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/raid1/www/Hosts/bankrupt/TCRLA_Public/190822.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 22, 2019, Vol. 20, No. 168 Headlines A R G E N T I N A ARGENTINA: IMF in Talks With Government After Market Turmoil BANCO PATAGONIA: S&P Cuts LT ICR to 'B', Outlook Negative JUJUY PROVINCE: S&P Cuts ICR to 'CCC+', Outlook Negative YPF SA: S&P Lowers Currency Ratings to 'B-', Outlook Negative B R A Z I L AVIANCA BRASIL: To Exit Star Alliance BRAZIL: Economy is Operating Below Capacity OI SA: Shares Sink Over News of Shareholder Seeking to Change CEO J A M A I C A JAMAICA: Finance Ministry Cancels Domestic Debt Issues M E X I C O MAXCOM TELECOMUNICACIONES: Case Summary & 20 Largest Creditors MAXCOM TELECOMUNICACIONES: Returns to Chapter 11 With Prepack V E N E Z U E L A PETROLEOS DE VENEZUELA: Debt to Russia's Rosneft Down to $1.1BB PETROLEOS DE VENEZUELA: Fire Hit Tanker Anchored Off Coast - - - - - ================= A R G E N T I N A ================= ARGENTINA: IMF in Talks With Government After Market Turmoil ------------------------------------------------------------ James Politi and Benedict Mander at The Financial Times report that IMF officials are in talks with Mauricio Macri's government in Argentina as it develops "policy plans" to tackle the brutal sell-off that has afflicted the Latin American nation since a primary vote this month foreshadowed a populist victory in upcoming presidential elections. "We are closely following recent developments in Argentina and are in ongoing dialogue with the authorities as they work on their policy plans to address the difficult situation that the country is facing," Gerry Rice, the IMF spokesman said on Twitter, according to The Financial Times. He added that IMF staff would travel to Buenos Aires "soon," the report notes. Mr. Macri, Argentina's sitting president, suffered a blow in primary elections this month. Alberto Fernandez, a populist challenger, is now the clear frontrunner ahead of the presidential election set for October, the report relates. The president had negotiated a package of reforms that allowed Argentina to receive a $57 billion bailout from the IMF--the largest in IMF history--which could be in peril if Mr. Fernandez were to secure control of the presidency in the autumn, the report says. The rising chances of victory for Mr. Fernandez sent Argentine assets, including its currency, the peso, plummeting, jeopardizing the economic stability that had returned to the country in recent months, the report notes. Nicolas Dujovne, Argentina's finance minister who was central to the negotiation of the bailout package last year, resigned in recognition of the economy's poor performance since the IMF deal was signed, the report relays. Mr. Macri's election defeat was seen as a consequence of the economic hardship suffered by many Argentines since last year's currency crisis, adds the report. Mr. Dujovne was replaced by Hernan Lacunza, previously the economy minister of the province of Buenos Aires, whose key tasks include continuing negotiations with the IMF ahead of the planned disbursement of the next $5.4 billion tranche of the program by the end of September, the report relates. One of Mr. Dujovne's last moves while in government was to design an economic package aimed at alleviating the plight of Argentines suffering from an ongoing recession and inflation of more than 50 per cent, the report discloses. According to The FT, The package will cost about $740 million and could compromise fiscal targets set by the IMF. It included tax breaks, increased subsidies, loans for students and small businesses and a 90-day freeze on petrol prices. Critics said it was too little, too late, and would fail to reverse Mr. Fernandez's 15-point lead in the elections, with the first round of voting due on October 27. The report discloses that Mr. Fernandez has attempted to calm market fears by insisting that if he wins the elections he will not crash out of the IMF program, and instead renegotiate it and extend maturities. One of his economic advisers, Guillermo Nielsen, insisted this week that Mr. Fernandez was not planning on restructuring Argentina's debt, the report adds. About Argentina As reported in the Troubled Company Reporter-Latin America on Aug. 20, 2019, Fitch Ratings has downgraded the sovereign ratings of Argentina, including its Long-Term Foreign-Currency Issuer Default Rating to 'CCC' from 'B'. The downgrade reflects elevated policy uncertainty following the Aug. 11 primary elections, a severe tightening of financing conditions, and an expected deterioration in the macroeconomic environment that increase the likelihood of a sovereign default or restructuring of some kind. On Aug. 16, 2019, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on Argentina to 'B-' from 'B'. The outlook is negative. S&P said, "We also affirmed our 'B' short-term foreign and local currency sovereign credit ratings. At the same time, we placed our 'raAA-' national scale rating on Argentina on CreditWatch with negative implications and lowered our transfer and convertibility assessment to 'B' from 'B+'." On July 16, 2019, Moody's Investors Service changed the outlook for the Government of Argentina to negative from stable. Concurrently, Moody's has affirmed the B2 foreign-currency and local-currency long-term issuer and senior unsecured ratings. The senior unsecured ratings for shelf registrations were also affirmed at (P)B2. At the same time Argentina's short-term rating was affirmed at Not Prime (NP). The senior unsecured ratings for unrestructured debt were affirmed at Ca and the unrestructured senior unsecured shelf affirmed at (P)Ca. Back in July 2014, Argentina defaulted on some of its debt, after expiration of a 30-day grace period on a US$539 million interest payment. Earlier that day, talks with a court-appointed mediator ended without resolving a standoff between the country and a group of hedge funds seeking full payment on bonds that the country had defaulted on in 2001. A U.S. judge had ruled that the interest payment couldn't be made unless the hedge funds led by Elliott Management Corp., got the US$1.5 billion they claimed. The country hasn't been able to access international credit markets since its US$95 billion default 13 years ago. On March 30, 2016, Argentina's Congress passed a bill that will allow the government to repay holders of debt that the South American country defaulted on in 2001, including a group of litigating hedge funds that won judgments in a New York court. The bill passed by a vote of 54-16. BANCO PATAGONIA: S&P Cuts LT ICR to 'B', Outlook Negative ---------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit ratings on Banco De Galicia Y Buenos Aires S.A.U. (Banco Galicia), Banco Patagonia S.A., and Banco de la Provincia de Buenos Aires (BAPRO) to 'B-' from 'B'. S&P said, "At the same time, we affirmed our long-term 'B-' issuer credit and debt ratings on Banco Hipotecario S.A. We also revised the outlook on it to negative from stable. In addition, we affirmed our short-term issuer credit rating on Banco Patagonia at 'B' and our debt rating on Banco Galicia at 'CCC'." The outlook on long-term ratings on the four banks is negative, mirroring the one on the sovereign. The downgrade of the three banks on global scale mirrors a similar action on Argentina. Pronounced financial market turbulence, with the peso's sharp depreciation and a spike in interest rates, following primary elections has substantially weakened the sovereign's already vulnerable financial profile. The magnitude of the market sell-off and