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/raid1/www/Hosts/bankrupt/TCRLA_Public/200602.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, June 2, 2020, Vol. 21, No. 110 Headlines A R G E N T I N A ARGENTINA: Default Prompts a Paul Singer Sequel in CDS Decision B R A Z I L COMPANHIA SIDERURGICA: Fitch Alters Outlook on 'B' IDR to Stable C H I L E LATAM AIRLINES: Driven to Bankruptcy by Coronavirus D O M I N I C A N R E P U B L I C AES ANDRES: Fitch Alters Outlook on 'BB-' FC IDR to Negative DOMINICAN REPUBLIC: Central Bank Supports Forex Availability DOMINICAN REPUBLIC: Pandemic Stuns Mango Exports DOMINICAN REPUBLIC: Remittance Firms Want to Pay 'Only in RD$' E C U A D O R ECUADOR: Places National Railway Into Liquidation J A M A I C A JAMAICA: Companies in Limbo Over Shortcomings of Companies Act P U E R T O R I C O ASCENA RETAIL: Provides Additional Business Update on COVID-19 IGLESIA TABERNACULO: Seeks to Hire Landrau Rivera as Legal Counsel - - - - - ================= A R G E N T I N A ================= ARGENTINA: Default Prompts a Paul Singer Sequel in CDS Decision --------------------------------------------------------------- Ben Bartenstein at Bloomberg News reports that Argentina's former nemesis Paul Singer is standing judgment over the nation's bond market once more. Four years after cutting a deal with the hedge fund billionaire to end a lengthy legal dispute over its defaulted debt, the South American country can't pay its debts again and Singer is back for a brief encore, according to Bloomberg News. His investment firm Elliott Management Corp. is one of 14 companies that will decide whether credit-default swaps were triggered by failure to meet a payment deadline, Bloomberg News notes. It's far from the courtroom clash that captivated audiences from Manhattan to Buenos Aires, Bloomberg News relates. The contracts are between private parties, so Argentina isn't on the hook, Bloomberg News notes. Still, the stakes are high: A potential payout of more than $1 billion to traders who hold the swaps. A CDS committee that includes Elliott will convene a meeting with a vote likely soon. If approved, as expected, an auction might occur in mid-June, Bloomberg News adds. Goldman Sachs Group Inc., JPMorgan Chase & Co., Pacific Investment Management Co. and Cyrus Capital Partners are also involved in the decision, Bloomberg News discloses. It's unclear who holds the majority of the swaps as that information is rarely public, Bloomberg News says. Some investors buy them to hedge their bond exposure, while others scoop them up as a bet against a particular country's debt, Bloomberg News relates. Elliott was also on Argentina's CDS panel in 2014. Province of Buenos Aires Governor Axel Kicillof, who was economy minister at the time, said back then that he suspected Elliott held the swaps, which he criticized as leading to "the most wretched speculative capitalism," Bloomberg News relates. The firm denied in a U.S. court in 2013 that it owned the derivative contracts. A spokeswoman at Elliott declined to comment. 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. As reported by the Troubled Company Reporter - Latin America on April 14, 2020, Fitch Ratings upgraded Argentina's Long-Term Foreign Currency Issuer Default Rating to 'CC' from 'RD' and Short-Term Foreign Currency IDR to 'C' from 'RD'. The TCR-LA reported on April 13, 2020, that S&P Global Ratings also lowered its long- and short-term foreign currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also affirmed the local currency sovereign credit ratings at 'SD/SD'. There is no outlook on 'SD' ratings. On April 9, the TCR-LA reported that Moody's Investors Service downgraded the Government of Argentina's foreign-currency and local-currency long-term issuer and senior unsecured ratings to Ca from Caa2. =========== B R A Z I L =========== COMPANHIA SIDERURGICA: Fitch Alters Outlook on 'B' IDR to Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Companhia Siderurgica Nacional's Long-Term Foreign and Local Currency Issuer Default Ratings at 'B' and National Scale ratings at 'BBB-(bra)'. Fitch has also affirmed the company's senior unsecured notes of CSN Islands XI Corp, CSN Islands XII Corp, and CSN Resources that are all guaranteed by CSN at 'B'/'RR4'. In addition, Fitch has revised the Rating Outlook to Stable from Positive. CSN's ratings reflect the company's solid iron ore business and strong Brazilian flat steel market position, as well as the cost competitiveness of these businesses. These strengths are balanced against high absolute and net debt levels, which can result in a projected variance of net leverage ratios between 2.5x and more than 6.0x depending on whether iron ore prices average USD90/ton or USD65/ton. The rating affirmations reflect the positive pricing environment for iron ore during 2020, which is projected to allow CSN to generate positive free cash flow despite deteriorating economic conditions in Brazil and throughout the world due to the impact of the coronavirus pandemic. The rating affirmations also reflect Fitch's expectation that CSN will successfully rollover the majority of short-term debt it has with Brazilian banks. The Outlook revision to Stable from Positive reflects a negative environment for transformational transactions that would materially lower gross debt. The Stable Rating Outlook also factors in Fitch's expectation that prices for iron ore will drop toward the end of 2020 and during the first half of 2021, which will eliminate the benefit the company's cash flow has received from elevated iron ore prices during 2019 and 2020. KEY RATING DRIVERS Positive Free Cash Flow: Widespread problems caused by the coronavirus will only marginally impair CSN's results, as iron ore prices remain elevated due to 2019 supply constraints caused by Vale's dam accident and cyclones in Australia, as well as weak Brazilian iron ore production during the first half of 2020 due to heavy rainfall. Fitch is projecting CSN will generate BRL5.9 billion