/raid1/www/Hosts/bankrupt/TCRLA_Public/200128.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, January 28, 2020, Vol. 21, No. 20
Headlines
A R G E N T I N A
ARGENTINA: Debt Continues to Challenge Fernandez's Rule
UBIOME INC: US Trustee Tasked to Appoint Consumer Privacy Ombudsman
B R A Z I L
OI SA: Collects US$1 Billion by Selling Stake in Unitel
C O L O M B I A
BANCOLOMBIA SA: Discloses Early Tender Results for 2021 Notes
J A M A I C A
JAMAICA: BOJ Introduces FX Swap Arrangement
JAMAICA: No Debt Expected From Country's Infrastructural Growth
JAMAICA: Proposes to Spend $8 Billion More This Fiscal Year
M E X I C O
GRUPO AEROMEXICO: Moody's Assigns B1 CFR, Outlook Stable
GRUPO AEROMEXICO: S&P Assigns BB- Global Scale Issuer Credit Rating
P U E R T O R I C O
HOGAR LA MISERICORDIA: Taps Norberto Colon Alvarado as Counsel
MMM HOLDINGS: Moody's Assigns B1 Rating on Sr. Sec. Debt
TRANS WORLD ENTERTAINMENT: Agrees to Sell FYE Segment for $10MM
- - - - -
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A R G E N T I N A
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ARGENTINA: Debt Continues to Challenge Fernandez's Rule
-------------------------------------------------------
Globalinsolvency, citing the Financial Times, reports that a big
question facing Alberto Fernandez, Argentina's new president, is
what to do with his country's debt.
Gross government debt is equal to 93 per cent of GDP, its highest
level since the 2004 restructuring, while the price of most
Argentine sovereign bonds has fallen to less than 50 cents on the
dollar, according to Globalinsolvency.
To some, these numbers suggest an over-indebted economy requiring
an aggressive debt restructuring imposing significant haircuts on
creditors to restore debt sustainability and economic growth, the
report notes.
Globalinsolvency notes that there is enormous uncertainty over
Argentina's capacity to service its debt, nowhere better captured
than in the evolution of the debt forecasts published by the IMF in
its debt sustainability analyses, the report relays. These have
consistently failed to anticipate the scale and pace at which
Argentina's debts would continue to accumulate, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. It's capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019 according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Moody's credit rating for Argentina was last set at Caa2 from B2
with under review outlook. Moody's rating was issued on Aug. 30,
2019. S&P Global Ratings, in December 2019, raised its foreign
currency sovereign credit ratings on Argentina to 'CC/C' from
'SD/D'. S&P's outlook on the long-term sovereign credit ratings is
negative. Fitch Ratings, in December 2019, upgraded Argentina's
Long-Term Foreign-Currency Issuer Default Rating to 'CC' from 'RD',
and its Short-Term Foreign-Currency IDR to 'C' from 'RD'. DBRS,
Inc. meanwhile downgraded Argentina's Long-Term and Short-Term
Foreign Currency - Issuer Ratings to Selective Default (SD), from
CC and R-5, respectively, also in December 2019.
UBIOME INC: US Trustee Tasked to Appoint Consumer Privacy Ombudsman
-------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
considered the certification of counsel filed by Alfred T.
Giuliano, the appointed chapter 7 trustee for the estate of UBiome
Inc., regarding the need for appointment of a consumer privacy
ombudsman in the chapter 7 case, and the Court has determined that
the requirements of Bankruptcy Code are implicated in connection
with the sale hearing scheduled for Dec. 19, 2019.
After due deliberation, the Court has determined that the relief
requested in the COC is in the best interests of the Debtor, its
estate, and creditors; and good and sufficient cause having been
shown.
The Court has ordered the United States Trustee to appoint a
consumer privacy ombudsman in accordance with 11 U.S.C. Sec.
332(a). The Ombudsman shall perform the functions set forth and
shall be compensated pursuant to the Bankruptcy code upon approval
by the Court of a request for compensation.
A full-text copy of Order is available at
https://tinyurl.com/ucfymq4 from PacerMonitor.com at no charge.
