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/raid1/www/Hosts/bankrupt/TCRLA_Public/190816.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, August 16, 2019, Vol. 20, No. 164 Headlines A R G E N T I N A NACION SEGUROS: Fitch Affirms 'B' IFS Ratings, Outlook Negative B R A Z I L BANCO BTG: Fitch Expects to Rate Sr. Unsec. Notes BB-(EXP) BRAZIL: Successfully Completes Auction of Port Terminals BRAZIL: Teeters on Brink of Recession GOL LINHAS: S&P Ups ICR to 'B' on Better Industry Fundamentals JBS SA: Mulls Acquisitions After Swine Fever Outbreak in Asia JBS SA: Posts Strong 2ndQtr Results, Bolstered by Asian Demand C H I L E GUACOLDA ENERGIA: S&P Lowers ICR to 'BB-' on Weaker Profitability P A N A M A PANAMA CANAL RAILWAY: S&P Affirms BB- ICR; Alters Outlook to Stable P U E R T O R I C O SEARS HOLDINGS: Cyrus Capital Files Limited Objection to Plan OK SEARS HOLDINGS: Indenture Trustee Objects to Confirmation of Plan TECNICENTROS MUNDIAL: Oct. 22 Hearing on Disclosure Statement V E N E Z U E L A PETROLEOS DE VENEZUELA: Partners Fear Reach of Latest US Sanctions VENEZUELA: Moody's Withdraws C Issuer Ratings for Business Reasons VENEZUELA: Trinidad and Tobago Welcomes Economic Migrants - - - - - ================= A R G E N T I N A ================= NACION SEGUROS: Fitch Affirms 'B' IFS Ratings, Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed the Insurer Financial Strength ratings of Nacion Seguros S.A., Nacion Reaseguros S.A. and Nacion Seguros de Retiro S.A. at 'B'. The Rating Outlook is Negative. The rating reflects the companies' strategic importance to its parent Banco de la Nacion Argentina, of which they are core subsidiaries. KEY RATING DRIVERS The current rating action fulfils the regulatory annual review. Fitch considers the three Nacion insurance companies core subsidiaries of BNA. The latter is a large state-owned bank whose liabilities are guaranteed by the Argentinian government. Argentina's long-term foreign currency Issuer Default Rating (IDR) is 'B' with a Negative Outlook. Although Fitch does not rate BNA, its creditworthiness is tied to Argentina's. The insurance subsidiaries are rated based on a group approach where the rating fully reflects the strengths and weaknesses of the group members. The insurance companies benefit from the bank's large distribution channels, brand and leadership position in the Argentinian banking industry. Nacion Seguros has a solid business profile with 4.9% overall market share in a highly granular industry and a strong position in several lines. The company has adequate product mix, distribution and geographical diversification. As of March 2019, the company exhibited a 52.4% growth in gross written premium (GWP), which is impacted, as are the other indicators, by the country's high inflation rates. Nacion Seguros has a conservative capitalization strategy that as of March 2019 has made the equity grow by 104.2% YOY, reducing the leverage indicators with a net written premium (NWP) to equity ratio of 1.3x (2.1x as of March 2018). The company has improved its operating result, reflected in a combined ratio of 84.5%, which compares positively to 3Q18's 102.3%. This is due to enhancement of the net loss ratio to 54.2% from 74.5% driven by a stricter pricing and underwriting policy. Nacion Seguros also improved its bottom line profitability with a return on average equity (ROAE) of 64.7% (29.3% as of March 2018). Nacion RE is a medium-sized company with an overall market share of 4.5% and significant participation in some business lines. Despite of presenting a wide product mix and geographical diversification, its premium is highly concentrated in two insurers. As of March 2019, the company presented an annual growth of 47.0% in GWP. Nacion RE has increased its leverage indicators due to growing operations and greater retention, reaching a net written premium (NWP) to equity ratio of 0.4x as of March 2019 (March 2018: 0.1x). At that time the company exhibited a negative operating income of ARS50.8 million with a combined ratio of 182.8%, comparing unfavorably to previous year results for the same quarter (120.5%). When including financial income Nacion RE's results are positive with a return on average equity (ROAE) of 6.6%, which compares positively to 4.4% from March 2018. Both claims costs and financial income are heavily impacted by inflation. Despite the increasing retention (March 2019: 13.0%; March 2018: 5.9%), Nacion RE increased its reinsurer exposure with a reinsurance recoverable to equity ratio of 650.0%. Nacion Retiro has a strong market position (8.7% market share) but with limited real growth, since its business consists of the run-off of pension policies. The company's NWP is mainly composed of retirement products associated with benefits granted to BNA employees. Like the other insurance subsidiaries, Nacion Retiro has a conservative capitalization strategy with