its likely long duration during the electoral period have weakened key rating indicators and pushed policy execution to crisis management mode. S&P rarely rates financial institutions higher than the sovereign where they operate, because S&P considers it unlikely that these institutions would remain unaffected by developments in domestic economies. S&P said, "We're keeping our BICRA unchanged, at group '8' and average risk for banks operating in the country (anchor) at 'b+'. However, we're revising the economic risk trend to negative due to the potential impact of the exacerbating adverse economic conditions. (We assess BICRAs on a scale that goes from '1' [lowest risk] to '10' [highest risk].) "In the upcoming quarters, we expect domestic financial institutions to continue operating under challenging economic conditions, exacerbated by the recent market turmoil that's eroding economic growth trajectory, and inflation and debt dynamics. We expect GDP to contract 2.3% this year and inflation to accelerate to 55% year on year, given the impact of the peso's 30% depreciation. These factors are hampering credit growth in real terms and banks' asset quality metrics. We consider adequate provisioning, capitalization, and low credit-to-GDP ratio, given a focus on formal sectors of the economy, will allow banks to cope with additional losses stemming from the weakening asset quality. Argentine banks have been increasingly providing dollar-denominated loans, but most of these are to borrowers that generate income in the same currency, such as exporters, which somewhat alleviates potential risk. We expect the banking system to remain profitable, but with a greater share coming from holdings in central bank securities, which should more than offset higher charges for provisions in response to rising delinquency. "Our industry risk assessment incorporates Argentina's enhanced regulatory framework after it implemented Basel III principles for capital requirement calculations and liquidity ratios, and rolled out aspects of international accounting rules. These factors align Argentina's financial system more closely with international standards. Nevertheless, risks for banks operating in Argentina are still very high, given a weak regulatory track record, historically low confidence of depositors in the system, and the absence of diversified long-term funding. Deposits in the system exhibited volatility in May 2018 and especially in August (with a 6% decline in the deposit base in dollars) with a subsequent recovery. In 2019, we're also seeing volatility after primary elections, expecting movements to be manageable and considering elevated levels of liquidity. In addition, in our opinion, the shallow domestic capital market and limited access to foreign capital markets result in a narrow range of funding sources for banks." JUJUY PROVINCE: S&P Cuts ICR to 'CCC+', Outlook Negative -------------------------------------------------------- S&P Global Ratings lowered its foreign and local currency issuer credit ratings on the city of Buenos Aires and the provinces of Cordoba, Entre Rios, La Rioja, Mendoza, Neuquen, Rio Negro, Salta, and Buenos Aires to 'B-' from 'B'. Also, S&P downgraded the province of Jujuy to 'CCC+' from 'B-'. The outlook on the 10 LRGs is negative. On Aug. 16, 2019, S&P lowered its long-term foreign and local currency ratings on Argentina to 'B-' from 'B' and assigned a negative outlook. Outlook The negative outlook on the 10 Argentine local and regional governments (LRGs) mirrors the negative outlook on the sovereign. In a more complex internal and external environment for Argentina, domestic LRGs are considerably vulnerable, while having a limited room to maintain fiscal health in the next few years. Sharp and consistent depreciation of the domestic currency has increased pressures on LRGs' budgetary performance, which are likely to continue rising for the remainder of the year. Demands for higher salaries for public-sector employees, due to persistently high inflation, and LRGs' ability to contain operating pressures will remain a main source of concern for the next 12 months. Downside scenario S&P said, "We could lower the ratings on the Argentine LRGs if we were to lower the ratings on the sovereign. Also, we could lower the rating on Argentine LRGs if their stand-alone credit profiles deteriorate beyond our base-case assumptions." This could occur, for example, if poor decisions lead to unsustainable fiscal deficits amid debt obligations in foreign currency and weak liquidity positions. Also, growing concerns about the LRGs' capacity to refinance existing debt in foreign and domestic currencies and/or their unwillingness to service debt obligations could prompt us to lower rating in the next 12-18 months. Upside scenario S&P said, "We could revise the outlook on the LRG ratings to stable in the next 12 months if we were to take the same action on the sovereign. We don't believe that Argentine LRGs can have higher ratings than on the sovereign because they operate under a very weak and volatile institutional framework that constrains their ratings." Rationale Rating constraints for Argentine LRGs are the weak institutional framework and economic woes. S&P said, "We expect economic contraction of 2.3% in 2019, following a 2.5% decline in 2018, and growth of only about 0.5% in 2020. However, other credit factors--budgetary performance, quality of financial management, liquidity position, and debt burden—influence LRGs' stand-alone credit profiles (SACPs). We use the latter to assess the LRG's intrinsic creditworthiness, absent the sovereign rating cap." S&P assesses the SACPs at: -- 'b+' for the city of Buenos Aires and province of Cordoba; -- 'b' for the provinces of Mendoza, Salta, Neuquen, Entre Rios, and La Rioja; -- 'b-' for the provinces of Buenos Aires and Rio Negro; and -- 'ccc+' for the province of Jujuy. S&P said, "However, we cap our rating on the provinces and the city of Buenos Aires at the 'B-' foreign currency long-term rating on Argentina, because these entities don't meet our criteria for having a higher rating than on the sovereign. "In our view, the institutional framework for Argentine LRGs is characterized by very weak institutional predictability, volatile intergovernmental system, and fiscal imbalances. However, we consider that the framework has improved during the Macri administration, and we don't expect these gains to be reversed in the next 12-18 months. Since 2016, automatic transfers to the provinces have increased following various agreements between the central and provincial governments. "Debt burden among Argentine LRGs has increased over the past few years; however, we don't consider it a rating constraint. Still, the plummeting Argentine peso is making payments on the LRGs' foreign debt more expensive, raising our concerns about their budgetary performance, weak liquidity positions, and refinancing risks in the coming years. However, LRGs have managed their reserve funds to pay debt in 2018, and we believe that they will be able to cover debt-servicing costs in 2019. "In 2018, Argentine LRGs were able to post stronger revenues and lower growth in spending. For 2019, we expect weaker fiscal results under harsher macroeconomic conditions." To offer more details on credit quality of each Argentine LRG that S&P rates, here are some relevant factors: The city of Buenos Aires -- S&P revised downwards its SACP on Buenos Aires to 'b+' from 'bb-', given that Argentina's deteriorating economy will likely weigh on the city's individual credit profile in 2019 and 2020. -- However, S&P believes the city