About uBiome Inc.
uBiome, Inc. -- https://ubiome.com/ -- is a microbial genomics
company founded in 2012. uBiome combines its patented proprietary
precision sequencing with machine learning and artificial
intelligence to develop wellness products, clinical tests, and
therapeutic targets. uBiome has filed for over 250 patents on its
technology, which includes sample preparation, computational
analysis, molecular techniques, as well as diagnostic and
therapeutic applications. uBiome and its non-debtor foreign
affiliates currently employ approximately 100 individuals, of which
35 are located in the United States, 37 in Chile, and 28 in
Argentina.
On Sept. 4, 2019, uBiome, Inc., sought Chapter 11 protection
(Bankr. D. Del. Case No. 19-11938). The Debtor was estimated to
have assets of $50 million to $100 million and liabilities of $10
million to $50 million as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtor tapped Young, Conaway, Stargat & Taylor, LLP as counsel;
Goldin Associates, LLC, as restructuring advisor; and GLC Advisors
& Co., LLC and GCLA Securities LLC as investment banker. Donlin
Recano & Company, Inc., is the claims agent.
In October 2019, the Bankruptcy Court converted the Chapter 11
bankruptcy case to a Chapter 7 liquidation.
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B R A Z I L
===========
OI SA: Collects US$1 Billion by Selling Stake in Unitel
-------------------------------------------------------
Iolanda Fonseca at Rio Times Online reports that Oi SA has
officially sold its stake in Unitel to the state-owned oil company
Sonangol.
The Brazilian company is under judicial reorganization and has been
selling off non-essential assets, according to Rio Times Online.
It held 25 percent of the Angolan operator's shares and the
transaction totaled US$1 (R$4) billion, the report relays.
Oi was to be paid R$699.1 million of the total price on Friday,
January 24, the report notes. The oil company Sonangol had
pre-paid US$60.9 million; the remaining US$240 million will be
credited by July 31, 2020, with a minimum monthly payout of US, the
report adds.
About Oi S.A.
Founded in the 1960s, Oi S.A., formerly known as Telemar, is a
large fixed telephone operator and mobile telephone operator in
Brazil. It is headquartered in Rio de Janeiro. Oi's major
subsidiaries include Telemar and Brasil Telecom.
In 2013, Oi announced its merger with Portugal Telecom, the largest
telecommunication company in Portugal, in order to strengthen the
Brazilian firm and simplify its ownership structure. In June 2015,
Portugal Telecom was acquired by Altice Group.
On June 20, 2016, Oi filed for a US$19 billion (R$65 billion)
bankruptcy protection, the largest on record for Brazil.
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings in September 2019, affirmed its global scale 'B'
issuer credit and issue-level ratings on Oi S.A. and revised the
outlook to negative from stable. At the same time, S&P lowered its
national scale rating to 'brA-' from 'brA' and assigned a negative
outlook.
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C O L O M B I A
===============
BANCOLOMBIA SA: Discloses Early Tender Results for 2021 Notes
-------------------------------------------------------------
Bancolombia S.A. disclosed the early tender results of the
previously announced offer by Citigroup Global Markets Inc. (the
"Offeror") to purchase for cash (the "Offer") any and all of the
Issuer's outstanding 5.950% Senior Notes due 2021 (the "Notes").
The Offer is subject to the terms and conditions as described in
the offer to purchase dated January 8, 2020 (the "Offer to
Purchase").
A table that summarizes certain payment terms of the Offer and sets
forth the principal amount of Notes validly tendered and not
validly withdrawn as of the Early Tender Date is available to view
at https://is.gd/4HVa6L
The early tender deadline for the Offer occurred at 5:00 P.M., New
York City time, on January 22, 2020 (the "Early Tender Date"). The
Offeror intends to accept for purchase on the early settlement date
for the Offer (the "Early Settlement Date"), which is expected to
be January 24, 2020, the aggregate amount of Notes that were
validly tendered and not validly withdrawn prior to the Early
Tender Date, if the financing and other conditions described below
are satisfied or waived. Holders who have not tendered their Notes
as of the Early Tender Date are eligible to tender their Notes at
or prior to 11:59 P.M., New York City time, on February 5, 2020
(the "Expiration Date"), unless the Offer is extended or earlier
terminated by the Offeror in its sole discretion.
