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/raid1/www/Hosts/bankrupt/TCRLA_Public/200113.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 Monday, January 13, 2020, Vol. 21, No. 9 Headlines B R A Z I L BRAZIL: High Inflation May Not Affect 2020 Interest Rate Projection BRAZIL: Official Inflation for Year 2019 Closed at 4.31 Percent GLOBO COMUNICACAO: S&P Rates New $300MM Sr. Unsecured Notes 'BB+' JBS SA: Opens New Beef Plant in Brazil as Domestic Prices Rise NATURA COSMETICOS: S&P Cuts GS ICR to 'BB-' on Higher Leverage D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: 2019's Dry Spell Likely to Continue Into 1Q DOMINICAN REPUBLIC: Gov. to Help Poultry Farmers Deal With Disease P U E R T O R I C O ASCENA RETAIL: Regains Compliance with Nasdaq Min. Bid Price Rule MESH SUTURE: Case Summary & 20 Largest Unsecured Creditors X X X X X X X X [*] BOND PRICING: For the Week January 6 to January 10, 2019 - - - - - =========== B R A Z I L =========== BRAZIL: High Inflation May Not Affect 2020 Interest Rate Projection ------------------------------------------------------------------- Richard Mann at Rio Times Online reports that the year 2019 interrupted a two-year sequence of the Broad Consumer Price Index (IPCA), Brazil's official inflation, below the 4.25 percent target set by the National Monetary Committee (CMN). In 2019, the index stood at 4.31 percent, the highest since 2016, when inflation stood at 6.29 percent, according to Rio Times Online. In December, the 1.15 percent hike was the highest for the month since 2002, the report notes. However, many economists still see a chance for an additional interest rate cut when assessing the Consumer Price Index acceleration, adds the report. As reported in the Troubled Company Reporter-Latin America on Nov. 18, 2019, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-'. The Rating Outlook is Stable. BRAZIL: Official Inflation for Year 2019 Closed at 4.31 Percent --------------------------------------------------------------- Adele Cardin at Rio Times Online report that official inflation, as measured by the Broad National Consumer Price Index (IPCA), closed 2019 at 4.31 percent. The rate is higher than the 3.75 percent observed in 2018, according to data released on January 10, by the Brazilian Geography and Statistics Institute (IBGE), reports Rio Times Online. The rate was also above the center of the inflation target, set by the Central Bank for 2019 at 4.25 percent. In December, the IPCA stood at 1.15 percent, up from 0.51 percent in November and 0.15 percent in December of the previous year, the report notes. As reported in the Troubled Company Reporter-Latin America on Nov. 18, 2019, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-'. The Rating Outlook is Stable. GLOBO COMUNICACAO: S&P Rates New $300MM Sr. Unsecured Notes 'BB+' ----------------------------------------------------------------- S&P Global Ratings said that it has assigned its 'BB+' foreign currency issue-level rating to Globo Comunicacao e Participacoes S.A.'s (Globo: BB+/Positive/--) planned issuance of $300 million senior unsecured notes with bullet maturity in 2030. S&P also assigned a '3' recovery rating to the proposed notes, which means a significant recovery expectation of 50%-70% (rounded estimate 65%). Globo will use the proceeds of the new notes to purchase up to $300 million of the 4.875% senior notes validly tendered and accepted for purchase in the tender offer, and the remainder for general corporate purposes. S&P said, "The new issue rating is the same level as our issuer credit rating on Globo, reflecting the company's strong market position as Brazil's largest media conglomerate, with solid cash flow and a historically positive net cash position. On the other hand, this is counterbalanced by our expectation of continued pressure on Globo's EBITDA margins in the next two years stemming from a high cost structure to support content development, corporate restructuring, and digital initiatives amid a still weak advertising market." The positive outlook on Globo, reflects that on Brazil. Issue Ratings - Recovery Analysis Key analytical factors -- S&P assesses recovery prospects using a simulated default scenario. In S&P's analysis, Globo's EBITDA would need to decline about 50% from its projected 2019 level before triggering a payment default, assumed in 2025, given the current rating category. -- At that level, S&P estimates that Globo's cash flow generation may not be sufficient to cover interest expense and maintenance capital expenditures. -- S&P