equity growing organically YOY (53.9% as of March 2019). The company presents low and improved leverage indicators (March 2019: 6.2x; March 2018: 6.3x). Nacion Retiro presented a negative operating result of ARS356 million but positive bottom line profitability (ROAE: 45.7%) due to strong financial income. Financial income is an important component of all three companies' net income, and it is reflected in the difference from the operating income. The companies' investments are concentrated in the local market where high inflation rates (47.6% 2018YE) result in high returns, which boosts the companies' bottom-line profitability. Annual inflation as of March 2019 stood at 54.7%, which was far above initial Fitch projections for 2019. The three insurance companies' investment risk and liquidity indicators are affected by Argentina's non-investment grade condition, which causes all sovereign and related securities to be viewed as risky and illiquid. In this scenario, Nacion Seguros, Nacion RE and Nacion Retiro presented risky asset ratios of 113.5%, 132.8% and 584.7%, respectively. The liquidity indicators for the first two companies, which is calculated over net claim reserves, were 66.5% and 115.8%, while the third's, over net technical reserves, was 14.2%. RATING SENSITIVITIES The ratings and their Outlooks are dependent on Fitch's view of the ability and willingness of BNA to provide support to the insurance subsidiaries. Changes to Argentina's sovereign rating can also have an impact on the Nacion insurance ratings. The current companies' ratings and their outlooks are subject to near term changes due to uncertainty related to recent events in Argentina and the potential impact on the country's sovereign rating. =========== B R A Z I L =========== BANCO BTG: Fitch Expects to Rate Sr. Unsec. Notes BB-(EXP) ---------------------------------------------------------- Fitch Ratings expects to assign a long-term rating of 'BB-(EXP)' to Banco BTG Pactual S.A.'s (BTG Pactual) upcoming private issue of senior unsecured notes with a maturity of five years in Brazilian Reais and to be settled in U.S. dollars. The notes will be issued by BTG Pactual's Cayman branch. The notes are part of a global medium-term notes program of up to USD3 billion, and its proceeds will be used to enable new business generation. Assignment of the final rating is contingent on the receipt of final documents conforming to the information received to date. KEY RATING DRIVERS The expected rating assigned to BTG Pactual's issuance is aligned with the bank's Issuer Default Ratings (BB-/Stable) and ranks equally with other senior unsecured debt. RATING SENSITIVITIES As the bank's notes are aligned with its IDR, any change to the latter will prompt a similar action on the notes' rating. BRAZIL: Successfully Completes Auction of Port Terminals -------------------------------------------------------- EFE News reports that the Brazilian government raised BRL148.5 million (about $37.5 million) from auctions of terminals on the Sao Paulo Stock Exchange, officials said. The auction included facilities in two of the largest ports in Brazil and Latin America. The government expects that the terminals in the ports of Santos, in Sao Paulo state, and Paranagua, located in the southern state of Parana, will receive investment totaling BRL417 million (some $105 million) over the next 25 years, the length of the concessions granted to the winning bidders, according to EFE News. Two of the terminals are in Santos, the largest port in Brazil and Latin America, and are used to warehouse and transfer fuel products, fertilizers and salt, the report notes. The third terminal is in Paranagua, considered the main port for Brazil's agricultural industry, the report relays. The facility also handles general cargo, especially paper products and cellulose, the report relays. The first terminal auctioned off sprawls over 29,300 sq. meters (314,969 sq. feet) in the port of Santos and drew a winning bid of BRL112.5 million (about $28 million) from Hidrovias do Brasil, which received the right to manage the facility for 25 years to store and transport salt and fertilizers, the report discloses. Hidrovias do Brasil, Aba Infraestructura and TRH Consortium all submitted bids for the terminal. In its initial bid, Hidrovias offered BRL65 million (about $16.4 million) and ended up beating out TRH Consortium by BRL500,000 (about $126,262), the report relays. The federal government projects that the terminal will receive approximately BRL219.3 million (about $55 million) in investment, EFE News notes. The winning bid on the second terminal in Santos was BRL35 million (about $8.8 million) by Aba Infraestrutura, the sole certified bidder after Empresa Brasilena de Terminales was ruled ineligible because it already had other assets in the same port zone, the report discloses. Aba Infraestructura won the right to manage