of EBITDA and BRL1.3 billion of FCF in 2020 based on 36 million tons of iron ore sales, average iron ore prices of USD75/ton and BRL1.1 billion of capex. These figures compare with BRL6.5 billion of EBITDA, BRL2.3 billion of free cash flow, BRL2.2 billion of capex, 38 million tons of sales and an average benchmark price of USD93 per ton during 2019. Weak Brazilian Steel Demand: The Brazilian Steel Institute is predicting domestic steel demand will fall 20% in 2020. Fitch projects that CSN's Brazilian sales volumes will drop by 25%, as it is exposed to the flat steel industry, which has been hit hard by plummeting automobile production volumes and weak white goods sales. The company's steel subsidiaries in Germany and Portugal will also face weak demand due to the sharp economic contraction in Europe. The export market is a poor alternative for CSN and its subsidiaries, as steel producers throughout the world have shipped excess capacity into this market in the faces of sharp declines in their domestic markets. CSN operates two blast furnaces at Volta Redonda with 4.6 mm tons of annual production capacity. The smaller blast furnace (BF#2), which has 1.4 mm tons of capacity, will likely be closed to adapt to the market situation. High But Manageable Refinancing Risks: CSN has a high percentage of its debt falling due in the next four years. As of March 31, 2020, the company had BRL4.9 billion of cash and marketable securities and BRL3.5 billion of debt due in 2020 and BRL4.4 billion due in 2021. CSN has a cross border bond of approximately USD170 million maturing in July 2020; the balance of the debt due in 2020 and 2021 is with banks. Caixa Economica and Banco do Brasil are CSN's largest lenders; Bradesco and Santander are also important lenders. CSN announced on May 22 that Banco do Brazil has moved the maturity of BRL1.4 billion of debt due in 2020 and 2021 to 2022. Fitch expects the other banks to continue to rollover the company's debt. Bradesco and Banco do Brasil have also lent money to CSN's controlling shareholder. High Debt Burden: CSN's results are extremely sensitive to iron ore prices and total debt is high relative to cash flow generation during iron ore price downturns. Iron ore prices averaged USD93/ton in 2019 due to supply disruption and have remained elevated in 2020 due to low inventory levels. In 2018, prices averaged USD69 per ton. Per Fitch's estimates, CSN's gross leverage and net leverage would exceed 7x and 6x if iron ore prices averaged USD65/ton. CSN ended March 31, 2020 with BRL38.1 billion of total adjusted debt, including BRL2.5 billion of advances received from Glencore for a 33-million-ton iron ore supply contract. Challenging Market for Asset Sales: CSN has been attempting to lower gross debt through the sale of assets. The downturn in global economic conditions and valuations will likely forestall progress on these sales during 2020. Key assets that have been discussed over the past few years include a minority stake in the company's iron ore subsidiary CSN Mineracao, the company's German steel subsidiary Stahlwerk Thuringen GMBH (SWT), a port (Tecar) and CSN's minority stake in Brazilian flat-steel producer Usiminas. Corporate Governance Concerns: CSN's ratings factor in an ESG score of 5 the company has received for the governance factor related to board independence and effectiveness. In Fitch's view, decision making is highly concentrated in the hands of Benjamin Steinbruch, the CEO and Chairman of the Board. Mr Steinbruch represents the interests of the family that indirectly controls Vicunha Acos and Rio laco Participacoes, which, in turn, jointly own 53% of the company's total shares and voting capital. The concentration of decision making in the hands of a key person makes proposed assets sales, CSN's long-term capital structure and strategy less predictable than other issuers in Fitch's corporate rated universe in Brazil DERIVATION SUMMARY CSN's 'B'/Stable rating reflects its solid business position; this strength is balanced by high debt levels and material levels of short- to medium-term debt. The high concentration of near-term debt makes the company vulnerable to a downturn in its operating cash flow due to lower iron ore prices. The volatility of the Brazilian economy and its impact on the company's steel business is an additional credit consideration. CSN's more integrated business profile and diversified portfolio of assets compare well with Usinas Siderurgicas de Minas Gerais S.A.'s (Usiminas; BB-/Stable). Both issuers are highly exposed to the local steel industry in Brazil. CSN and Usiminas show weaker business positions than Brazilian steel producer Gerdau S.A (Gerdau; BBB-/Stable), which has a diversified footprint of operations with important operating cash flow generated from its assets abroad, mainly in U.S., and flexible business model (mini-mills) that allow it to better withstand economic and commodities cycles. Among the three business steel producers, Gerdau has consistently maintained the strongest balance sheet, most manageable debt amortization schedule, and has consistently made efforts to improve its capital structure through assets sales or equity issuances. Gross debt levels at CSN remain high and the company will need to rebalance its capital structure through asset sales in the medium term. CSN alsi has a more challenging debt amortization schedule than either Usiminas or Gerdau. Gerdau ended 2018 with a 2.0x net debt/EBITDA ratio. Approximately 10% of its debt falls due in 2020 and 7% matures both 2021 and in 2022. Usiminas refinanced almost all of its debt in 2019 and faces very low levels of debt amortization between 2020 and 2022. Its first large debt payment will be due in 2026 when its USD750 million bond matures. Usiminas' net leverage was 1.9x during 2019. CSN's 1st quartile position on the hot rolled coil steel cost curve compares similarly to global peers such as PAO Severstal (BBB/Stable), as the company benefits from its vertical integration and the weak BRL. CSN and Severstal both benefit from a significant share of high value-added products that make up their sales. CSN exhibits much weaker credit metrics when compared to Severstal and its significant refinancing risks reflect the differential between its rating and its global peer. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Benchmark iron ore prices average USD75/ton in 2020, USD60/ton in 2021, USD60/ton in 2022; -- Iron ore costs decline 15% in 2020 to reflect BRL weakness and lower shipping costs; -- Iron ore volumes drop by 7% in 2020 and then rebound by 5% in 2021; -- Brazil steel volumes fall 25% in 2020 and then increase by 10% in 2021 and 5% in 2022; -- Export steel volumes fall 30% in 2020 and the increase by 20% in 2021 and 5% in 2022; -- Steel costs decline in 2020 to reflect weakness in the Brazilian real, the revamp of blast furnace No. 3, and lower iron ore costs. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Additional asset sales in order to support gross debt reduction; -- Improved debt amortization schedule; -- Sustained adjusted total debt/EBITDA ratio below 5.0x and/or adjusted net debt/EBITDA ratio below 4.0x; -- FFO fixed-charge coverage of 2.5x or above, Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Weakening liquidity position; -- Inability or unwillingness to reduce gross debt levels with cash proceeds from asset sale; -- Sustained adjusted total debt-/-EBITDA ratio above 6.0x and/or adjusted net debt/EBITDA ratio above 5.0x; -- FFO fixed-charge coverage below 1.5x; -- Adverse regulatory changes in Brazil's mining industry. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE CSN ended March 31, 2020 with BRL38.1 billion of total adjusted debt, including BRL2.5 billion of advances received from Glencore for a 33-million-ton five-year iron ore supply contract. Capital markets debt represents 51% of the Fitch adjusted debt total, while banks account for 42% of debt and the Glencore advance represents the final 7% of debt. Including the Glencore debt, approximately 90% of the company's debt is denominated in U.S. dollars or euros. At the end of March, CSN had BRL4.9 billion of cash and marketable securities and BRL7.9 billion of debt due during 2020 and 2021. Of this debt, BRL887 million was related to a cross border bond maturing in July 2020, and the rest was with banks. In addition to these bank and capital markets obligations, CSN has to make payments of about USD150 per year for the next five years, according to terms of the cash advance it received from Glencore for its iron ore supply agreement. Caixa Economica and Banco do Brasil are CSN's largest lenders; Bradesco and Santander are also important lenders. On May 22, CSN announced that Banco do Brazil has moved the maturity of BRL1.4 billion of the 2020 and 2021 debt figures to 2022 and that there is a plan to move this debt toward 2024 in the future. Fitch expects the other banks to continue to rollover the company's debt. Bradesco and Banco do Brasil have also lent money to CSN's controlling shareholder, which makes them reliant to a degree upon CSN continued success and dividend distributions. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Companhia Siderurgica Nacional (CSN): Governance Structure: 5, Financial Transparency: 4 ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). GGV - 5; Key person risk and limited board independence through single powerful shareholder. GTR - 4; Below-average disclosure of cash and debt positions at material iron ore JV Companhia Siderurgica Nacional (CSN) - LT IDR B; Affirmed - LC LT IDR B; Affirmed - Natl LT BBB-(bra); Affirmed CSN Islands XII Corp. - Senior unsecured; LT B; Affirmed CSN Islands XI Corp. - Senior unsecured; LT B; Affirmed CSN Resources S.A. - Senior unsecured; LT B; Affirmed ========= C H I L E ========= LATAM AIRLINES: Driven to Bankruptcy by Coronavirus --------------------------------------------------- Marcelo Rochabrun, Fabian Cambero, Tatiana Bautzer at Reuters report that LATAM Airlines Group, the continent's largest carrier, filed for U.S. bankruptcy protection, becoming the world's largest carrier so far to seek an emergency reorganization due to the coronavirus pandemic. The filing highlights the financial weakness of Latin America's carriers, following a similar bankruptcy earlier this month by the region's No. 2 airline, Avianca Holdings, according to Reuters. But unlike Avianca, which experienced management turmoil and losses, Chile's LATAM posted profits for the last four consecutive years totaling more than $700 million, the report notes. LATAM had also approved a dividend payment this year, in contrast to other carriers that have halted payouts, the report relays. One of the world's largest airlines, LATAM said it would continue to fly through its bankruptcy restructuring, the report relays. LATAM shares closed down 36% after falling as much as 58% in Santiago, the report discloses. Latin American governments, many under severe budget constraints themselves, have been reluctant to bail out their key airlines, in contrast to the United States and Europe, the report says. Reuters notes that Chile's finance ministry said in as statement LATAM is a "strategic company for Chile" and that the government would "consider" how it could contribute to LATAM's restructuring, but it did not offer a bailout. In Brazil, LATAM has been negotiating a bailout of up to BRL2 billion ($367.45 million) that has yet to materialize, the report relays. LATAM's Brazil unit is not part of the bankruptcy, although the company may file for bankruptcy there as well if the negotiations for aid fall through, the report discloses. The airline's CEO for Brazil Jerome Cadier told Reuters that LATAM would rather not go through a separate bankruptcy filing in Brazil. "The history here shows that the vast majority of companies don't make it out of bankruptcy restructuring because the process is too complicated," the report quoted Mr. Cadier as saying. Delta Air Lines (DAL.N) last year paid $1.9 billion