will continue to adhere to fiscal austerity, resulting in operating surpluses close to 10% of operating revenue and a deficit after capital expenditures (capex) of slightly less than 5% of total revenue over the next few years. The city of Buenos Aires' wealth and its higher infrastructure spending than among other Argentine LRGs, should enable it to maintain sustainable fiscal results. -- Debt burden and debt service will still be subject to market conditions, namely the peso's depreciation and reference interest rates, but debt should remain just above 30% of operating revenue towards 2021. Finally, while liquidity should remain weak given low cash reserves, the city has access to external funding sources in order to refinance significant debt maturities. The province of Cordoba: -- S&P lowered its SACP on Cordoba to 'b+' from 'bb-', as Argentina's recession will likely dent provincial revenue, while the weaker peso pressures the province's liquidity position. -- S&P expects Cordoba to remain committed to sound fiscal policies and to post relatively high operating surpluses in the next two years. S&P expects the province to delay investment plans in order to post low deficits after capex. -- Weaker fiscal results and the peso's further depreciation could drag down Cordoba's cash position, because almost all of the province's debt is denominated in dollars. In addition, the province's liquidity could be subject to volatility because Cordoba faces a $725 million bullet amortization in June 2021. The province of Mendoza: -- S&P revised downwards its SACP on Mendoza to 'b' from 'b+'. Fiscal constraints will remain for the next two years, with limited room to increase revenue amid pressure to raise public-sector wages. Nonetheless, S&P expects sound fiscal policies to remain after the September provincial election. -- Economic contraction will harm Mendoza's fiscal performance. Therefore, S&P expects liquidity to remain relatively low and subject to volatility for the next two years. -- Mendoza's debt is exposed to foreign currency, mitigated by revenue linked to the dollar, such as hydrocarbon royalties. The peso's slide hasn't substantially worsened Mendoza's debt profile. The province of Salta -- Salta's 'b' SACP balances fiscal consolidation, increased liquidity, and improvement in financial management, with some uncertainty over the continuity of recently implemented policies, which could weaken budgetary performance. -- Salta has a track-record of issuances in the international capital market of both plain vanilla and structured bonds backed by hydrocarbon royalties. Debt burden remains manageable, about 30% of revenues. The debt service profile is relatively smooth, with a hike in 2022-2024 due to the amortization in three tranches of the $350 million bond issued in 2016. -- Salta has structural constraints such as a low GDP per capita and high infrastructure gaps, which limit its flexibility, and are likely to remain in the coming years. The province of Entre Rios -- Entre Rios' 'b' SACP reflects S&P's expectations of prudent fiscal policies and moderate deficits after capex, despite Argentina's economic instability. -- Entre Rios has improved its fiscal performance in the past two years. This was the result of the prudent management, additional transfers from the federal government, and the gradual erosion of real expenditures amid high inflation. -- Fiscal sustainability should reduce the province's debt burden over the next few years, although the latter and debt service will remain vulnerable to market conditions, particularly the currency's depreciation. The province of La Rioja -- La Rioja's 'b' SACP balances prudent fiscal policies with the provincial structural weaknesses, such as an unfavorable socioeconomic profile that hampers the budgetary flexibility. -- Operating surpluses below 5% of operating revenues and decreasing deficits after capex for the next three years should preserve the province's cash position, which is stronger than those of other provinces in Argentina, as seen in sufficient cash to cover 2x of La Rioja's debt service for the next 12 months. -- Argentine peso's steep depreciation raised La Rioja's debt stock to 55% of the 2019 projected operating revenues from 38% in 2017. S&P expects a gradual reduction in debt because financing needs will be limited. However, debt burden will remain vulnerable to market conditions, because 80% of the debt stock is denominated in foreign currency. The province of Neuquen -- The province's 'b' SACP reflects an economy that's stronger than the nation's. However, the provincial economy is highly concentrated in the hydrocarbon industry, which exposes Neuquen to swings in commodity cycles. -- The combination of the peso's sharp depreciation and increased hydrocarbon production improved the provincial finances. However, S&P expects budgetary performance to remain volatile because of the province's exposure to cyclical revenues, namely hydrocarbon royalties, and weak revenue and expenditure management. -- Low debt burden and limited exposure to contingent liabilities, with a track record of managing exposure to foreign currency risk, support creditworthiness. The province of Buenos Aires -- S&P lowered the province's SACP to 'b-' from 'b', the same level as the final rating. Although the province has adhered to its fiscal consolidation plan since 2016, the worsening economy make it more difficult for the province to continue at a similar pace as in the past year, especially given its very large spending constraints. -- Budgetary performance is likely to remain weaker than those of most domestic LRGs in 2019 and beyond, and we expect capex to diminish given that financing conditions remain tight. -- The peso's sharp depreciation lifted the debt to operating revenue ratio to almost 70% in 2019. S&P expects debt to decrease gradually over the next few years. The province has more than $1 billion in amortizations coming due in the next 12 months, and S&P considers that the province could receive support from the central government if market uncertainty remains for the remainder of 2019 and in 2020. The province of Rio Negro -- S&P revised downward Rio Negro's SACP to 'b-' from 'b', because recession will likely crimp revenue. This, coupled with spending restraints, will make further fiscal consolidation difficult to implement. -- Nonetheless, S&P believes that Rio Negro's commitment to fiscal discipline, coupled with increasing resources from royalties, will prevent fiscal deficits. S&P expects Rio Negro to post operating surpluses of about 1.7% of operating revenues and deficits after capex of about 4% of total revenues for 2019 and 2020. -- Although 67% of Rio Negro's debt is in foreign currency, the risk is mitigated by revenues linked to the dollar, such as hydrocarbon royalties. The peso's recent depreciation hasn't substantially worsened Rio Negro's debt profile. The province of Jujuy -- S&P lowered Jujuy's SACP to 'ccc+' from 'b-' as a result of unfavorable economic and political conditions in Argentina, and greater challenges to maintain fiscal sustainability. -- Jujuy's budgetary constraints will result in substantial fiscal deficits during 2019 and 2022, which is likely to keep Jujuy's liquidity very weak. -- These factors and exacerbating market volatility increase risks for a province, about 90% of whose debt is denominated in foreign currency. Although Jujuy may not face a payment crisis for the next 12 months, it's more vulnerable than other Argentine provinces. In the coming months, S&P will publish full analyses for each LRG with the corresponding financial