a 38,400 sq. meter (412,792 sq. foot) terminal for 25 years. The government estimates that the terminal, which handles chemicals and fuel products, will receive about BRL110.7 million (about $27.9 million) in investment, the report relays. The rights to the third port zone, which covers 27,500 sq. meters (295,619 sq. feet) in the port of Paranagua, were won at auction by Klabin S.A. for BRL1 million (about $252,525), the report relays. The terminal in Paranagua mainly handles general cargo, especially paper products and cellulose. The government estimates that the terminal will get some BRL87 million (about $21.9 million) in investment, the report relates. Of the funds raised by the auction, some BRL37.12 million (about $9.6 million) will be paid when the contracts are signed, the report notes. Under the terms of the auction, the contracts must be inked within 120 days, the Infrastructure Ministry, which coordinated the auctions, said, the report relays. The winning bidders must pay the remaining funds in five annual installments, the ministry said, the report notes. This was the third auction of port facilities conducted by the government this year, the report relays. In April, the government received $113 million from the auction of the rights to operate to six terminals in the Amazonian state of Para, the report relays. On March 22, an auction of the rights to operate four terminals in the southeast state of Espirito Santo and the northeast state of Paraiba raised $60 million, the report notes. President Jair Bolsonaro, who took office on Jan. 1, has made privatizations, especially of ports and airports, a priority, 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. BRAZIL: Teeters on Brink of Recession ------------------------------------- EFE News reports that preliminary data on the performance of the Brazilian economy in the second quarter points to a threat that the Latin American powerhouse will re-enter recession in the first year of the presidency of business-friendly rightist Jair Bolsonaro. The index of economic activity, seen as a leading indicator of gross domestic product, retreated 0.13 percent in the April-June period compared with the previous three months, Brazil's Central Bank said, according to EFE News. If the official GDP figure set to be released Aug. 29 also shows a decline, the Brazilian economy will meet the technical definition of a recession: two consecutive quarters in negative territory, notes the report. EFE relates that Brazil's GDP shrank 0.2 percent in the January-March quarter. According to the report, the discouraging growth numbers coincide with an unemployment rate of 12 percent as the sectors that have traditionally powered the Brazilian economy continue to suffer the after-effects of the sharp downtown in 2015-2016. Industrial output fell 1.6 percent in the first six months of 2019, driven mainly by a 13.7 plunge in the extractive sector, which includes mining. Even so, analysts at the leading banks with operations in Brazil, such as Itau-Unibanco, Bradesco and Santander, say they expect an improvement in the second half of the year, EFE News relates. "The truth is that growth will be around zero or slightly positive. I don't think it will be negative," Marcelo Kfoury, an economist with the prestigious Getulio Vargas Foundation, told EFE, says the report. Kfoury distinguished between "structural problems," related to productivity and investment, from transient factors such as declines in the mining sector and in exports of vehicles to neighboring Argentina, which is suffering from economic woes of its own. So far, the response of the right-wing government to the poor economic data has been to urge patience, EFE News says. "Give it a year or two, give an opportunity to a government that will last four years and is liberal democratic. Don't work against Brazil and have a little patience," the report quoted Economy Minister Paulo Guedes as saying. The opposition, led by the center-left Workers Party (PT), blames the slowdown on the doctrinaire free-market policies advanced by Guedes, EFE relates. "What we are seeing is high unemployment, a fall in income, weak economic activity and the withdrawal of (labor) rights. Nothing is good, while Bolsonaro rides on a jet-ski to hide the chaos," PT chair Gleisi Hoffmann said on Twitter, alluding to the president's outing earlier this week on a lake in Brasilia, notes the report. The administration has taken steps to ward off recession by pumping 42 billion reais ($10.5 billion) into the economy with an eye toward boosting consumption, EFE News says. Brazil's Central Bank is also trying to stimulate spending, cutting its benchmark interest rate to a historic low of 6 percent, though the rates paid by consumers on loans and credit cards remain steep. After taking office in January with a forecast of 2.5 percent GDP growth in 2019, the government has since