for a 20% stake in LATAM, becoming the No. 2 shareholder in the company, the report relays. "We remain firmly committed to our partnership with LATAM and believe that it will successfully emerge a stronger airline and Delta partner for the long term," Delta Chief Executive Officer Ed Bastian said in a statement obtained by the news agency. LATAM said its bankruptcy filing would seek to expedite the timeline for the necessary antitrust approvals for it and Delta to coordinate flight routes between Latin America and the United States, the report relays. The plans still need approval from the U.S. Department of Transportation, as well as regulators in Chile, Brazil, and a few other countries in South America, the report discloses. In the lead-up to the bankruptcy filing, LATAM laid off 1,800 employees out of more than 40,000 in total, the report notes. Troubled Merger LATAM is an instantly recognizable brand for South Americans, dominating international air travel in the region, as well as a leading domestic flight operator in Brazil, Colombia, Chile, Argentina, Peru and Ecuador, the report discloses. In addition to Brazil, subsidiaries in Argentina and Paraguay are also not part of the bankruptcy process, the report notes. LATAM said it raised up to $900 million to support operations through its bankruptcy reorganization from major shareholders, including the Cueto family, which controls the airline, and Qatar Airways, Reuters discloses. In addition, LATAM has $1.3 billion in cash on hand. LATAM was born in 2012 through a merger between Chile's LAN and Brazil's TAM, spawning a carrier with large aircraft order books and major exposure to Latin America's top economy as it went through its worst recession on record, the report notes. It has since dropped many plane orders but maintains 44 with Airbus and seven with Boeing Co, the report relays. LATAM said it would seek to cancel several of those orders, the report notes. LATAM did disclose that Delta canceled the planned purchase of four Airbus A350s from LATAM, and paid $62 million to break the deal, the report says. LATAM said that its debts totaled $18 billion. The airline was downgraded by S&P and Fitch after not paying interest and principal on $1 billion worth of debt tied to new aircraft purchases, the report adds. As reported in the Troubled Company Reporter-Latin America on May 28, 2020, Fitch Ratings has downgraded LATAM Airlines Group S.A.'s Long-Term Foreign Currency Issuer Default Rating to 'D' from 'CC' and its National scale Long-term rating to 'D(cl)' from 'CC(cl). LATAM Finance's unsecured notes were affirmed at 'C' and the recovery rating for the notes was revised to 'RR6' from 'RR5'. LATAM's national scale unsecured notes were affirmed at 'C(cl)'. The National Equity Rating has been affirmed at 'Segunda Clase Nivel 5 (cl)'. =================================== D O M I N I C A N R E P U B L I C =================================== AES ANDRES: Fitch Alters Outlook on 'BB-' FC IDR to Negative ------------------------------------------------------------ Fitch Ratings has affirmed AES Andres B.V.'s Long-Term Foreign-Currency Issuer Default Rating at 'BB-' and revised the Rating Outlook to Negative from Stable. Fitch has also affirmed Andres' USD270 million notes due 2026 at 'BB-'. The Negative Outlook reflects Fitch's revision of the Outlook on the Dominican Republic's sovereign rating due to the coronavirus pandemic. The pandemic has caused a sharp fall in economic activity and pressured the country's balance of payments given its reliance on tourism and remittances. Andres's ratings reflect the Dominican Republic's electricity sector's high dependency on transfers from the central government to service their financial obligations, a condition that links the credit quality of the distribution companies and generation companies to that of the sovereign. Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies. The ratings also consider the companies' solid asset portfolio, strong balance sheet, and well-structured purchase power agreements. The rating of the notes considers the combined operating assets of Andres and Dominican Power Partners (jointly referred to as AES Dominicana), which are joint obligors of Andres's USD270 million notes due 2026. These notes are attached to Empresa Generadora de Electricidad Itabo's USD100 million notes, also rated 'BB-'. In late March 2020, AES Andres discovered damage to its recently-repaired steam turbine. The outage is expected to last eight to 16 weeks, which was prolonged due to the country's quarantine. The company indicates that its insurance will cover the business interruption with a total decline in 2020 EBITDA of approximately USD8 million-USD13 million, reflecting the applicable deductible. The company expects the manufacturer's warranty to cover equipment damage. KEY RATING DRIVERS Dependence on Government Transfers: High energy distribution losses of 27% in 2019, low level of collections and important subsidies for end-users have created a strong dependence on government transfers. This dependence has been exacerbated by the country's exposure to fluctuations in fossil-fuel prices and strong energy demand growth from distribution companies of 5.9% in 2019. The regular delays in government transfers pressure working capital needs of generators and add volatility to their cash flows. This situation increases the risk of the sector, especially at a time of rising fiscal vulnerabilities affecting the Central Government's finances. Strong Credit Metrics: The combined credit metrics for Andres and DPP are strong for the rating category. Expected 2019 EBITDA of USD264 million based on each company's standalone results reflects the commencement of operations from DPP's completed combined cycle unit. Fitch expects 2020 debt to EBITDA to rise slightly to 2.4x from 2.2x in 3Q19 due a fall in demand and the company's marginal exposure to spot electricity sales and well as a USD10 million insurance deductible due to the outage at AES Andres. Leverage