stats and rating score snapshots. Ratings List Downgraded To From Buenos Aires (City of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Buenos Aires (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Cordoba (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Entre Rios (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Jujuy (Province of) Issuer Credit Rating CCC+/Negative/-- B-/Stable/-- Senior Unsecured CCC+ B- La Rioja (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Mendoza (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Neuquen (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Secured B- B Senior Unsecured B- B Province of Rio Negro Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Salta (Province of) Issuer Credit Rating B-/Negative/-- B/Stable/-- Senior Unsecured B- B Senior Secured B- B YPF SA: S&P Lowers Currency Ratings to 'B-', Outlook Negative ------------------------------------------------------------- S&P Global Ratings lowered its local and foreign currency ratings on the following companies and utilities to 'B-'. The outlook on these ratings is negative: -- AES Argentina Generacion S.A; -- Compania de Transporte de Energia Electrica en Alta Tension TRANSENER S.A.; -- Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR); -- IRSA Propiedades Comerciales S.A.; -- IRSA Inversiones y Representaciones S.A.; -- Pampa Energia S.A.; -- Petroquimica Comodoro Rivadavia S.A.; -- YPF Energia Electrica S.A.; and -- YPF S.A. S&P said "We also lowered our local and foreign currency ratings on Telecom Argentina S.A. to 'B' from 'B+' and placed them on CreditWatch negative. We lowered our ratings on Aeropuertos Argentina 2000 S.A. to 'B' from 'B+' and assigned a negative outlook. "We placed the 'B' ratings on CAPEX S.A. and Transportadora de Gas del Sur S.A. (TGS) on CreditWatch negative. "Finally, we removed our 'B-' ratings on Compania General de Combustibles S.A. from CreditWatch positive and assigned a negative outlook. "On Aug. 16, 2019, we lowered our local and foreign currency ratings on Argentina to 'B-' from 'B' and assigned a negative outlook. At the same time, we revised downwards our transfer and convertibility (T&C) on the country to 'B' from 'B+'." The rating action on the sovereign reflects the heightened turbulence in financial markets amid concerns about policy initiatives and execution under a potential Peronist administration. This follows the resounding lead by a Peronist candidate, Alberto Fernandez, in the country's primary elections. The extreme market dynamics and volatility have exacerbated the sovereign's underlying fiscal and external financing vulnerabilities, given the heavy dependence on dollar financing and lack of confidence in the Argentine peso as a store of value. Amid this pronounced market turmoil, Argentina's economic growth trajectory, inflation dynamics, debt profile, and external position have all deteriorated, weakening its flexibility and performance profile. S&P lowered the ratings on the 11 Argentine entities listed above because it views them as too exposed to Argentina, given that they generate most of their cash flows in the country. Some of them are also subject to domestic regulations that determine their revenues (e.g., utilities). The downgrades reflect its belief that they face substantial default risks in a hypothetical sovereign default scenario, particularly involving a severe economic contraction and currency depreciation. Most of these entities also bear some form of currency mismatch due to their large proportion of foreign currency denominated debts and that their cash flows are predominantly in domestic currency. A relatively low financial leverage among these entities and manageable short-term debt maturities mitigate currency risks. The 'B' ratings on Aeropuertos Argentina 2000 and Telecom Argentina remain one notch above those on the sovereign, reflecting our view that they're a bit more resilient to Argentine risks than the rest of companies in the list. S&P'll continue monitoring these entities' credit profiles, their separation from the sovereign's credit quality as the situation evolves, and any new elements. S&P said, "We removed the 'B-' ratings on Compania General de Combustibles from CreditWatch positive and assigned a negative outlook because the company faces meaningful refinancing needs in 2021and a portion of its gas operation is dependent on government subsidies, which adds uncertainty over the medium term. "The ratings on all these entities remain at or below Argentina's T&C assessment because we continue to believe that probably none of them would be able to continue honoring their foreign currency obligations under potential restrictions to access to foreign currency and/or restrictions on the ability to transfer money abroad." Similarly to the outlook on the sovereign, the outlooks on these entities are negative, reflecting a greater likelihood of another downgrade over the next 12 months amid very complex economic and financial market dynamics exacerbated by October presidential election. In our view, the greater vulnerabilities of Argentina's credit profile stem from the depreciating exchange rate, a likely acceleration in inflation, and a deepening economic recession. These factors will increasingly challenge the ability of both the current administration and the leading presidential candidate to contain market volatility and restore financial and economic stability. =========== B R A Z I L =========== AVIANCA BRASIL: To Exit Star Alliance ------------------------------------- Aviation Tribune reports that Brazilian airline Ocean Air Linhas Aereas, headquartered in Sao Paulo and formerly doing business as Avianca Brasil, will formally leave Star Alliance with effect from September 1, 2019. Ocean Air's withdrawal follows several months of bankruptcy protection and the withdrawal of its Air Operator Certificate (AOC) by Brazilian regulator ANAC, according to Aviation Tribune. The Star Alliance network maintains a significant and long-time presence in the Brazilian market continuously since its founding in 1997, the report notes. As of September 1, 2019, the Alliance will number 27 member airlines. The report notes that Jeffrey Goh, CEO Star Alliance, said: "Initially joining Star Alliance in 2015, Avianca Brasil made important contributions to our customer proposition in the Brazilian market, and we regret this unfortunate development. "I wish to stress that the exit of Avianca Brasil in no way affects the membership of Avianca, our valued member based in Bogota, Colombia, which continues to be a significant contributor to the Alliance in South America," the report quoted Mr. Goh as saying. Eleven of the Star Alliance member airlines offer direct services to and from Brazil, namely: Air Canada, Avianca, Air China, Copa Airlines, Ethiopian Airlines, Lufthansa, Swiss, South African Airways, TAP Air Portugal, Turkish Airlines and United, the report relays. Taken together, Star Alliance member airlines operate 588 weekly flights from 11 domestic points in Brazil to 17 Star Alliance hubs, offering connections to a further 738 international destinations, more than any other airline alliance, the report adds. About Avianca Brasil Avianca Brazil, officially Oceanair Linhas Aereas S/A, is a Brazilian airline based in Sao Paulo, Brazil. It operates passenger services from more than 20 destinations. It is hailed as the fourth largest airline in Brazil. Synergy Group is the parent company of Avianca Brazil. On December 10, 2018, Avianca Brazil filed for bankruptcy when three lessors took a move to gain possession of 30% of the airline's 50 all-Airbus fleet. The airline further blamed high fuel prices and a strong dollar for its troubles. The airline noted at that time that flights won't be affected. Since the airline filed for bankruptcy, its operations progressively diminish until they were suspended in late May 2019. BRAZIL: Economy is Operating Below Capacity ------------------------------------------- Rio Times Online reports that Brazil's economy is operating with high levels of idle inputs, such as machinery and labor, in all regions of the nation and with inflation at comfortable levels. Such is the assessment of the Central Bank (BC) which released the Regional Bulletin, according to Rio Times Online. 