lowered its prediction to 0.81 percent, in line with the expectations of private sector analysts, EFE News relays. The Brazilian economy contracted by 7 percent in 2015-2016, the country's worst downturn in 70 years, followed by an anemic recovery with growth of 1 percent in both 2017 and 2018, it 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. GOL LINHAS: S&P Ups ICR to 'B' on Better Industry Fundamentals -------------------------------------------------------------- On Aug. 13, 2019, S&P Global Ratings raised its global scale ratings to 'B' from 'B-' and national scale rating to 'brA' from 'brBBB' on Brazilian airline, Gol Linhas Aereas Inteligentes S.A. (Gol). The issue-level rating on the unsecured notes is the same of the issuer credit rating, reflecting the recovery rating of '4', with an average recovery of 35% (rounded). S&P said, "We expect Gol to maintain EBITDA margins at 25%-30%, FFO to gross debt at about 15%, and gross debt to EBITDA close to 4.0x in 2019, and the latter in the 3.5x-4.0x range in 2020. These metrics, which are in line with improved balance sheet and liquidity position, underpin the upgrade. These improvements also reflect the consistency in Gol's strategy to pursue a rational capacity and yield management, focusing on routes where it has competitive edges. The company should generate margins in the abovementioned range also because of the competitive changes since the halt of Avianca Brasil's (AVB) operations in the country, which had a significant overlap with Gol's routes and whose pricing strategy was more aggressive. In addition, the liability management in the past 12 months strengthened Gol's balance sheet and liquidity position, which combined with more conservative fuel hedging strategy, should enhance the company's ability to absorb short-term exogenous shocks, such as fuel prices and foreign-exchange volatility. "We have observed a significant improvement in industry fundamentals with the halt of AVB operations in Brazil and the continued disciplined supply management among the remaining three main industry players, Gol, Azul S.A. (B+/Stable/--), and Latam Airlines Group S.A. (BB-/Stable/--). Before its bankruptcy process, AVB held about 12% of the Brazilian market share. In the first half of 2019, Gol has upped its overall domestic market share position to 40% from 38%. However, its share of the corporate segment surged to about 39% from 33% in the same period, improving its average yields. At the same time, the company has maintained disciplined capacity management amid tight cost control, adding six Boeing 737NG to its operating fleet and keeping load factor close to 82% since the last quarter of 2018, even in the downward seasonality period of second quarter of the year. "Also, Gol's liability management has significantly changed its capital structure in the past 12 months, strengthening its balance sheet and liquidity position, which we now view as adequate. Recently, the company issued a total of $425 million (or about R$1.6 billion) in senior unsecured exchangeable notes due 2024, with a coupon of 3.75%. Management has publicly stated that it will use the cash proceeds to prepay the 2022 bond (callable as of the first half of 2020) and to amortize the term loan due August 2020. This, combined with more conservative fuel hedging strategy of about 67% of consumption for the next 12 months as of June 2019 (as opposed to only 14% in December 2017), should help the company to better absorb short-term shocks. Nonetheless, we still maintain our view of a negative capital structure because the company remains highly exposed to exchange rate fluctuations in its lease obligations and debt principal. "We don't expect the 737MAX grounding to impact Gol's credit profile substantially. Management expects the restrictions on this aircraft to lift by the fourth quarter of 2019, during the high seasonality period. If necessary, the company can sublease additional 737NG to supply its need in the short term." JBS SA: Mulls Acquisitions After Swine Fever Outbreak in Asia ------------------------------------------------------------- Ana Mano at Reuters reports that Gilberto Tomazoni, Chief Executive Officer of meat-packer JBS SA, said the Brazilian firm will consider acquisitions in geographies where it already operates to make the most of opportunities after an outbreak of African swine fever in Asia. In a conference call to comment on second quarter results, Tomazoni cited the recent acquisition of a pork processor in Brazil as a good example of a purchase that has synergies with existing business, in this case its Seara food processing operation in Southern Brazil, according to Reuters. 