is expected to fall to 2.0x by 2022 as demand recovers and new LNG sales offset investment in the 50km pipeline. While the 750MW Punta Catalina project will likely lower prices in the near term for the system as a whole, Andres and DPP are substantially contracted through 2022, and their lower leverage provides a cushion against eventual PPA revaluations. High-Quality Asset Base: Andres has the Dominican Republic's most efficient power plant, and ranks among the lowest-cost electricity generators in the country. Andres's combined-cycle plant burns natural gas and is expected to be fully dispatched as a base-load unit as long as the liquefied natural gas (LNG) price is not more than 15% higher than the price of imported fuel oil No. 6. In July 2017, the aggregate capacity of AES Dominicana increased by approximately 122MW as result of the development of a combined cycle facility in DPP's power plant. Fitch expects higher medium-term margins, although generation may contract initially when the Punta Catalina coal plant enters the dispatch curve. Cash Flow Volatility to Moderate: Cash flow to Andres and DPP has historically been affected by delays in payment from the state-owned distribution companies particularly during periods of high fuel oil prices, which have pressured the system financially. According to the Dominican Electricity Industry Association, the balance owed to AES by state-owned distribution companies stood at USD216.4 million in April 2020, relatively unchanged from the level of USD219.7 million in December 2019. Fitch expects the systemic payment delays to moderate with the entrance of the 752MW Punta Catalina plant, which will significantly lower spot prices and relieve financial pressure on the system. Expanding Natural Gas Business: Andres operates the country's sole LNG port, offering regasification, storage, and transportation infrastructure. In the medium term, the company is looking to expand its transportation network and processing capacity for its LNG operations as illustrated by the recent 10-year gas supply agreement with Barrick. A 50-kilometer gas pipeline is also being constructed from Andres's terminal to San Pedro de Macoris to facilitate the conversion from heavy fuel oil to natural gas in that region. For the first nine months of 2019, natural gas sales and transportation comprised 24 percent of the combined companies' revenues. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - A positive rating action for Andres could follow if the Dominican Republic's sovereign ratings are upgraded or if the electricity sector achieves financial sustainability through proper policy implementation. Factors that could, individually or collectively, lead to negative rating action/downgrade: - A negative rating action for Andres would follow if the Dominican Republic's sovereign ratings are downgraded, if there is sustained deterioration in the reliability of government transfers, or financial performance deteriorates to the point of increasing the combined Andres/DPP ratio of debt-to-EBITDA to 4.5x for a sustained period. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). DOMINICAN REPUBLIC: Central Bank Supports Forex Availability ------------------------------------------------------------ Dominican Today reported that the Central Bank of the Dominican Republic (BCRD) reiterated last week that it will "continue to support the availability of foreign exchange in the foreign exchange market, as long as the foreign currency-generating sectors resume their dynamism." It noted that the high demand for dollars is due to "[t]he uncertainty associated with the spread of COVID-19 globally." "The institution calls for confidence in the fundamentals of the Dominican economy and in the credibility of the Central Bank, which remains vigilant in the face of the development of events that could impact the achievement of its inflation target and the good development of the exchange market," it said in a statement. The BCRD recalled that the current supply of foreign exchange has been "impacted by the suspension of tourism, less dynamism in the free zones, national exports and Foreign Direct Investment, as well as a decrease in remittances, as has happened in emerging countries worldwide." 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 in April 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 negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). DOMINICAN REPUBLIC: Pandemic Stuns Mango Exports ------------------------------------------------ Dominican Today reports that just when the quarantine was imposed throughout the country last March, due to the pandemic, the mango harvest in Bani (south) was beginning, which has caused millions in losses and the reduction of a workforce that has left hundreds of families without a daily sustenance this season. The beginning of the harvest, as every year, for the months of April and March, has coincided with the highest curve of the Covid-19, which has caused a series of inconveniences that, according to mango producers, according to Dominican Today. They cite, among the main obstacles, the total suspension of flights to the European continent and the United States, causing a considerable drop in the demand for this tropical fruit in the months of March and April and what corresponds to May, the report notes. Neither have they been able to start shipments to Europe, as established, which implies another closed market, the report adds. 