calculated a net enterprise value (EV) of about R$2.7 billion. S&P believes that this value would be sufficient to provide substantial recovery (65%) for the company's bondholders. -- In an event of default, S&P believes Globo would be reorganized rather than liquidated. S&P bases this view on Globo's position as the largest media player in Brazil, with diversified operations that should generate consistent cash flows. Simulated default assumptions -- Country of insolvency: Brazil (Jurisdiction B), leading to a jurisdictional cap at '3' for unsecured debt -- Simulated year of default: 2025 -- EBITDA at emergence: R$425 million -- Implied EV multiple: 6.5x -- Estimated gross EV at emergence: R$2.7 billion -- Estimated net EV, post 5% administrative expenses: R$2.6 billion Simplified waterfall -- Senior unsecured debt of R$3.7 billion (existing loans, bonds, and proposed 2030 notes) Ratings List New Rating Globo Comunicacao e Participacoes S.A. (GLOBO) Senior Unsecured BB+ Recovery Rating 3(65%) JBS SA: Opens New Beef Plant in Brazil as Domestic Prices Rise -------------------------------------------------------------- Reuters reports that Brazilian meatpacker JBS SA is opening a new beef plant in the state of Mato Grosso to cater to the domestic market, said the chief executive officer of its beef division Friboi. The move comes as beef prices reached record highs last year amid a surge in Brazilian exports to China after an outbreak of African swine fever there that has reshaped meat trade flows globally, according to Reuters. Friboi CEO Renato Costa said JBS invested BRL70 million ($17.18 million) in its 37th Brazil-based beef unit, which is located in the town of Brasnorte, the report notes. The plant can process 500 head of cattle per day, the report relays. Costa said JBS may make further investments in the Brasnorte plant in the future but did not elaborate, the report notes. In a separate statement, JBS said Joanita Karoleski had decided to step down as chief executive of the Seara processed foods division to focus on personal projects, the report says. Seara posted net sales of almost BRL20 billion ($4.92 billion) in the 12 months ended in the third quarter, accounting for some 10% of JBS's sales, the report notes. Karoleski will be replaced by Wesley Batista Filho, the 28-year-old grandson of company founder Jose Batista Sobrinho, the report relays. Batista Filho will also keep his role as chief executive of the JBS Brasil division, the statement said, the report adds. As reported in the Troubled Company Reporter-Latin America on Dec. 19, 2019, Moody's Investors Service upgraded JBS S.A.'s corporate family rating to Ba2 from Ba3 and the senior unsecured ratings of its wholly-owned subsidiaries JBS USA Lux S.A. and JBS Investments II GmbH to Ba2 from Ba3. The rating of the secured term loan under JBS USA Lux S.A. was upgraded to Ba1 from Ba2. The outlook for all ratings is stable. NATURA COSMETICOS: S&P Cuts GS ICR to 'BB-' on Higher Leverage -------------------------------------------------------------- On Jan. 8, 2020, S&P Global Ratings lowered its global scale issuer credit and issue-level ratings to 'BB-' from 'BB', and its national scale issuer credit and issue-level ratings to 'brAA+' from 'brAAA' on Brazil-based cosmetics company, Natura Cosmeticos S.A. (Natura). The recovery rating on the unsecured debts remains at '3' (50%). At the same time, S&P removed all ratings from CreditWatch with negative implications, where it placed them on March 25, 2019. Natura completed the acquisition of Avon Products Inc. (Avon) on Jan. 3, 2020. Both entities are now controlled by a new parent company, Natura&Co Holding S.A. (Natura&Co), which is now the driver of Natura's credit quality. Natura and Avon are legally independent entities, with no cross guaranteed debt between them, but Natura&Co fully owns both companies. The group's credit profile drives the rating on Natura due to its importance to the group--representing about 75% of total EBITDA--its integral role to the business strategy, and cash flow contribution. In addition, the former controlling shareholders of Natura will control Natura&Co, and the group will inherit the board and senior management of Natura. S&P said, "We currently view Natura's 'bb' stand-alone credit profile (SACP) as stronger than Natura&Co's credit quality due to Avon's small EBITDA contribution and the weaker consolidated leverage metrics. Additional debt stemming from the merger will be limited, given that the acquisition was an all-share merger agreement, and the only