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: Posts Strong 2ndQtr Results, Bolstered by Asian Demand -------------------------------------------------------------- The Poultry Site reports that JBS SA reported net income of BRL2.184 billion ($539 million) in the second quarter, beating analysts' expectations as an outbreak of African swine fever in Asia boosted exports, said a Reuters report. According to a securities filing, the Sao Paulo-based company's earnings before interest, tax, depreciation and amortsation (EBITDA) totaled BRL5.099 billion, an all-time record and above analysts' expectations of BRL4.535 billion, the report notes. JBS, which produces food in four continents, said net revenues grew by 12.5 percent in the quarter to BRL50.8 billion, according to The Poultry Site. "The global protein market is expanding at an annual 2 percent as the world's population is growing," JBS said in its earnings statement obtained by the news agency. "The outbreak of African swine fever in many countries has contributed to a rise in exports and represents an opportunity to grow our business," the company said, the report notes. African swine fever, which has swept across China over the past year, is fatal to pigs but does not harm people, the report relays. At the Pilgrim's Pride (PPC.O) chicken division, results also improved on the back of a better supply-demand balance, JBS said, the report notes. In its US pork division, the company said margins rose from the previous quarter despite higher raw materials costs, the report discloses. In Brazil, JBS' Seara processed foods division sales, which had struggled due to a recent downturn, rose by 24.3 percent to 5.081 billion, the company said, the report relays. In North America and in Australia, two key operating bases, the beef business stayed strong, driven by local demand and higher export volumes, the company said, 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. ========= C H I L E ========= GUACOLDA ENERGIA: S&P Lowers ICR to 'BB-' on Weaker Profitability ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit and issue-level ratings on Chilean electric power generator Guacolda Energia S.A. to 'BB-' from 'BB'. S&P said, "The outlook is now negative and reflects our view of the company's lack of a clear and well-established execution of a recontracting strategy for Guacolda for the upcoming 12-24 months. If the company fails to recontract several of its PPAs, this would jeopardize its cash flows, which could result in another downgrade. A downgrade is also possible if Guacolda's adjusted debt to EBITDA rises above 6x, which could stem from higher exposure to spot prices with lower margins. "The downgrade reflects our view that Guacolda will operate in more challenging conditions given that Chile is implementing a plan to shift the country's energy generation matrix to cleaner sources. Moreover, we expect a significant renewable capacity entering the domestic electricity market in the short to medium term. This trend will lower variable costs, which will reduce spot prices and expose coal-fired power plants--such as those Guacolda that operates--to less favorable recontracting conditions. Finally, we have observed in the past weeks that the country's largest miners, which represent most of Guacolda's unregulated off-takers, have prioritized agreements with power generators that produce 100% of output from renewable sources. We believe all these factors will make it more difficult for Guacolda to recontract its capacity." =========== P A N A M A =========== PANAMA CANAL RAILWAY: S&P Affirms BB- ICR; Alters Outlook to Stable ------------------------------------------------------------------- On Aug. 13, 2019, S&P Global Ratings revised its outlook on Panama Canal Railway Company (PCRC) to stable from negative. At the same time, S&P affirmed its 'BB-' issuer credit and issue-level ratings on PCRC. S&P said, "The outlook revision reflects our view that PCRC has contained the risks stemming from the loss of MSC, which used to represent about 18% of the company's freight volumes. In the second half of 2018, MSC shifted its operations from the Balboa port to the Rodman port, which does not have rail connectivity. As a result, PCRC's total container movements declined to 278,000 in 2018 from 308,000 in 2017, reducing its revenue and EBITDA by 13.6% and 18.1%, respectively. Nevertheless, PCRC maintained metrics in line with the current rating level, with a debt to EBITDA below 3.0x and FFO to debt above 30%. Moreover, at the beginning of 2019, PCRC reached short-term agreements with new customers to partly substitute freight volume from MSC. The new agreements, coupled with the company's high cash conversion business model and comfortable debt amortizing profile, support our view that PCRC will continue deleveraging in the next 12 months." Recently, PCRC's main customer, A.P. Moller - Maersk A/S (Maersk; BBB/Stable/--) and its subsidiary, Hamburg Süd, announced the expansion and enhancement of the services both offer between Europe and Central America, the Caribbean and South America west coast, with