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 in April 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 negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). DOMINICAN REPUBLIC: Remittance Firms Want to Pay 'Only in RD$' -------------------------------------------------------------- Dominican Today reports that some people who receive income from abroad complain that remittance companies want to force them to receive Dominican pesos in the country, instead of the dollars deposited by the relatives who send them money. Listin Diario reports that several people complained that they are aware that this is happening in the market despite the fact that the relatives who deposit the remittances request that the delivery to the destination be in dollars and not pesos, according to Dominican Today. One of them said she has experienced the practice twice in a renowned remittance company in the Dominican Republic. She said that during the coronavirus pandemic emergency period, she has received two shipments from the United States, the report notes. The first time, after a long line, when it was her turn, the cashier told her that he could only pay in Dominican pesos, the report relays. "Sorry, we don't have dollars, you will have to come back later or go to another branch," she added. 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 in April 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 negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). ============= E C U A D O R ============= ECUADOR: Places National Railway Into Liquidation ------------------------------------------------- International Railway Journal reports that the Ecuadorian government has announced plans to put several state-owned companies, including Ecuador Railways, into liquidation. The decision is intended to substantially reduce expenditures at a time when government income, especially from oil revenues, has been severely reduced. Ecuador Railways Public Company (Feep) was established in 2010 to take over the assets and operation of the previous state-owned rail company EFE, which had barely operated any services following substantial El Niño weather damage to the network in 1996-97, according to International Railway Journal. The 966km 1067mm-gauge rail network was substantially modernized between 2010 and 2015 with 507km completely renewed and rebuilt at a cost of around US$385 million, the report relays. However, lack of maintenance and damage caused by earthquakes and volcanic eruptions meant only 380km was operational in 2019 with 127km having been effectively shut in 2018, the report notes. Feep's main business activity was the operation of both short-distance and longer multi-day tourist trains, including the 447km flagship Tren Crucero Quito - Duran (Guayaquil) service which crosses the Andes before descending to the Pacific. The railway currently employs 327 people, the report relates. In an interview with local media, transport minister, Mr Gabriel Martinez, said the government hoped to revive the tourist train market and that it was in discussion with Peru based rail operator Peru Rail, the report discloses. The company's website currently carries an invitation in Spanish, English and German for potential partner companies to develop options for continued operation, the report relays. In the event a new operator or partner cannot be found within six months of the liquidation the assets and the liabilities, including former EFE and FEEP employees' pensions, will pass to the Ministry of Tourism, the report notes. In 2008, the national railway network was declared a national monument with legal protection, the report relates. The law establishing Feep in 2010 specifically requires the infrastructure and rolling stock to be legally protected and not sold in the event the company is liquidated, the report notes. About Ecuador The Republic of Ecuador is a country in northwestern South America. The sovereign state of Ecuador is a middle-income representative democratic republic and a developing country that is highly dependent on commodities, namely petroleum and agricultural products. As of May 12, 2020, Ecuador has defaulted on sovereign debt in 2020. On April 3, 2020, Moody's Investors Service downgraded the long-term foreign-currency issuer and senior unsecured rating of the Government of Ecuador to Caa3 from Caa1 and changed the outlook to negative from stable. Moody's decision to downgrade Ecuador's rating reflects the increased and now very high probability of a restructuring, distressed exchange or default on Ecuador's market debt as a result of the economic and financial shock the country is experiencing due to the coronavirus outbreak that has led to extremely tight financing conditions for Ecuador. On April 13, 2020, S&P Global Ratings lowered its long- and short-term sovereign credit ratings on Ecuador to 'SD/SD' from 'CCC-/C'. S&P removed the ratings from CreditWatch. S&P said Ecuador's already large budgetary financing needs have been exacerbated by the plunge in global oil prices and the negative global economic impact of the COVID-19 pandemic. The country is one of the worst affected by the virus outbreak in the region. Also, in mid April 2020, Fitch lowered Ecuador's longterm foreign currency issuer default rating to C from CC. The 'C' rating reflects Fitch's view that a sovereign default of some kind is imminent following the "consent solicitation" made by the Ecuadorian government to defer external bond payments while it pursues a comprehensive restructuring. A deferment in payments, if agreed to by bondholders, would constitute a distressed debt exchange in Fitch's view. ============= J A M A I C A ============= JAMAICA: Companies in Limbo Over Shortcomings of Companies Act -------------------------------------------------------------- RJR News reports that the COVID-19 pandemic has exposed shortcomings in Jamaica's Companies Act. The law prevents companies from hosting virtual or electronic annual general meetings, leaving many firms in limbo, according to RJR News. Gail Moss-Solomon, General Counsel and Chief Corporate Secretary at GraceKennedy Group, addressed the issue at an online meeting hosted by the company, the report notes. She noted that while GraceKennedy has not been affected by the clause since its annual general meetings are held in person and its quorum is just three persons, other companies "have quorums of 15, 20, even 30 for their AGM's and so they unfortunately are not able to proceed or else they would be in breach of the DRM orders," the report relates. For companies which cannot host online meetings at this time, the Jamaica Stock Exchange has made a proposal to institute a representative action in the Supreme Court to temporarily allow firms to host them during the pandemic, the report discloses. Companies wishing to participate in that agreement will have to fork out US$1,533 to cover legal expenses, the report notes. The JSE said while a positive outcome in any court matter cannot be guaranteed, the attorney dealing with the matter believes there is a strong chance of success, the report adds. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings revised on April 16, 2020 its outlook on Jamaica to negative from stable. At the same time, S&P affirmed its 'B+' long-term foreign and local currency sovereign credit ratings, its 'B' short-term foreign and local currency sovereign credit ratings on the country, and its 'BB-' transfer and convertibility assessment. The TCR-LA also reported that Fitch Ratings, in April 2020, revised Jamaica's Outlook to Stable from Positive. The Long-Term Foreign-Currency Issuer Default Rating is affirmed at B+. The Outlook change reflects the shock to Jamaica from the coronavirus pandemic, which is expected to lead to a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports. ===================== P U E R T O R I C O ===================== ASCENA RETAIL: Provides Additional Business Update on COVID-19 -------------------------------------------------------------- Ascena Retail Group Inc. provided a brief update related to its most recently completed quarter that ended on May 2, 2020. The estimated 2020 third quarter information presented in this release is preliminary, and is subject to the completion of the Company's standard procedures for the preparation and completion of its quarterly financial statements. Given that these reviews are ongoing, the Company may make further adjustments as a result of developments occurring between now and the time the financial results are finalized and publicly released. In addition, estimated sales data has been provided to help investors understand and assess the near-term impacts of the coronavirus ("COVID-19") pandemic, but is subject to variability and may not be indicative of results or trends for any future reporting period. Carrie Teffner, interim executive chair of ascena commented, "COVID-19 has significantly disrupted our business. Despite aggressive actions to preserve liquidity, the pandemic has significantly reduced our earnings and cash flow, resulting in increased levels of debt and deferred liabilities. With retail stores making up the majority of our revenue and cash flow, the uncertainty created by COVID-19 requires us to evaluate all options available to protect the business and its stakeholders." Gary Muto, chief executive officer of ascena commented, "We took immediate actions to preserve liquidity and reduce costs in response to the COVID-19 pandemic while continuing to heighten engagement with our customers. We have successfully leveraged our digital capabilities to respond to the evolving needs of our customers across our portfolio of well-known and beloved brands. As of May 27th, we have re-opened approximately 450 of our 2,800 stores and will operate in adherence with local regulations as well as health and safety guidelines from the CDC. We look forward to welcoming our customers back to our stores." Mr. Muto continued, "The safety of our store associates and customers remain our leading priority as we navigate the challenges presented by COVID-19. We continue to put our associates, customers and community at the center of everything we do and I am extremely thankful to our associates for their commitment and hard work during this extremely difficult period." Operational update: The Company closed all of its stores on March 18, 2020. Prior to the closing, store revenue in fiscal 2020 represented approximately 60% of total revenues. The Company was able to continue its e-commerce business, which experienced a 9% increase in demand during April 2020, compared to April 2019. Total revenues in the third quarter of fiscal 2020 were down 45% compared to the third quarter of the prior year. In early May, the Company began to re-open a select number of stores in states that have lifted business restrictions on non-essential businesses. The Company's approach to meeting customer demand and re-opening its stores has been to use its stores to fulfill e-commerce orders from its existing store inventory. Additionally, the Company has also begun to re-introduce its buy online and pick-up in stores option via curbside pickup. Lastly, some stores have begun to fully re-open to customers following local health and safety guidelines and regulations, which include the following: * Limiting the number of customers in the stores; * Implementing health safety checks for associates before every shift; * Providing hand sanitizer and masks to customers; * Creating new flexible distance between clothing racks; * Adjusting fitting rooms to accommodate social distancing practices; * Installing plexiglass health guard partitions at checkout areas; and * Following enhanced cleaning protocols. In markets where shelter-in-place orders have been lifted, and where the Company has fully opened stores, the Company is experiencing significantly reduced customer traffic relative to the same period last year. Inventory at the end of the quarter was down approximately 20% compared the same period in the prior year. This reflects a significant increase in inventory reserves, reflecting the uncertainty of consumer sentiment once stores fully re-open. Gross inventory, before reserves, was up 5% compared to the same period in the prior year. Liquidity update: The Company has taken a number of steps since the temporary closure of its stores to maintain maximum financial flexibility. Those steps include the following: * Borrowed $230 million under its amended and restated revolving credit agreement, as previously announced in