Holders that validly tendered prior to the Early Tender Date, and
whose Notes are accepted for purchase, will be entitled to receive
the total consideration set forth in the table above, which
includes the early tender payment. Holders validly tendering their
Notes after the Early Tender Date and prior to or at the Expiration
Date, and whose Notes are accepted for purchase, will be entitled
to receive the tender offer consideration set forth in the table
above. In addition, holders whose Notes are purchased in the Offer
will be entitled to receive accrued and unpaid interest in respect
of their purchased Notes from the last interest payment date to,
but not including, the applicable settlement date.
The Issuer intends to redeem all or a portion of the Notes that
remain outstanding following the completion of the Offer. The Offer
to Purchase does not constitute a notice of redemption and no
redemption will be binding on the Issuer until such time as a
notice of redemption is delivered in accordance with the indenture
dated as of June 3, 2011, between the Issuer and The Bank of New
York Mellon, as trustee.
The withdrawal deadline for the Offer was 5:00 P.M., New York City
time, on January 22, 2020, and so has passed. Accordingly, Notes
tendered (in the past or future) in the Offer may no longer be
withdrawn, except as required by applicable law.
The Issuer has consented to the Offeror making the Offer. The
Issuer is not making the Offer. It is intended that the Notes
purchased on the Early Settlement Date by the Offeror in the Offer
will be exchanged by the Offeror with the Issuer for a decrease in
the proceeds of certain new notes to be issued in a new offering by
the Issuer (the "New Offering"). The pricing of the New Offering
on terms satisfactory to the Issuer and the underwriting agreement
for the New Offering not having been terminated prior to the Early
Settlement Date are conditions to the Offeror's obligation to
accept for purchase and pay for tendered Notes. The pricing of the
New Offering is expected to occur later today. Additional
conditions to the Offer are described in the Offer to Purchase.
The Offeror may amend, extend, terminate or withdraw the Offer in
its sole discretion.
Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are
the dealer managers for the Offer. Global Bondholder Services
Corporation has been appointed as the information and tender agent
for the Offer.
Persons with questions regarding the Offer should contact Citigroup
Global Markets Inc. at (800) 558-3745 (toll-free) or (212) 723-6106
(collect), or J.P. Morgan Securities LLC at (866) 846-2874
(toll-free) or (212) 834-7279 (collect). In addition, holders of
Notes may contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
Holders who would like copies of the Offer to Purchase may call the
information and tender agent, Global Bondholder Services
Corporation at (212) 430-3774 or (866) 470-4200 (toll free) or by
e-mail at contact@gbsc-usa.com.
As reported in the Troubled Company Reporter-Latin America on Dec
17, 2019, Fitch Ratings assigned 'BB+' final long-term ratings to
Bancolombia S.A.'s U.S. dollar subordinated notes.
The net proceeds of these subordinated notes will be used to
replace a portion of the existing old notes and for general
corporate purposes.
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J A M A I C A
=============
JAMAICA: BOJ Introduces FX Swap Arrangement
-------------------------------------------
RJR News reports that the Bank of Jamaica (BOJ) is introducing a
new instrument available to foreign exchange authorized dealers
called the FX Swap Arrangement.
This instrument is intended to enhance the Bank's management of the
foreign exchange market and provides U.S. dollar liquidity to the
market through authorized dealers, according to RJR News.
Under the FX Swap Arrangement, the Bank will sell U.S. dollars to
authorized dealers, within a pre-determined limit, at the
prevailing market rate, with an agreement to buy back the same
amount of US dollars at a time in the future at an agreed forward
rate, the report notes.
The BOJ says in addition to its usual B-FXITT operations, it will
utilize the FX Swap Arrangement to smooth out excess volatility and
restore orderly conditions in the market, the report adds.
About Jamaica
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings in September 2019 raised its long-term foreign and
local currency sovereign credit ratings on Jamaica to 'B+' from
'B'. The outlook is stable. At the same time, S&P Global Ratings
affirmed its 'B' short-term foreign and local currency sovereign
credit ratings on the country. S&P Global
Ratings also raised its transfer and convertibility assessment to
'BB-' from 'B+'.
RJR News reported in June 2019 that Steven Gooden, Chief Executive
Officer of NCB Capital Markets, warned 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.
JAMAICA: No Debt Expected From Country's Infrastructural Growth
---------------------------------------------------------------
RJR News reports that Prime Minister Andrew Holness has reiterated
that while there will be rapid infrastructural growth in Jamaica,
the country will not incur debt during the process.