the port of Balboa as part of these new services. S&P said, "In our view, this indicates the relevance of the port to the group's strategy in the long term, supporting our expectation that PCRC will gradually recover its freight volume in the next 12 months. However, our base-case scenario contemplates that total container movements will remain below 300,000 for the next two years. In addition, we believe that the increased customer concentration could continue constraining PCRC's EBITDA margin given the preferential rate both companies have. Nevertheless, we expect PCRC to mitigate the effects of lower rates with operating efficiencies in load optimization and freight movement." ===================== P U E R T O R I C O ===================== SEARS HOLDINGS: Cyrus Capital Files Limited Objection to Plan OK ---------------------------------------------------------------- Cyrus Capital Partners, L.P., filed a limited objection to the confirmation of Sears Holdings Corporation and affiliates' modified second amended chapter 11 plan. Cyrus is a significant creditor of the Debtors' estates, holding material positions in: (i) second lien debt instruments issued and guaranteed by various Debtors; (ii) five series of SRAC-issued unsecured notes; (iii) the SRAC 7.00%/12.00% PIK - Toggle Notes due 2028; and (iv) certain SRAC-issued unsecured Medium Term Notes of various interest rates and maturities. In the aggregate, the Cyrus Prepetition Claims exceed $635 million, of which nearly $370 million is guaranteed by one or more Debtors and therefore impacted by the Debtors proposed Substantive Consolidation Settlement. Cyrus complains that the Plan as proposed cannot meet the requirements of sections 1129(a)(2) or section 1129(a)(3) of the Bankruptcy Code because it is premised upon the Debtors' abject failure to allocate post-petition Allocable Costs (as defined in those orders) in a "fair and reasonable allocation" on an "entity by entity" basis. To date the Debtors have failed to comply with these provisions in the Court's orders or to seek relief therefrom and have proposed a Plan that ignores these requirements and effectively reads them out of the Final DIP Order and the Junior DIP Order. However, the failure to comply with a bankruptcy court's own orders has been viewed as fatal to a debtors' attempt to confirm a plan of reorganization. Further, the Plan as proposed is based on a Plan Settlement that substantively consolidates most (but not all) of the Debtors' estates. As the Second Circuit has stated, substantive consolidation "is no mere instrument of procedural convenience . . . but a measure vitally affecting substantive rights" and thus is "to be used sparingly." As such, the remedy requires "a searching review of the record, on a case-by-case basis" to ensure that the result is in fact fairness to all creditors." To date, the Debtors have not submitted evidence that even begins to approach this standard. In fact, the Debtors' posture that substantive consolidation issues are being "settled" under the Plan suggests an effort by the Debtors to sidestep the high hurdle established under the case law regarding substantive consolidation. Therefore Cyrus will evaluate the evidence produced by the Debtors at confirmation and reserves its rights to object to the Plan Settlement and the included substantive consolidation if such evidence does not demonstrate such fairness. A copy of Cyrus Capital's Objection is available at https://tinyurl.com/yxunurbx from Pacermonitor.com at no charge. The Troubled Company Reporter previously reported that the Debtors and Liquidating Trust shall fund Distributions and satisfy applicable Allowed Claims under the Plan using: (a) Cash on hand; (b) Cash from Net Proceeds of Total Assets; (c) Cash from the Wind Down Account; and (d) Cash from the Carve Out Account. A full-text copy of the Modified Second Amended Disclosure Statement dated July 9, 2019, is available at https://tinyurl.com/y4uwv3ba from PacerMonitor.com at no charge. A redlined version of Modified Second Amended Disclosure Statement dated July 9, 2019, is available at the https://tinyurl.com/y4cqzvs2 from Prime Clerk at no charge. 