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. OI SA: Shares Sink Over News of Shareholder Seeking to Change CEO ----------------------------------------------------------------- Tatiana Bautzer and Gabriela Mello at Reuters report that shares in Brazilian telecoms carrier Oi SA posted heavy losses on Aug. 20, after media reports that its largest shareholder, GoldenTree Asset Management, is seeking to replace Oi's Chief Executive Officer Eurico Teles. Brazilian newspaper O Estado de S. Paulo reported earlier that GoldenTree, which holds a 14.5% stake in the company, sent a letter to the board saying Oi needs a CEO "that may execute the operational restructuring recently proposed," the paper said, mentioning the letter was dated Aug. 16, according to Reuters. According to the media outlet, Oi Chairman Eleazar de Carvalho has proposed Rodrigo Abreu, a member of Oi's board since September 2018, for the job, the report notes. Abreu formerly served as CEO for rival TIM Participacoes SA, the report relays. Newspaper Valor Economico also reported GoldenTree wants to remove Eurico, the report relays. Oi common shares were trading down 21% on Aug. 20 at BRL0.79, while preferred shares were falling 12% at BRL1.10. Oi filed for Latin America's largest bankruptcy protection proceeding three years ago, and asset managers are now its largest shareholders after the conclusion of a debt-for-equity swap, the report relays. As reported on the Troubled Company Reporter-Latin America on May 31, 2019, Fitch Ratings has affirmed Oi S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings at 'B-', the National Long-Term Rating at 'BB-(bra)', and the 2025 notes rating at 'B-'/'RR4'. The Rating Outlook is Stable. The ratings reflect improvements to Oi's financial profile after the company's debt restructuring. The ratings also reflect Oi's weak operating performance, challenged competitive position, and uncertain turnaround prospects, says the report. Oi filed for bankruptcy protection in June 2016 to restructure approximately BRL65 billion of debt. ============= J A M A I C A ============= JAMAICA: Finance Ministry Cancels Domestic Debt Issues ------------------------------------------------------ RJR News reports that the Ministry of Finance has cancelled its domestic debt issues which were published in the Government's medium-term debt management strategy for financial years 2019/20 to 2022/23. In a statement published on the Bank of Jamaica's website, the Finance Ministry said the investment notes which were scheduled for issue on August 23 will not be offered, according to RJR News. In the statement, the Ministry apologized for any inconvenience caused by changes to the schedule of debt issues for August 2019, the report relates. As reported in the Troubled Company Reporter-Latin America on June 27, 2019, RJR News said that Steven Gooden, Chief Executive Officer of NCB Capital Markets, is warning that the increasing liquidity in the Jamaican economy might result in heightened risk to the financial market if left unchecked. This, he said, is against the background of the local administration seeking to reduce the debt to GDP to 60% by the end of the 2025/26 fiscal year, which will see Government repaying more than J$600 billion which will get back into the system, according to RJR News. =========== M E X I C O =========== MAXCOM TELECOMUNICACIONES: Case Summary & 20 Largest Creditors -------------------------------------------------------------- Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Maxcom USA Telecom, Inc. (Lead Case) 19-23489 Ten Bank Street, Suite 560 White Plains, NY 10606 Maxcom Telecomunicaciones, S.A.B. de C.V. 19-23491 Guillermo Gonzalez Camarena, 2000 Centro Ciudad Santa Fe, Mexico, D.F. 01210 Business Description: Maxcom Telecomunicaciones, S.A.B. DE C.V is a limited liability public stock corporation (sociedad anonima burstatil de capital variable) with indefinite life, organized under the laws of Mexico in 1996. Maxcom USA is a wholly owned subsidiary of Maxcom Parent organized under the laws of New York in 2019. The Debtors are an integrated telecommunication services operator providing voice and data services to residential and small- and medium-sized business customers in markets that the Debtors believed were underserved by Telefonos de Mexico, S.A.B. de C.V., the local telecommunication incumbent, and other competing telecommunications providers. Chapter 11 Petition Date: August 19, 2019 Court: United States Bankruptcy Court Southern District of New York (White Plains) Judge: Hon. Robert D. Drain Debtors' Counsel: Pedro A. Jimenez, Esq. Irena Goldstein, Esq. PAUL HASTINGS LLP 200 Park Avenue New York, NY 10166 Tel: 212-318-6000 Fax: 212-319-4090 Email: pedrojimenez@paulhastings.com irenagoldstein@paulhastings.com Debtors' Financial Advisor: Floris B. Iking Jorge L. Moreno Felix Pablo Lopez Navarro ALVAREZ & MARSAL MEXICO Montes Urales 505, PB Col. Lomas de Chapultepec CP 11000, Mexico D.F. https://www.alvarezandmarsal.com Tel: 52 (55) 5596 2543 Debtors' Noticing, Balloting, & Claims Administration Agent: PRIME CLERK LLC 830 Third Avenue, 9th Floor New York, NY 10022 https://cases.primeclerk.com/maxcom/ Maxcom USA's Estimated Assets: $100,000 to $500,000 Maxcom USA's Estimated Liabilities: $0 to $50,000 Maxcom Telecomunicaciones' Estimated Assets: $100 million to $500 million Maxcom Telecomunicaciones' Estimated Liabilities: $100 million to $500 million The petitions were signed by Erik Gonzalez Laureano, authorized officer. Full-text copies of the petitions are available for free at: http://bankrupt.com/misc/nysb19-23489.pdf http://bankrupt.com/misc/nysb19-23491.pdf List of Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Qualtel Sa De CV Services $1,700,615 M. Herrera Francisco Fernandez Trevino 475 Leones Monterrey Monterrey 64600 Mexico Tel: +528117693022 Email: mherrera@qualtel.com.mx 2. Instituto Federal de Fine $1,054,404 Telecomunicaciones IFT Insurgentes Sur #1143 Col. Nochebuena 03720 Mexico Tel: 55 5015 4000 Email: atencion@ift.org.mx 3. NEC De Mexico Sa De CV Goods $210,318 M. Ramirez Jaime Balmes 8 Col Los Morales Polanco 11510 Mexico Tel: +525521226500 Email: mramirez@nec.com.mx 4. MXT Eagle Towers Sapi De CV Sale and Lease $202,804 Oliver Deleau Back Pedregal 24 Piso 3 Piso 3 Molino Del Rey 11040 Mexico Tel: +525541298523 Email: oliver.deleau@mxtowers.com 5. Data Vision Digital SA De CV Services $172,114 Jaime Lama Patriotismo 8 Col Condesa 12200 Mexico Tel: +525541951100 Email: jaime.lama@datavision.com.mx 6. Westcon Mexico SA De CV Goods $139,554 Customer Service Calle Lago Victoria 74 Piso Piso 7 Col Granada 11520 Mexico Tel: +525541603257 Email: anyluv@comstor-la.com 7. PROCOM Servicios Services $133,869 Intelligentes Ricardo Pelusi Montes Athos 355-302-355-302 Lomas De Chapultepec III 11000 Tel: +525562864325 Email: ricardo.pelusi@procom-inc 8. Alcatel Lucent Mexico SA DE CV Maintenance $113,796 Eduardo