He said his administration has been focused on solving most of the
country's economic issues before embarking on expansion projects,
according to RJR News.
Mr. Holness said Jamaica's experience should serve as a lesson to
the administrations of other countries facing economic challenges,
the report relays.
About Jamaica
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings in September 2019 raised its long-term foreign and
local currency sovereign credit ratings on Jamaica to 'B+' from
'B'. The outlook is stable. At the same time, S&P Global Ratings
affirmed its 'B' short-term foreign and local currency sovereign
credit ratings on the country. S&P Global Ratings also raised its
transfer and convertibility assessment to 'BB-' from 'B+'.
RJR News reported in June 2019 that Steven Gooden, Chief Executive
Officer of NCB Capital Markets, warned 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.
JAMAICA: Proposes to Spend $8 Billion More This Fiscal Year
-----------------------------------------------------------
RJR News reports that the Government of Jamaica is proposing to
spend an additional $8 billion for this fiscal year.
The information is contained in the Second Supplementary Estimates
tabled in the House of Representatives, according to RJR News.
The Estimates show that the Budget has been increased from $851
billion to $859 billion, the report notes.
Recurrent expenses have moved from $779 billion to $787 billion,
the report relates.
Capital spending remains the same at $72 billion, the report
notes.
About Jamaica
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings in September 2019 raised its long-term foreign and
local currency sovereign credit ratings on Jamaica to 'B+' from
'B'. The outlook is stable. At the same time, S&P Global Ratings
affirmed its 'B' short-term foreign and local
currency sovereign credit ratings on the country. S&P Global
Ratings also raised its transfer and convertibility assessment to
'BB-' from 'B+'.
RJR News reported in June 2019 that Steven Gooden, Chief Executive
Officer of NCB Capital Markets, warned 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
===========
GRUPO AEROMEXICO: Moody's Assigns B1 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service assigned a B1 Corporate Family Rating to
Grupo Aeromexico, S.A.B. de C.V. and B2 to its proposed USD400
million senior unsecured global notes to be issued by its fully
owned subsidiary Aerovias de Mexico, S.A. de C.V. and
unconditionally guaranteed by Aeromexico. The rating outlook is
stable. This is the first time Moody's assigns a rating to
Aeromexico.
Aeromexico will use the proceeds from the proposed notes issuance
to cover debt maturities under a local commercial paper program,
revamp its short distance fleet and reinforce its cash position.
The rating of the proposed notes assumes that the issuance will be
successfully completed and that the final transaction documents
will not be materially different from draft legal documentation
reviewed by Moody's to date and assume that these agreements are
legally valid, binding and enforceable.
Ratings Assigned:
Issuer: Grupo Aeromexico, S.A.B. de C.V.
Corporate Family Rating - B1
Issuer: Aerovias de Mexico, S.A. de C.V.
$400 million senior unsecured notes unconditionally
guaranteed by Grupo Aeromexico, S.A.B. de C.V. - B2
Outlook Actions:
Issuer: Grupo Aeromexico, S.A.B. de C.V.
Outlook assigned: Stable
Issuer: Aerovias de Mexico, S.A. de C.V.
Outlook assigned: Stable
RATINGS RATIONALE
Aeromexico's B1 corporate family rating reflects its leading market
position in Latin America supported by superior network
connectivity and strategic alliances. The rating also considers a
stronger capital structure pro-forma for the proposed issuance and
other measures currently in process aiming to enhance liquidity and
profitability. "The company is in the midst of a plan to improve
its operating structure and liquidity that will support its credit
profile going forward." said Sandra Beltran, a VP-Senior analyst at
Moody's. Conversely, the B1 rating considers the company's still
high gross leverage and weak economic environment in Mexico.
Aeromexico's rating also incorporates its exposure to foreign
currency, and other risks inherent to the airline industry such as
fuel price volatility and tough competitive environment. Execution
risk is also factored in the B1 rating considering the extended
grounding into 2020 of new MAX aircrafts by The Boeing Company (A3,
Ratings Under Review), that will likely delay Aeromexico's recovery
of financial profile, beyond 2021.