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. SEARS HOLDINGS: Indenture Trustee Objects to Confirmation of Plan ----------------------------------------------------------------- Wilmington Trust National Association, as indenture trustee objects to the confirmation of Sears Holding Corporation and affiliates' joint modified second amended chapter 11 plan of liquidation. Wilmington Trust complains that the Debtors fail to sufficiently justify their reason(s) for entering into their settlement with the PBGC providing for substantive consolidation given that the parties originally reached an agreement that prohibited substantive consolidation. The initial plan did not provide for substantive consolidation and the Plan will revert to an unconsolidated plan in the event the court does not approve the Plan Settlement. It is difficult to understand how substantive consolidation could be necessary if the Plan can revert to an unconsolidated plan if the Court does not approve the Plan Settlement. The Debtors cannot bypass the Second Circuit's standard for evaluating substantive consolidation by incorporating substantive consolidation into a "settlement," particularly with the PBGC Settlement. Alternatively, if the Court were to find the Debtors satisfied either of the Second Circuit's two disjunctive factors required for substantive consolidation, the Debtors still would not be justified in substantively consolidating their estates due to the inequitable treatment and undue prejudice that substantive consolidation would pose on Debtors' remaining creditors. In addition, PBGC's classification and settlement unfairly discriminates against other creditors and is not reasonable. Wilmington Trust also asserts that the Plan has not been proposed in good faith and violates public policy. A copy of Wilmington Trust's Objection is available at https://tinyurl.com/y4v5u4kr from Pacermonitor.com at no charge. The Troubled Company Reporter previously reported that PBGC will receive from the Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest and (ii) in respect of the Allowed PBGC Unsecured Claims, subject to Section 9.2(a)(viii) of the Plan, PBGC's Pro Rata share of (w) Kmart WA Guarantee General Unsecured Liquidating Trust Interests; (x) Kmart WA Guarantee Specified Unsecured Liquidating Trust Interests; (y) the General Unsecured Liquidating Trust Interests; and (z) the Specified Unsecured Liquidating Trust Interests, in full and final satisfaction, settlement, release, and discharge of all PBGC Claims against Kmart of Washington LLC. A full-text copy of the Modified Second Amended Disclosure Statement dated July 9, 2019, is available at https://tinyurl.com/y4uwv3ba from PacerMonitor.com at no charge. A redlined version of Modified Second Amended Disclosure Statement dated July 9, 2019, is available at the https://tinyurl.com/y4cqzvs2 from Prime Clerk at no charge. 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. TECNICENTROS MUNDIAL: Oct. 22 Hearing on Disclosure Statement ------------------------------------------------------------- A hearing on approval of disclosure statement explaining the Chapter 11 Plan of Tecnicentros Mundial, Inc., is scheduled for October 22, 2019 at 10:00 AM to consider and rule upon the adequacy of the disclosure statement. Objections to the form and content of the disclosure statement must be filed and served not less than fourteen (14) days prior to the hearing. About Tecnicentros Mundial Based in San Juan, Puerto Rico, Tecnicentros Mundial, Inc., a distributor of tires and tubes for passenger and commercial vehicles, filed a voluntary Chapter 11 petition (Bankr. D.P.R. Case No. 19-04471) on August 6, 2019, and is represented by William Vidal Carvajal, Esq., in San Juan, Puerto Rico. The case is assigned to Hon. Enrique S. Lamoutte Inclan. The Debtor's financial consultant is Luis Carrasquillo, CPA. At the time of filing, the Debtor had total assets of $3,459,283 and total liabilities of $8,891,276. The petition was signed by Jacklin Tirado Rivera, vice-president. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Partners Fear Reach of Latest US Sanctions ------------------------------------------------------------------ Luc Cohen at Reuters reports that foreign joint venture partners with Venezuelan state-owned oil company Petroleos de Venezuela, S.A. are concerned the latest set of U.S. sanctions on the South American country could disrupt their operations, three industry sources said. The Trump administration last week froze all Venezuelan government assets in the United States and U.S. officials ratcheted up threats against companies that do business with Venezuela, according to Reuters. Reuters reports that that has raised fears for those companies that the United States will make good on threats to sanction individual firms, and also that banks will limit transactions just to avoid the risk of sanctions as well, the sources said. The White House imposed sanctions on Venezuela's oil industry in January in an effort to oust socialist President Nicolas Maduro, whose re-election in 2018 is viewed by much of the Western Hemisphere as illegitimate, the report notes. The executive order issued on Aug. 5 did not explicitly sanction non-U.S. companies that do business with PDVSA, including partners in crude operations like France's Total SA, Norway's Equinor ASA and Spain's Repsol SA, as well as Russian and Chinese customers, the report relays. However, the order threatens to freeze U.S. assets of any person or company determined to have "materially assisted" the Venezuelan government, the report notes. Similar language was included