Velazquez Ciencia 13 13 Sin Numero Parque Industrial 54730 Mexico Tel: 5255262209200 Email: eduardo.velazquez@nokia.c 9. Innovaconect S De RL De CV Maintenance $104,284 Juan B.M. Rio tuxpan 1 Paseos De Churubusco 09030 Mexico Tel: +52553178586 Email: juanbm@innovaconect.com 10. SK Holdings SA DE CV Maintenance $84,334 Carlos Paseo De Los Encinos 38 Fracc Los Encinos KM 46 5200 Mexico Tel: +527282823258 Email: carlos@skh.mx 11. IP Matrix SA DE CV Services $74,625 Accounts Receivable Campos Eliseos 9050 H1 9050 H1 Campos Eliseos 32472 Mexico Tel: +526562571281 Email: ar@transtelco.net 12. Profesionales EN Goods $74,285 Computacion SA DE Irene Antonio Xicotencatl 109 Col Del Carmen Coyoacan 04100 Mexico Tel: +5255867854489 Email: irene_antonio@pco.com.mx 13. Axtel S.A.B. De CV Services $59,105 A. Ceballos Blvd Diaz Ordaz KM 3.33 L 1 Col Unidad San Pedro 66215 Mexico Tel: +528147701134 Email: aceballos77@gmail.com 14. Level SMS SA De CV Services $55,229 Customer Service Paseo De Las Palmas 215 304D 304D Lomas De Chapultepec 1 SE 11000 Mexico Tel: +525551478040 Email: smsadmin@c3ntro.com 15. ATC Holding Fibra Mexico Maintenance $48,946 Carolina Zainos Juan Vazquez De Mella 48 PISO5 Los Morales Polanco 11510 Mexico Tel: +525588501602 Email: Carolina.zainos@americant 16. Dupra Systems SA DE CV Services $45,820 C. Duran Calle Taxco 14 506- 7 506-7 Roma Sur 06760 Mexico Tel: +525552644058 Email: cduran@duprasystems.com 17. Secretaria de Couminaciones y Fine $43,389 Transporte SCT Insurgentes Sur 1089 Col. Nochebuana 03720 Mexico Tel: 55-57-23-93-00 Email: buzon_ucg@sct.gob.mx 18. Grupo Polmesa SA De CV Services $42,180 Trevino Plan Sexenal 3760 3760 3760 Jardin Revolucion TLAquepaque 45580 Mexico Tel: +523310295003 Email: trev@prodigy.net.mx 19. JAG Telecom SA DE CV Services $41,293 Camacho La Garita 31 LT 4 Col Calpultitla 55700 Mexico Tel: +525565847696 Email: camachosua@jagtelecom.com 20. Victor Hugo Rodriquez Lopez Services $39,300 Victor Hugo Rodriquez Hornero 2 1 1 La Pradera El Marquez 76269 Mexico Tel: +524422675039 Email: hugo1978_@hotmail.com MAXCOM TELECOMUNICACIONES: Returns to Chapter 11 With Prepack ------------------------------------------------------------- Maxcom Telecomunicaciones SAB, a Mexican telecommunications company, returned to the U.S. bankruptcy court after six years to seek confirmation of a prepackaged plan that would address its high debt load. The company and its Maxcom USA affiliate filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in White Plains, New York, with between $100 million and $500 million in both assets and liabilities. Maxcom Telecomunicaciones SAB ("Maxcom Parent") is a limited liability public stock corporation (sociedad anonima burstatil de capital variable) with indefinite life, organized under the laws of Mexico in 1996. Maxcom USA Telecom, Inc., is a wholly owned subsidiary of Maxcom Parent organized under the laws of New York in 2019. Maxcom Parent and its subsidiaries (together, the "Maxcom Enterprise") are facilities-based telecommunications providers that use a "smart-build" approach to deliver "last mile" connectivity to enterprises, residential customers and governmental entities in Mexico. The Maxcom Enterprise operates in select metropolitan areas that offer the best growth opportunities in telecommunications because of a combination of concentrated population, low subscriber line penetration, potential expenditure in telecom services per customer and economic prosperity. The Maxcom Enterprise currently offers services in the cities of Mexico City, Puebla, Queretaro, San Luis Potosi, Guadalajara, Monterrey, Veracruz, Toluca, Leon, Aguascalientes, among others. As of December 31, 2018, the Maxcom Enterprise's network encompassed 1,685 kilometers of metropolitan fiber optic cable in 16 cities and over 504 kilometers of high-quality copper loops capable of high-speed data transmission in San Luis Potosa. The Maxcom Enterprise is currently winding down its residential segment, which involves the gradual closure of residential clusters and mass disconnection of residential customers. This divestiture should be concluded by December 2019. For the second quarter ended June 30, 2019, the Maxcom Enterprise's residential segment generated approximately $1.4 million, 7% of the Maxcom Enterprise's total consolidated revenues. In contrast to the residential segment, the Maxcom Enterprise recently reactivated its wholesale business this year. The revenue in this segment was approximately $7 million, more than 2,000% as compared to the same period in 2018. The wholesale segment generated approximately 35% of the Maxcom Enterprise's revenues for the quarter ended June 30, 2019. Prepetition Capital Structure The Debtors' largest financial indebtedness is the amount that it owes on account of old notes, in the amount of $103,378,674 outstanding, plus estimated accrued interest through August 18, 2019 of $5.6 million. The old notes are secured by the Debtors' fixed assets, but not the Debtors' cash or accounts receivable. In light of the Debtors' liquidity constraints and the progress made on negotiations concerning a restructuring, Maxcom Parent elected not to make the interest payment of $4.1 million due on June 15, 2019 in order to conserve cash for operational and restructuring expenses. Maxcom Parent is also indebted in the approximate amount of $29 million under certain leases and bank loans. The vast majority of such liabilities relate to leases for property and telecom equipment. The remaining amount of the $29 million of non-Old Notes liabilities is the $1.84 million owed to Banco Nacional de Comercio Exterior, S. N. C., Banca de Desarrollo ("Bancomext"). The Bancomext Loan is secured by a pledge of funds in a trust account, on deposit at BBVA Bancomer, S.A., Institucion de Banca Multiple, Grupo Financiero BBVA Bancomer ("BBVA"). Banco Mercantil del Norte ("Banorte") is the trustee of the Trust Account. The 2013 Restructuring The Old Notes were issued, in the aggregate principal amount of $180.4 million, pursuant to a pre-packaged plan of reorganization confirmed by the United States Bankruptcy Court for the District of Delaware on Sept. 10, 2013 (the "2013 Plan"). The Old Notes are governed by an indenture, dated as of Oct. 11, 2013, among Maxcom, the guarantors named therein, Deutsche Bank Trust Company Americas, as indenture trustee, and Deutsche Bank Luxembourg, S.A. as Luxembourg sub-paying agent and transfer agent (the "Old Notes Indenture"). The 2013 Plan embodied a restructuring and support agreement among Maxcom Parent, Ventura Capital Privado, S.A. de C.V. ("Ventura Capital"), and an ad hoc group of entities that held Maxcom Parent's 11% Senior Notes due 2014 (the "2014 Senior Notes"). Under the 2013 Plan, the 2014 Senior Notes were extinguished and the holders of the 2014 Senior Notes received on account of claims arising from the 2014 Senior Notes, (a) the Old Notes, (b) cash in the amount of unpaid interest accrued on the 2014 Senior Notes during certain specified periods and (c) the rights to purchase equity that was unsubscribed by Maxcom Parent's then current equity holders. Under the 2013 Plan, the only creditors of Maxcom Parent and its affiliated debtors that were entitled to vote on the 2013 Plan were the holders of the 2014 Senior Notes; the remaining classes of claims and equity interests were unimpaired. On Sept. 27, 2013, a group of investors, represented by Ventura Capital, completed an equity tender offer, acting through a trust held by Banco Invex, S.A. Institucion de Banca Multiple, Invex Grupo Financiero, a banking institution organized and existing under