In 2019, Aeromexico estimates its operating margin to be close to
2.5% and 3.8% in 2020 and then gradually improve until stabilizing
at close to 10% in 2023. The improvement will be supported by a
continuation of the company's segmentation strategy of its customer
base, further leverage of strategic alliances that going forward
will also benefit from the recently announced partnership between
Delta and LATAM Airlines Group S.A. (LATAM, Ba3 stable), the
largest airline group in South America. Moreover, profitability
will also improve as the MAXes, now in Aeromexico's pipeline, are
fully operational and replacing less efficient aircrafts.
Therefore, the continued delay in the grounding of the MAXes poses
a risk in the company's ability to execute its strategy. Moreover,
current margins are weak when compared to rated peers such as
American Airlines Group Inc. (Ba3, stable), Azul S.A. (Ba3,
stable), LATAM and Gol Linhas Aereas Inteligentes S.A. (B1,
stable), which presented Moody's adjusted EBIT margin ranging
between 7.6% to 18.5%.
This relatively low profitability also results in weak cash
generation. Moody's estimates that in the 2019 -- 2021 period cash
flow from operations will range from MXN11 billion to MXN 15
billion. However, considering capex ranging from MXN3 billion to
MXN 6 billion during the same period and payments under fleet
leasing contracts between MXN7.7 billion and MXN9.2 billion, cash
generation will be flat during this period. Therefore, liquidity is
still weak but will evolve through 2020. As of September 30, 2019,
the company reported MXN7.7 billion in cash ($390 million), not
enough to cover MXN15.4 billion in short term debt maturities. The
proposed issuance of $400 million global notes due in 2025 will
reduce refinancing risk as some $130 million will be used to cover
debt maturities under a local commercial paper program. Some other
$130 million will be used to revamp its short distance fleet and
the balance will be kept in cash as a liquidity buffer. Short-term
debt include $74 million pre-delivery payments (PDP), common debt
instruments in the airline industry that usually have staged
partial payments of the aircraft price made by the customer to the
aircraft manufacturer pursuant to an aircraft purchase agreement in
advance of delivery of the aircraft.
The B2 rating assigned for the unsecured notes stands one notch
lower than Aeromexico's B1 corporate family rating (CFR) in order
to reflect the effective subordination of those unsecured creditors
to the company's other existing secured debt. Aeromexico's
consolidated debt is composed mainly of capitalized leases under
IFRS 16 accounting and financing leases, representing about 85% of
its total debt. Therefore, the proposed unsecured notes rank below
all the company's existing and future secured claims.
The stable outlook reflects its belief that Aeromexico will be able
to sustain the improvements in its operating margin, cash flow
generation, liquidity and leverage amid opportunities to continue
to capture synergies from the existing agreement with Delta, and
ongoing initiatives to increase operating efficiency.
A rating upgrade could be considered if Aeromexico is able to
successfully execute its cost reduction and market strategies,
strengthening its financial profile, such that profitability
improves with EBIT margin closer to 10% (0.3% in LTM 3Q19) on a
sustained basis. An upgrade will also require a substantial
improvement in liquidity through stronger cash generation, measured
as retained cash flow/debt, improving towards 20% (12.8% in LTM
3Q19). Likewise, leverage should decline with Debt-to-EBITDA (after
Moody's standard adjustments) being below 4.5 times on a sustained
basis (5.8 times in LTM 3Q19).
Conversely, negative rating pressure could develop if the company's
liquidity is strained due to a prolonged market downturn or
significant cost pressures, which combined with missteps in its
aircraft acquisition program lead to weaker credit profile.
Quantitatively, downward pressure on the rating could occur if
adjusted EBIT margin remains below 5% and adjusted Debt-to-EBITDA
remains above 6.0 times with no prospects to improve in the short
term.
Based in Mexico City, Grupo Aeromexico, S.A.B. de C.V. is Mexico's
leading airline, with more than 20 million passengers transported
in 2018 and currently serving 87 destinations (43 domestic and 44
international) in Mexico, the United States, Europe, Central and
South America, Asia and Canada. The company currently has a fleet
of 121 aircraft with passengers accounting more than 90% of
revenues and the balance being related with cargo services.
Aeromexico has been a public company since 2011. In 2017, Delta Air
Lines, Inc. (Delta, Baa3, positive) increased its equity stake in
Aeromexico to 49%, enhancing the strategic alliance between both
companies. For the LTM period ended September 30, 2019, Aeromexico
generated revenues of $3.6 billion and EBITDAR of $652 million.