additional debt will stem from the $91 million (or about R$365 million) accrued dividend payment to Cerberus Capital Management (Cerberus). According to our estimates, adjusted gross debt should fall, because Cerberus has opted to convert its preferred stock position at Avon into common shares of Natura&Co, and we previously treated the preferred stock as equivalent to debt at Avon. "We expect consolidated debt to EBITDA of close to 4.0x in 2019 and to drop to the 3.0x-3.5x range in 2020 and to 2.5x-3.0x in 2021, compared with our forecast of close to 3.0x in 2019 for Natura on a stand-alone basis, because of Avon's highly leveraged financial risk profile. We also believe risks associated with the turnaround of Avon's operations are still meaningful, mainly reflecting the difficulty in stanching the EBITDA decline of the past several years, despite the recent progress, such as headcount reduction and working capital optimization. "We believe Avon's overhaul is now more credible under the joint management with Natura. The latter company reversed the declining productivity and engagement of its representatives, and has been recovering its market share since 2017. We expect Avon to improve its margins and speed up digitalization of its platforms. However, significant amount of restructuring charges will still heavily weigh on Avon's EBITDA margins in the next two years, which we expect at 5%-7%. On a consolidated basis, we expect Natura&Co's EBITDA margin of close to 10% in 2019 and 2020, below the industry average, and well below those of leading peers such as L'Oreal and Estee Lauder, with margins in the 25% area. "Our base-case forecast doesn't include significant synergies stemming from the merger, but they could reach $200 million - $300 million per year according to Natura's guidance. The company expects this would stem from sourcing optimization, distribution channels, and production facilities (unifying channels and production in Brazil, benefiting from Avon's strong position in Mexico etc.). As per management, synergies could materialize starting in 2021, allowing Natura&Co's debt to EBITDA to approach 2.0x, compared with our assumptions of 2.5x-3.0x for the same year." =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: 2019's Dry Spell Likely to Continue Into 1Q --------------------------------------------------------------- Dominican Today reports that for the first quarter of 2020, the precipitation deficit of last year in several regions of the country is likely to continue, especially to the southwest and south, according to meteorologist Jose Medina, who relies on climate prediction models. Medina, head of the Synoptic Meteorology and Forecasting Division of the National Weather Office (Onamet), noted that the southwest and south regions, during this period each year are under the effects of the seasonal drought that lasts until mid-April, according to Dominican Today. "After this it is uncertain what can happen in the following months since these climatic conditions will be determined by the state of the temperatures in the equatorial Pacific Ocean that determine the presence of El Nino or La Nina (currently in its neutral phase -- warm) and the Atlantic temperatures that directly provide energy to the weather systems that affect the national territory," said the official quoted by Diario Libre, the report relays. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). DOMINICAN REPUBLIC: Gov. to Help Poultry Farmers Deal With Disease ------------------------------------------------------------------ Dominican Today reports that Agriculture minister, Osmar Benitez, pledged government help to dozens of poultry producers of Las Lagunas, Moca (north) affected by Newcastle disease. "It will collaborate and provide support" after the losses expected in the millions, sustained by poultry farmers by the death of thousands of chickens due to Newcastle in farms in several regions of the country, according to Dominican Today. Benitez blames the deaths on the failure to vaccinate and other protocol processes by the producers and asked the farmers to comply with the sanitary measures required by international organizations, the report notes. The official said that the Government supervises so that the necessary controls are applied for a healthy breeding of birds, but notes that "what happens is that there are people who want blood," the report relays. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). ===================== P U E R T O R I C O ===================== ASCENA RETAIL: Regains Compliance with Nasdaq Min. Bid Price Rule ----------------------------------------------------------------- Ascena Retail Group, Inc. received written notice from The Nasdaq Stock Market LLC, stating that the Company successfully regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market set forth in Nasdaq Listing Rule 5450(a)(1). The Company previously received notification from the Nasdaq on July 29, 2019 citing failure to maintain a minimum closing bid price of $1.00 per share for its common stock for a period of 30 consecutive business days required by the Bid Price Rule for continued listing on The Nasdaq Global Select Market. The letter provided that Ascena had 180 calendar days, or until Jan. 27, 2020, to regain compliance with the Bid Price Rule. About Ascena Retail Ascena Retail Group, Inc. (Nasdaq: ASNA) -- http://www.ascenaretail.com/-- is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion (Dressbarn) segments, and for tween girls under the Kids Fashion segment (Justice). Ascena, through its retail brands, operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico. Ascena Retail reported a net loss of $661.4 million for the fiscal year ended Aug. 3, 2019, a net loss of $39.7 million for the year ended Aug. 4, 2018, and a net loss of $1.06 billion for the year ended July 29, 2017. As of Nov. 2, 2019, the Company had $3.49 billion in total assets, $3.32 billion in total liabilities, and $173 million in total equity. * * * As reported by the TCR on Nov. 26, 2019, S&P Global Ratings lowered its issuer credit rating on Mahwah, N.J.-based women's specialty apparel retailer Ascena Retail Group Inc. to 'CCC' from 'CCC+' to reflect the rating agency's belief that it is increasingly likely the company will pursue a debt restructuring over the next 12 months. In October 2019, Moody's Investors Service downgraded Ascena Retail Group, Inc.'s corporate family rating to Caa2 from B3, probability of default rating to Caa2-PD from B3-PD and senior secured term loan rating to Caa2 from B3. The downgrades reflect Moody's view that Ascena's capital structure is likely unsustainable as a result of its weak operating performance, high leverage, and negative free cash flow, creating an elevated risk of a debt restructuring including a material debt repurchase at a significant discount. MESH SUTURE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mesh Suture, Inc. D 83 Calle C Costa De Oro Dorado, PR 00646 Business Description: Mesh Suture, Inc. -- https://meshsuture.net -- is engaged in the manufacturing of medical equipment and supplies. Chapter 11 Petition Date: January 9, 2020 Court: United States Bankruptcy Court District of Puerto Rico Case No.: 20-00031 Debtor's Counsel: Carmen D. Conde Torres, Esq. C. CONDE & ASSOC. 254 San Jose Street, 5th Floor San Juan, PR 00901-1523 Tel: 787-729-2900 E-mail: condecarmen@condelaw.com Total Assets: $9,133,930 Total Liabilities: $1,486,431 The petition was signed by Mark Schwartz, chief executive officer, director of the Board, and treasurer. A copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/S2Ku2H =============== X X X X X X X X =============== [*] BOND PRICING: For the Week January 6 to January 10, 2019 ------------------------------------------------------------ Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD Noble Holding Internat 5.3 60.5 3/15/2042 KY USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD SACI Falabella 2.3 50.6 7/15/2020 CL CLP Sylph Ltd 2.4 65.1 9/25/2036 KY USD Banco Security SA 3.0 27.4 6/1/2021 CL CLP Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD Noble Holding Internat 6.2 62.2 8/1/2040 KY USD YPF SA 16.5 67.3 5/9/2022 AR ARS Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD Enel Americas SA 5.8 32.7 6/15/2022 CL CLP Empresa Provincial de 12.5 0.0 1/29/2020 AR USD Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD Noble Holding Internat 6.1 62.0 3/1/2041 KY USD USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD YPF SA 16.5 67.3 5/9/2022 AR ARS Provincia del Chubut A 4.5 2208 3/30/2021 AR USD Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Polarcus Ltd 5.6 71.8 7/1/2022 AE USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Plaza SA 3.5 38.3 8/15/2020 CL CLP Banco Security SA 3.0 5.6 7/1/2019 CL CLP Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD Fospar S/A 6.5 1.2 5/15/2026 BR BRL Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Esval SA 3.5 49.9 2/15/2026 CL CLP ********* 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 2020. 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 * * *