the laws of the United Mexican States. As part of this transaction, the Ventura Capital investors became Maxcom Parent's principal shareholders. Pursuant to the terms of the Old Notes Indenture, Maxcom Parent used 50% of the capital contribution made by the Ventura Capital investors to make an offer to repurchase the Old Notes, but only to the extent that such capital contribution exceeded $5 million, at a price equal to 85% of the principal amount of the Old Notes, in cash. This repurchase offer was initiated on November 8, 2013 and consummated on Dec. 12, 2013, resulting in the purchase and payment of $2.5 million to investors who validly tendered their Old Notes. During the foregoing repurchase offer, some of the holders of the Old Notes exercised their equity purchase rights issued under the 2013 Plan, and thereby exchanged their Old Notes totaling $1.8 million at book value, for 22,655,679 Series "A" common stock shares. The rest of the equity purchase rights held by the holders of the Old Notes expired on their own terms in December 2013. Debtors' Current Financial Condition The Debtors' negative cash flows have limited its ability to invest in its operations by replacing or upgrading its infrastructure and technologies. In this regard, Maxcom Parent incurred losses of $4.9 million for the three months ended June 30, 2019, as compared to losses of $2.9 million for the three months ended June 30, 2018, and losses of $16 million for the year ended Dec. 31, 2018, compared to losses of $0.8 million for the year ended Dec. 31, 2017 and losses of $102.7 million recorded in 2016. Further, Maxcom Parent's comprehensive cost of financing increased to approximately $11.2 million in 2018 from $1.1 million in 2017. This increase reflects the step-up interest rate of the Old Notes to 8% beginning in the second half of 2018, compared to 7% for the first half of 2018 and all of 2017, as well as decreases in interest income, foreign currency rates and valuation effects of financial instruments. The Debtors' net revenues have also declined, in part because of the decrease in its residential services revenue. The Debtors' net revenues derived from its commercial revenues have increased and constitute the core source of profitability in the future. The Debtors' business is capital intensive. It has historically met its working capital and capital expenditure requirements through its various debt arrangements, vendor financings and the sale of equity to investors. In order to expand its network and strengthen its market share, the Debtors require additional capital. But, the Old Notes Indenture prohibits Maxcom Parent from incurring additional indebtedness (other than permitted indebtedness) unless certain leverage coverage ratios are satisfied, and the increased interest burden under the Old Notes seriously constrains the Debtors' ability to take the actions required under its business plan to strengthen and expand their operations. Commencement of New Cases Maxcom Parent is currently suffering under the high debt load of the Old Notes, which it has been unable to refinance due to issues with its business, including its inability to continue modernizing its infrastructure. While the Maxcom Enterprise has executed several non-strategic asset sales in order to raise cash (e.g., sales of contracts with select residential clients, certain transmission towers, among other transactions), because of external events outside of its control that arose after the Old Notes were issued, Maxcom Parent will be unable to satisfy the Old Notes when they mature in 2020. For example, in 2014, Mexico enacted certain telecommunications reforms that (a) prohibit Maxcom Enterprise (and other telecommunication companies) from charging certain long-distance fees and (b) establish price restrictions on all telephone calls in the country. These restrictions severely affected the profitability of that business segment. Further, from 2013 to date, the value of the Mexican Peso, as compared to the U.S., has decreased by 53%. Because of such devaluation, Maxcom Parent's repurchase of the $74.3 million in principal amount of the Old Notes did not decrease the amount that Maxcom Parent's books and records reflect is owed to the holders of the Old Notes given that Maxcom Enterprise's revenues are mostly in Mexican Pesos. In other words, while the amount that Maxcom Parent owes on account of the Old Notes has decreased in U.S. Dollars, because the majority of Maxcom Enterprise's revenues are in Mexican Pesos and the Old Notes are denominated in U.S. Dollars, Maxcom Parent's liability on account of the Old Notes remains roughly the same on its books and records. Moreover, the majority of Maxcom Enterprise's residential segment operates through a copper network that was sufficient at the time that Maxcom Enterprise acquired that business, but as technology advanced, rendered Maxcom Enterprise unable to compete against leaders in the telecommunications business who invested hundreds of millions of dollars to upgrade their systems to fiber networks. It was for these reasons that the Maxcom Enterprise determined to exit out of the residential segment. As the result of these disruptions, Maxcom Enterprise's reported total revenues of $19.085 million during the second quarter ended June 30, 2019, 24% less than the revenues generated in the second quarter of 2018. In addition, the Debtors reported an operating loss of approximately $2.3 million and a net income loss of $4.8 million for the quarter ended on June 30, 2019 as compared to a net income loss of approximately $2.9 million for the period ended on June 30, 2018. For the first six months of 2019, the operating loss was $3.9 million. Exchange Offer Because Maxcom Parent needs relief from its debt burden in order to remain competitive, it began discussions with several holders of its Old Notes regarding a restructuring of the Old Notes that would extend the maturity of the Old Notes and reduce Maxcom Parent's overall debt and interest burden. Thereafter, on June 17, 2019, Maxcom Parent commenced an offer to eligible holders10 of the Old Notes to exchange the Old Notes (the "Exchange Offer") for (a) new 8.00% senior secured notes due 2024 (the "Senior Notes") and (b) junior payment-in-kind notes (the "Junior PIK Notes" and together with the Senior Notes, the "New Notes"). The outstanding principal amount of the Old Notes is $103,378,674. The maximum aggregate principal amounts of the Senior Notes and the Junior PIK Notes are $56,858,270 and $10,337,867, respectively. In addition to the Senior Notes and the Junior PIK Notes, eligible holders that tendered their Old Notes were entitled to share pro rata in a Cash Payment of $100 for each $1,000 of the principal amount of the Old Notes and Cash in the amount of interest accrued on the Old Notes until consummation of the Exchange Offer. In addition, holders of the Old Notes that tendered their Old Notes on or before August 14, 2019, are also entitled to a distribution of an extra $10 for each $1,000 in principal amount of the Old Notes tendered. The cash consideration is funded, in part, by certain of Maxcom Parent's shareholders who have committed to inject approximately $15 million of new equity capital into Maxcom Parent (the "Shareholder Contribution Amount") upon the successful consummation of the Exchange Offer or the Plan. The Shareholder Contribution Amount will also inject additional liquidity into the Debtors. To assist it in connection with the Exchange Offer, consent solicitation and the Plan Solicitation, the Debtors retained the services of Prime Clerk, LLC. After announcing