Currently public float of the company accounts for 20% of its
equity stake.
The principal methodology used in these ratings was Passenger
Airline Industry published in April 2018.
GRUPO AEROMEXICO: S&P Assigns BB- Global Scale Issuer Credit Rating
-------------------------------------------------------------------
S&P Global Ratings noted that Aerovias de Mexico, S.A. de C.V., a
subsidiary of Mexico-based air carrier, Aeromexico S.A.B. de C.V.,
will issue the proposed senior unsecured bond issuance for up to
$400 million. The company will use the proceeds primarily to
refinance its short-term debt obligations, growth capex, and other
corporate expenses.
S&P expects a recovery in the company's lower operating and
financial performance for the past 12 months, benefiting from its
leading position in Mexico's international air travel market and
its route offering, maintaining EBITDA margins at about 20% and
leverage ratios in line with the credit rating.
Thus, on Jan. 24, 2020, S&P assigned its long-term 'BB-' global
scale issuer credit rating on Aerovias de Mexico, S.A. de C.V.
At the same time, S&P assigned its 'BB-' issue-level rating on
Aerovias' proposed senior unsecured notes. S&P also assigned a
recovery rating of '4' to the notes, indicating an expected average
recovery (30%-50%) in the event of a payment default.
The company posted negative income from its unconsolidated
companies, mostly from Club Premier, which shortened its miles
redemption time for customers, leading to lower revenues for this
entity. In May 2019, the company was forced to ground six of its
B737-8 MAX aircraft due to potential mechanical malfunctions, for
which the company compensated passengers for route cancellations
and rescheduling expenses. By the end of 2018, Aeromexico's
adjusted debt increased 21.5% from 2017, mainly from the delivery
of eight new aircraft, which the company financed mainly through
operating leases. In addition, higher jet fuel prices, FX
volatility on maintenance and airport fees lifted Aeromexico's
operating costs by 16.9% and reduced its EBITDA margins below 20%
in 2018.
Even though the company's operations substantially recovered during
the third quarter of 2019, the negative outlook reflects S&P's view
that Aeromexico is still exposed to jet fuel prices, FX rates,
greater competition, and a possible delay in restarting operations
of B737-8 MAX aircraft. These factors could lower revenue and
EBITDA to lower-than-expected levels, denting its liquidity and
leverage metrics. This could result in debt to EBITDA above 5.0x,
FFO to debt below 12.0%, or EBITDA interest coverage ratios below
2.0x in the next 12 months.
For 2019, Aeromexico posted a 5.4% drop in passenger traffic at its
domestic and international services over the same period in 2018,
mainly related to the grounding of its six B737-8 MAX aircraft.
However, the company mitigated this impact by rearranging routes
and frequencies, which increased its load factor to 83.0% in 2019
from 82.1% in 2018. This allowed Aeromexico to maintain a market
share of approximately 25.1% of total domestic traffic and 16.8% of
total international traffic in Mexico during the first nine months
of 2019, carrying 39.6 million and 12.3 million passengers,
respectively. S&P said, "We believe the company will continue
focusing on retaining passengers that are less susceptible to price
changes, while maximizing its revenue by differentiating fares and
higher ancillary revenue. We also expect Aeromexico to maintain its
leading position in the Mexico's international air travel market
and continue benefiting from cost efficiencies, thanks to its
partnership with Delta Airlines Inc. (BBB-/Stable/--) in the
trans-border market between the U.S. and Mexico."
Additionally, S&P believes Aeromexico will maintain debt aligned
with its fleet delivery schedule, likely to be about MXN62 billion
for 2019 and MXN83 billion for 2020.
=====================
P U E R T O R I C O
=====================
HOGAR LA MISERICORDIA: Taps Norberto Colon Alvarado as Counsel
--------------------------------------------------------------
Hogar La Misericordia, Inc., seeks approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to hire Norberto
Colon Alvarado Law Office as its legal counsel.
Norberto Colon Alvarado will represent the Debtor in connection
with its Chapter 11 case. The firm will bill $8,000 for its legal
services.
The firm is "disinterested" within the meaning of Section 101(14)
of the Bankruptcy Code, according to court filings.
Norberto Colon Alvarado can be reached through:
Norberto Colon Alvarado, Esq.