March; * Cancelled merchandise receipts where possible in order to better align inventory receipts with expected market demand; * Extended landlord and vendor payment terms, including withholding payments in certain instances; * Furloughed over 90% of our associates; * Significantly reduced base salaries for associates earning above a certain level; * Amended and restated the Company's Executive Severance Plan to better align with prevailing market practices; * Reduced advertising expenses; and * Reduced capital expenditures to those that are considered business critical. As a result of these steps, the Company ended the third quarter with cash and cash equivalents of approximately $439 million. The Company ended the third quarter with outstanding term-loan debt of $1,292 million, with interest payments due in the fourth quarter of fiscal 2020 of $20.9 million and its next quarterly term-loan payment of $22.5 million due in November 2020. The Company also ended the third quarter with $230 million of borrowings outstanding under its amended and restated revolving credit agreement, which, as noted above, was utilized to maintain maximum financial flexibility. Borrowings under the Company's amended and restated revolving credit agreement have no required repayments until the maturity date, which is currently expected to be in May 2022. Due to the Company's increased level of debt and deferred liabilities resulting from the COVID-19 pandemic, despite the aggressive steps outlined above, the Company will continue to evaluate all available options to preserve its ongoing operations. Other update: The Company also announced that it will file its Quarterly Report on Form 10-Q for the quarter ended May 2, 2020 no later than July 27, 2020 pursuant to the 45-day extension permitted by the Securities and Exchange Commission's Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020. 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 Feb. 1, 2020, the Company had $3.07 billion in total assets, $2.99 billion in total liabilities, and $76.6 million in total equity. * * * As reported by the TCR on March 20, 2020, S&P Global Ratings raised its issuer rating on Ascena Retail Group Inc. to 'CCC-' from 'SD' and maintained the 'D' rating on the term loan due August 2022. "The rating action reflects our view of the likelihood of a conventional default or a broad-based restructuring of Ascena's capital structure in the next six months. Our opinion considers the company's unsustainable capital structure, its still significant debt burden following the repurchases, and our expectation for weak performance amid a highly challenging operating environment. The rating also reflects our view that the recent coronavirus outbreak in the U.S. will further pressure store traffic and limit conventional refinancing prospects," S&P said. As reported by the TCR on April 16, 2020, Moody's Investors Service downgraded Ascena Retail Group, Inc.'s corporate family rating to Caa3 from Caa2. Ascena's Caa3 CFR is constrained by Moody's view that default risk is elevated as a result of the company's high leverage, 2022 debt maturities, and expectations for declining earnings over the next 12-18 months. IGLESIA TABERNACULO: Seeks to Hire Landrau Rivera as Legal Counsel ------------------------------------------------------------------ Iglesia Tabernaculo De Adoracion Y Alabanza, Inc. seeks authority from the United States Bankruptcy Court for the District of Puerto Rico to hire the law offices of Landrau Rivera & Associates, and its attorney Noemi-Landrau Rivera, Esq., as its legal counsel. The Debtor requires the counsel to: a) advise DIP with respect to its duties, powers and responsibilities in this case under the laws of the United States and Puerto Rico in which the debtor in possession conducts its business, or is involved in litigation; b) advise DIP in connection with a determination whether a reorganization is feasible and, if not, aiding debtor in the orderly liquidation of its assets; c) assist DIP with respect to negotiations with creditors for the purpose of proposing a viable plan of reorganization; d) prepare on behalf of the DIP the necessary complaints, answers, orders, reports, memoranda of law and/or any other legal papers or documents; e) appear before the Bankruptcy Court, or any court in which DIP asserts a claim interest or defense directly or indirectly related to this bankruptcy case; f) perform such other legal services for DIP as may be required in these proceedings or in connection with the operation of/and involvement with debtor's business, including but not limited to notarial services; g) employ other professional services as necessary to complete debtor's financial reorganization with Chapter 11 of the Bankruptcy Code. The firm's hourly rates are: Noemi Landrau Rivera, Esq. $200 Josue A. Landrau Rivera, Esq. $175 Legal and Financial Assistants $75 The firm received a retainer in the amount of $10,000. Landrau Rivera & Associates is disinterested person within the definition provided by 11 USC Sec. 101(14), according to court filings. The firm can be reached through: Noemi Landrau Rivera, Esq. Landrau Rivera & Associates Calle Fraser #1423 Urb. Reparto Landraw 00927 San Juan, PR Phone: +1 787-774-0224 About Iglesia Tabernaculo De Adoracion Y Alabanza, Inc. Iglesia Tabernaculo De Adoracion Y Alabanza, Inc. is a nonprofit religious organization that operates an evangilical church. The Company owns in fee simple a real property, where the church is located, at PR Road 132, Km. 22.6, Canas Ward, Ponce, PR, having an appraised value of $915,000. Iglesia Tabernaculo De Adoracion Y Alabanza, Inc., filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 20-01752) on May 5, 2020. In the petition signed by Jesus F. Perez Gutierrez, president, the Debtor estimated $938,025 in assets and $1,274,467 in liabilities. Noemi Landrau Rivera, Esq. at LANDRAU RIVERA & ASSOCIATES, represents the Debtor as counsel. ********* 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 * * *