the Exchange Offer, Maxcom Parent continued its talks with certain holders of the Old Notes, and thereafter, extended the deadline for tendering the Old Notes and improved the terms of the Junior PIK Notes by (i) changing the applicable currency from Mexican pesos to U.S. dollars, (ii) increasing the cash payout on the Junior PIK Notes via a greater sharing of the equity upside in certain circumstances, and (iii) removing the Debtors' optional redemption rights. Plan Solicitation Concurrently with the Exchange Offer, the Debtors solicited votes from all holders of the Old Notes to approve the Plan (the "Plan Solicitation") that would effectuate the financial restructuring, i.e., the exchange of the Old Notes for the New Notes and certain cash consideration, on essentially the same terms as the Exchange offer. On August 15, 2019, Maxcom Parent terminated the Exchange Offer because the requisite number of eligible holders did not tender their Old Notes and determined to file and prosecute the Plan. As set forth in the certification of Prime Clerk, 118 ballots were submitted by holders of the Old Notes (the only creditors eligible to vote on the Plan). Of those that voted, 84.75% of the holders of Old Notes in number, holding 66.73% of principal amount of the Old Notes of the Holders that voted, voted to accept the Plan. Discussions with Holders of Old Notes Prior to the expiration of the Voting Deadline on the Plan, Maxcom Parent was contacted by Cicerone Advisors LLC, as financial advisor to three holders of the Old Notes, Moneda Asset Management, Megeve Investments and UBS Financial Services, Inc.(acting as personal banker for certain customers holding the Old Notes), who claimed that they collectively hold approximately 30% of Old Notes.13 Cicerone further advised that the three parties were not prepared to support the restructuring of the Old Notes on the terms proposed by the Debtors, but they were prepared to provide Maxcom Parent with a restructuring proposal for the Old Notes if, and only if, the Debtors paid the June 15, 2019 interest coupon. While the Debtors were not in a position to make the June 15 interest payment, they welcomed the opportunity to engage with these parties to determine whether they would ultimately support the restructuring of the Old Notes, since their support (given the amount of Old Notes they allege to hold) could potentially mean that the Debtors would not have to resort to Chapter 11 in order to restructure the Old Notes. Beginning on or around Aug. 1, 2019, Maxcom Parent met with Cicerone (without the three Old Notes holders) but Cicerone was not prepared to provide a proposal to Maxcom Parent. Shortly before the expiration of the Voting Deadline, on August 12, 2019, Cicerone sent a letter to Maxcom Parent to reiterate the three holders' desire to provide a restructuring proposal to the Debtors, but that before they would do so, Maxcom Parent would have to agree to certain confidentiality restrictions and to pay the fees and expenses of the financial and legal advisors of such holders. Ultimately, the support of these three holders became unnecessary as the Debtors received sufficient support for the Plan to permit the Debtors to satisfy section 1126(c) of the Bankruptcy Code and move forward with confirmation of the Plan. Notwithstanding whatever terms these holders intended to propose to the Debtors to restructure the Old Notes, the Debtors believe that the Plan represents the best prospect for a successful restructuring of the Debtors and in a manner designed to provide the highest possible recovery to holders of Old Notes under the circumstances. In light of these circumstances, the Debtors believe that confirmation of the Plan is in the best interests of holders of the Old Notes, the only class of claims impaired under the Plan. About Maxcom Telecomunicaciones Maxcom Telecomunicaciones SAB is a limited liability public stock corporation (sociedad anonima burstatil de capital variable) with indefinite life, organized under the laws of Mexico in 1996. Maxcom USA Telecom, Inc., is a wholly owned subsidiary of Maxcom Parent organized under the laws of New York in 2019. Maxcom Parent and its subsidiaries are facilities-based telecommunications providers that use a "smart-build" approach to deliver "last mile" connectivity to enterprises, residential customers and governmental entities in Mexico. On Aug. 19, 2019, Maxcom USA Telecom, Inc. and its affiliated debtor, Maxcom Telecomunicaciones, S.A.B. de C.V. each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The lead case is In re Maxcom USA Telecom, Inc. (Bankr. S.D.N.Y. Case No. 19-23489). Paul Hastings LLP is the Debtors' counsel. Alvarez & Marsal Mexico is the Debtors' restructuring advisors. Prime Clerk LLC is the claims agent. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Debt to Russia's Rosneft Down to $1.1BB --------------------------------------------------------------- Maria Grabar at Reuters reports that Venezuelan state-owned oil company Petroleos de Venezuela, S.A. (PDVSA) had lowered its outstanding debt to Rosneft to $1.1 billion by the end of the second quarter, from $1.8 billion as of the end of the first quarter, Rosneft said. Rosneft, Russia's largest oil producer, also said its net debt rose to $45.7 billion in the second quarter from $43.9 billion at the end of the first three months of 2019, according to Reuters. 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. PETROLEOS DE VENEZUELA: Fire Hit Tanker Anchored Off Coast ---------------------------------------------------------- A fire swept through the engine room of a tanker owned by Venezuela's state oil company Petroleos de Venezuela, S.A. (PDVSA) while it was anchored at Amuay Bay near the country's largest refinery, three sources familiar with the matter told Reuters. The extent of the damage to the Panama-flagged Aframax tanker Proteo was not immediately clear, according to Reuters. But it highlighted the poor state of much of the fleet belonging to PDV Marina, PDVSA's shipping subsidiary, at a time when U.S. sanctions are complicating its ability to lease vessels from third parties, the report notes. Even before this fire, the Proteo had been inoperative, one of the sources said, the report relays. The sources said there have been no reports of injuries so far, the report says. The company took back the Proteo and another dozen tankers from Bernhard Schulte Shipmanagement (BSM) earlier this year over a claim by the German maritime firm over unpaid operational fees, the report discloses. Since then, it has struggled to hire enough crew to operate the vessels itself, according to maritime sources, the report says. U.S. sanctions imposed in January on PDVSA as part of efforts by the administration of U.S. President Donald Trump to pressure socialist President Nicolas Maduro to leave office also motivated BSM's decision to return PDVSA's vessels, the report relays. A team from Venezuela's National Institute for Aquatic Spaces (INEA) planned to investigate the incident, the source added, the report notes. Neither INEA nor PDVSA immediately responded to requests for comment. PDVSA has largely been using those vessels for voyages between Venezuelan ports and floating storage, the report relays. With the sanctions blocking imports of Venezuelan oil by U.S. refiners, previously PDVSA's largest customers, the amount of crude stored at sea due to a lack of buyers has risen dramatically, 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. ********* 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. 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