Norberto Colon Alvarado Law Office
46 Calle Castillo
Ponce, PR 00730
Phone: 787-843-4272
E-mail: norbertocolonalvarado@yahoo.com
About Hogar La Misericordia
Hogar La Misericordia, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D.P.R. Case No. 19-07107) on Dec. 4,
2019. At the time of the filing, the Debtor disclosed assets of
between $100,001 and $500,000 and liabilities of the same range.
Judge Edward A. Godoy oversees the case. The Debtor tapped
Norberto Colon Alvarado Law Office as its legal counsel.
MMM HOLDINGS: Moody's Assigns B1 Rating on Sr. Sec. Debt
--------------------------------------------------------
Moody's Investors Service assigned definitive B1 senior secured
debt ratings to MMM Holdings, LLC in connection with Summit
Partners' acquisition on December 26 of MMM's ultimate parent,
InnovaCare, Inc. The acquisition was financed with new equity, a
$550 million 7-year senior, secured term loan and an $80 million
5-year senior, secured revolving credit facility. Moody's has also
assigned a Ba1 insurance financial strength rating to MMM's
operating company and affirmed MMM's B1 corporate family rating.
The outlooks on MMM and MMM Healthcare, LLC are stable. The
definitive debt ratings replace the provisional (P)B1 senior
secured debt ratings, which Moody's assigned on October 1, 2019,
pending the closing of the acquisition.
RATINGS RATIONALE
The ratings on MMM and its operating subsidiary reflect MMM
Healthcare, LLC's solid profitability, leading market share in the
Puerto Rico Medicare Advantage (MA) market, and solid MA membership
growth of 25% since 2017 amidst favorable reimbursement rate trends
after six years (2011 & 2017) of severe MA reimbursement rate cuts
(21%) pursuant to the Affordable Care Act. Another credit positive
is MMM's vertical integration, including ownership of an
independent physician's network, a medical service organization,
chronic care clinics and a network of multi-payor primary care
clinics in the Orlando, Florida market (Orlando Family
Physicians).
These capabilities support MMM's leading medical loss ratio in
Puerto Rico. Despite a significant increase in debt, projected 2019
year-end debt-to-EBITDA with Moody's adjustments remains well under
3.0x on a pro-forma basis.
Credit challenges include MMM's small scale, geographic
concentration in Puerto Rico and the lowest RBC capital ratio among
Moody's rated peers. In addition, the significant goodwill from the
acquisition adversely impacts the quality of capital. With
approximately 523 thousand members, MMM is the smallest health
insurer in Moody's rated universe.
Approximately half of MMM's members are enrolled in Medicare
Advantage and the other half in Medicaid, which is a significant
concentration in government business. Furthermore, almost its
entire business is located in the Commonwealth of Puerto Rico (Ca
negative), which remains under severe financial stress. Medicaid
typically is a shared responsibility between the US federal
government and the "state." The Medicaid risks, however, are
somewhat mitigated because for two reasons: 1) Medicaid contributes
only about 5% of earnings, and; 2) the US will continue to cover
the vast majority of Puerto Rico's Medicaid costs through June 30,
2021. Finally, MMM's RBC capital ratio at the company action level
(CAL) was only 109% as of year-end 2018. While the company is
planning to boost RBC to 125% going forward, it would still be well
below peer levels.
The stable outlook reflects the positive MA reimbursement
environment and solid claims and expense controls which Moody's
believes will continue, along with favorable MA demographic trends
on Puerto Rico as well as south Florida, where MMM has started up a
new MA plan.
RATINGS DRIVERS
Moody's could upgrade MMM (and its operating subsidiary) if the
company meets the following drivers: (1) risk-based capital ratio
at company action level at or above 150% of company action level;
(2) MA membership growth continues in general and the Florida plan
achieves 15-20% or more of total MA members; (3) Meaningful
percentage of earnings is from outside Puerto Rico on a sustained
basis while sustaining current profitability metrics.
Conversely, Moody's could downgrade MMM (and its operating
subsidiary) under the following conditions: (1) risk-based capital
ratio at company action remains below 115%; (2) MA membership drops
10% or more from current levels, and; (3) debt-to-EBITDA exceeds
3.0x on a sustained basis.