in sanctions in January, but U.S. national security adviser John Bolton said that the newest measures mean companies have a choice between doing business with Venezuela or the United States, the report relays. "If they really want to do what Bolton says that he wants to do, which is to get these firms to stop doing business with Venezuela, they're going to show that they mean it, they're going to have to punish somebody," said Francisco Rodriguez, a Venezuelan economist at Torino Economics in New York and former advisor to opposition presidential candidate Henri Falcon, the report discloses. Total and Repsol did not respond to requests for comment. An Equinor spokesman said that the company had no comment on the new sanctions and was "compliant with any limitations and/or sanctions that would apply to our business in Venezuela," Reuters discloses. The latest measures do not go as far as Washington's sanctions on Iran's oil sector, which expressly prohibit foreign countries from purchasing Iranian crude, the report relays. Still, sanctioning companies that do business with PDVSA, known as secondary sanctions, could hamper Venezuela's oil industry, analysts said. More than half of current crude production comes from joint ventures between PDVSA and foreign partners, the report notes. Reuters relays that the January sanctions blocked U.S. firms from importing Venezuelan oil and U.S. dollar transactions with PDVSA, accelerating a longstanding decline in the OPEC member's oil industry. Venezuela shipped about 933,000 barrels per day (bpd) in July, down from almost 1.5 million bpd in the three months before sanctions, the report notes. One industry source said PDVSA's partners and customers may request clarity on the order from the U.S. Treasury Department, or even request explicit waivers to ensure their activities do not run afoul of regulations, the report relays. The source said companies were concerned about potential overcompliance by financial institutions unwilling to risk sanctions by approving operations linked to PDVSA, complicating their ability to pay suppliers and contractors, the report notes. That could cause oilfield activity to slow. While transactions in dollars linked to PDVSA or its joint ventures remain banned, the European Union has not prohibited operations in euros, the report relays. Nevertheless, many banks are not authorizing euro bank accounts to firms associated with PDVSA or transactions that can ultimately be tracked to it, which has left the state-run firm with frozen money all over the world, the report notes. "There is panic among oil companies about how the U.S. government will interpret the new executive order, since it could lead to secondary sanctions---not at the level of Iran, but close, the report relates. Every punitive measure by the United States generates a corrosive effect," said a third source, the report discloses. Sanctioning companies from European allies of the United States could raise diplomatic tensions, the report relays. Such sanctions would be less likely to influence companies from China and Russia, which have continued to back Maduro amid an economic and political crisis in Venezuela, 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: Moody's Withdraws C Issuer Ratings for Business Reasons ------------------------------------------------------------------ Moody's withdrawn the C rating of the local and foreign currency issuer ratings and the (P) C rating of the medium-term note program of the Government of Venezuela. RATINGS RATIONALE Moody's has decided to withdraw the ratings for its own business reasons. VENEZUELA: Trinidad and Tobago Welcomes Economic Migrants --------------------------------------------------------- EFE News reports that as the Trinidad and Tobago government's distribution of T&T registration cards to Venezuelan economic migrants in this country continues, some local business leaders have highlighted the potential economic benefits to the influx of people from the South American country. Some 16,562 Venezuelan nationals were registered during the two-week period, which ran from May 31 to June 14, according to EFE News. Subject to positive vetting for criminal involvement, those who registered are receiving an official T&T identification card that allows them to work in T&T for up to one year, the report notes. The Venezuelans have been assured that they will have access to primary healthcare in local medical centers, the report relays. 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 report discloses. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013, the report recalls. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum, the report says. 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, the report relays. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country, the report notes. 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 * * *