $31K Total Payment --------------------------------------------------------- Solutions By Design, Inc., filed an amended Chapter 11 Plan and accompanying amended disclosure statement proposing that general unsecured creditors will get 11 monthly payments of $2,606 each and one final payment of $2,616, commencing on month 19 until year 2022. The total payout amount is $31,282. Class 2 Insiders are impaired. Claimants will receive 100% payment of the amount owed only after payment in full of all other creditors as per the terms of the Chapter 11 Plan. Holders of Class 2 claims will receive 17 monthly payments of $3,610 each and one final payment of $3,630.00 commencing on month 31 until year 2023. The total payout amount is $65,000. Payments and distributions under the Plan will be funded by the continued operation of the business of the Debtor. A full-text copy of the Amended Disclosure Statement dated July 18, 2019, is available at https://tinyurl.com/y4rnzds8from PacerMonitor.com at no charge. The Amended Plan was filed by Nilda M. Gonzalez-Cordero, Esq., in Guaynabo, Puerto Rico, on behalf of the Debtor. About Solutions By Design Solutions By Design Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 18-06886) on Nov. 28, 2018, disclosing under $1 million in assets and liabilities. The case has been assigned to Judge Brian K. Tester. The Debtor is represented by Nilda M. Gonzalez Cordero, Esq., at Gonzalez Cordero Law Offices. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Petropiar Starts Operations --------------------------------------------------- Luc Cohen at Reuters reports that Venezuelan state-run oil company Petroleos de Venezuela, S.A. said the Petropiar extra-heavy crude upgrader, part-owned by U.S. oil company Chevron Corp (CVX.N), had begun operations as a blending facility. The facility, which used to produce upgraded crude destined mainly for the U.S. market, is expected to produce some 130,000 barrels-per-day (bpd) of heavier Merey crude with an API gravity of 16, PDVSA said in a statement, adding that the first Merey shipment from the plant of 520,000 barrels had been loaded, according to Reuter. Reuters last month reported that PDVSA planned to convert Petropiar into a facility that blended heavy and light oils to make Merey, a grade favored by Asian refiners, citing internal company documents detailing the strategy. Petropiar once made up to 210,000 bpd of exportable "synthetic" crude out of tar-like oil from the OPEC nation's Orinoco Belt, home to one of the largest crude reserves in the world, the report notes. But PDVSA struggled to find buyers for that grade after the United States, previously the largest customer for Venezuelan crude, sanctioned PDVSA in January to pressure socialist President Nicolas Maduro to step down, the report relays. The Treasury Department renewed Chevron's license to continue operating Petropiar and its three other joint ventures with PDVSA despite the sanctions for three months, the report discloses. It had previously been set to expire on July 27, the report relays. In the statement, PDVSA said the conversion of Petropiar to a blending facility was "part of the socialist efforts underway at the upgraders of the Jose Antonio Anzoategui industrial complex" where its four extra-heavy crude upgraders are located, the report ntoes. It did not say whether it planned to convert the other upgraders, which include the Petrocedeno facility part owned by France's Total (TOTF.PA) and Norway's Equinor (EQNR.OL) and the Petromonagas plant part-owned by Russia's Rosneft into blending facilities as well, the report relays. The Petrosanfelix upgrader, wholly owned by PDVSA, has been offline for months, the report adds. Petroleos de Venezuela, S.A. is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil as well as exploration and production of natural gas. As reported in Troubled Company Reporter-Latin America on June 3, 2019, Moody's Investors Service withdrew all the ratings of Petroleos de Venezuela, S.A. including the senior unsecured and senior secured ratings due to insufficient information. At the time of withdrawal, the ratings were C and the outlook was stable. VENEZUELA: Decline of Currency Accelerates Against US Dollar ------------------------------------------------------------ EFE News reports that the Venezuelan bolivar accelerated its decline against the US dollar, with $1 worth 9,830.94 bolivar on July 29, while the rate was even greater on the parallel market that governs much of the country's commercial activity. The report notes that the further fall confirms the rapid weakening of the bolivar which, according to the South American country's Constitution, is the only legal tender in Venezuela. However, EFE verified that in the wake of the crisis, small traders, service providers and several other people have decided to use the US dollar for their transactions instead. The new cryptocurrency "Petro" is also legal tender in Venezuela, but following an executive order by US President Donald Trump--which banned Americans from using it for conducting business--is now used as a savings certificate and is accepted as a form of payment in some stores, the report relays. The new official rate now brings Venezuela's legal minimum wage to just over $4 per month, which leaves some 3 million government employees who receive it in poverty, in comparison to the income threshold of $1.25 per day set by the United Nations, the report relays. Currency controls have been in place in the Caribbean country since 2003, but the government led by President Nicolas Maduro has allowed some flexibility in an attempt to attract foreign exchange for the public purse, which was hit by a decline in oil production--the main source of Venezuela's income, the report discloses. Along with the economic crisis, Venezuela has been witnessing political tensions since January, when Maduro was sworn in for a new six-year term, which is not recognized by the opposition and a part of the international community, the report says. Because of this, the head of the Parliament, Juan Guaido, proclaimed himself as the interim president with the backing of more than 50 countries, including the US, the report adds. About Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. Standard and Poor's long- and short-term foreign currency sovereign credit ratings for Venezuela stands at 'SD/D' (November 2017). S&P's local currency sovereign credit ratings on the other hand are 'CCC-/C'. The May 2018 outlook on the long-term local currency sovereign credit rating is negative, reflecting S&P's view that the sovereign could miss a payment on its outstanding local currency debt obligations or advance a distressed debt exchange operation, equivalent to default. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook (March 2018). Fitch's long term issuer default rating for Venezuela was last set at RD (2017) and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* 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 * * *