Affirmations:
Issuer: MMM Holdings, LLC:
Corporate family rating, Affirmed B1;
Assignments:
Issuer: MMM Healthcare, LLC
Insurance Financial Strength Rating, Assigned Ba1
Issuer: MMM Holdings, LLC
Backed senior secured term loan due 2026: Assigned B1 from
(P)B1
Backed senior secured revolving credit facility due 2024:
Assigned B1 from (P)B1
Outlook Actions:
Issuer: MMM Holdings, LLC
Outlook, Remains Stable
Issuer: MMM Healthcare, LLC
Outlook, Assigned stable
ICH US Intermediate Holdings II, Inc. and ICH Flow-Through LLC are
co-borrowers on the term loan and revolving credit facility.
The principal methodology used in these ratings was US Health
Insurance Companies Methodology published in November 2019.
InnovaCare, Inc., the parent company of MMM Holdings, is a
privately-owned company incorporated in Puerto Rico and
headquartered in Fort Lee, New Jersey.
TRANS WORLD ENTERTAINMENT: Agrees to Sell FYE Segment for $10MM
---------------------------------------------------------------
Trans World Entertainment has entered into a definitive asset
purchase agreement with a subsidiary of Sunrise Records and
Entertainment Ltd., the parent of Sunrise Records in Canada and HMV
Records in the United Kingdom, to sell substantially all of the
assets of the Company's wholly owned subsidiary, Record Town, Inc.
(the retail, music, film, video and popular business constituting
the For Your Entertainment segment of the Company's business), for
$10 million in cash, subject to a net inventory and other
adjustments, plus the assumption of certain liabilities.
The Transaction follows a process in which the Company's board of
directors explored strategic alternatives available to the
Company.
The Transaction was unanimously approved by the Company's board of
directors.
The Transaction is expected to close in the first quarter of 2020,
subject to the satisfaction or waiver of customary closing
conditions set forth in the purchase agreement, including the
receipt of certain third party consents and the approval by at
least two-thirds of the Company's stockholders. The Company will
call and hold a stockholders' meeting seeking to obtain this
approval. The Company will use all of the proceeds from the
Transaction to repay outstanding indebtedness and satisfy other
unassumed liabilities.
The Company will continue to operate its business in the ordinary
course until the Transaction closes, and thereafter Sunrise
anticipates keeping substantially all of the current FTE
employees.
Following the closing, the Company plans to focus on the operation
of its wholly owned subsidiary, etailz, Inc.
About Trans World
Headquartered in Albany, New York, Trans World Entertainment is a
multi-channel retailer, blending a 40-year history of entertainment
retail experience with digital marketplace expertise. Its brands
seamlessly connect customers with the most comprehensive selection
of music, movies, and pop culture products on the channel of their
choice. The Company has operated as a specialty retailer of
entertainment and pop culture merchandise with stores in the United
States and Puerto Rico, primarily under the name fye, for your
entertainment, and on the web at www.fye.com and
www.secondspin.com. Trans World Entertainment, which established
itself as a public company in 1986, is traded on the Nasdaq
National Market under the symbol "TWMC".
Trans World reported a net loss of $97.38 million for the year
ended Feb. 2, 2019, following a net loss of $42.55 million for the
year ended Feb. 3, 2018. As of Nov. 2, 2019, Trans World had
$141.48 million in total assets, $116.60 million in total
liabilities, and $24.87 million in total shareholders' equity.
The Company incurred net losses of $39.1 million and $31.7 million
for the thirty-nine weeks ended Nov. 2, 2019 and Nov. 3, 2018,
respectively, and has an accumulated deficit of $89.3 million at
Nov. 2, 2019. In addition, net cash used in operating activities
for the thirty-nine weeks ended Nov. 2, 2019 was $30.8 million. Net
cash used in operating activities for the thirty-nine weeks ended
Nov. 3, 2018 was $53.3 million. The Company also experienced
negative cash flows from operations during fiscal 2018 and 2017,
and expects to incur net losses in the foreseeable future. Based
on its recurring losses from operations, expectation of continuing
operating losses for the foreseeable future, and uncertainty with
respect to any available future funding, as well as the completion
of other strategic alternatives, the Company has concluded that
there is substantial doubt about its ability to continue as a going
concern for a period of one year after the date of filing of this
Quarterly Report on Form 10-Q (Dec. 23, 2019).
*********
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