/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200902.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 Wednesday, September 2, 2020, Vol. 21, No. 176 Headlines B E R M U D A SEADRILL LTD: Proposes to Turn Over Stakes in Oil Service Firms WEATHERFORD INT'L: Moody's Rates New $500MM Secured Notes Ba3 B R A Z I L BANCO ABC: Fitch Affirms 'BB+' LT LC IDR, Outlook Negative BANCO BOCOM: Fitch Affirms 'BB' LT FC IDR, Outlook Negative BRAZIL: 7% of Bars and Restaurants Closed Due to Pandemic RIO DE JANIERO: Fitch Affirms 'BB-' LT IDR, Outlook Negative SANTA CATARINA: Fitch Affirms 'BB-' LT IDR, Outlook Negative D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: 1.5MM Locals Leave Poverty From 2012 to 2019 DOMINICAN REPUBLIC: Launches US$28.9BB Tourism Recovery Push DOMINICAN REPUBLIC: Scrambles to Save School Year E C U A D O R ECUADOR: Can Rework $17.4BB of Dollar Bonds with IMF Deal P E R U RUTAS DE LIMA: S&P Ups Issue-level Rating to CCC+, Off CreditWatch P U E R T O R I C O ASCENA RETAIL: Seeks to Hire Prime Clerk as Administrative Advisor ASCENA RETAIL: Taps Cooley LLP as Co-Counsel - - - - - ============= B E R M U D A ============= SEADRILL LTD: Proposes to Turn Over Stakes in Oil Service Firms --------------------------------------------------------------- Nerijus Adomaitis at Reuters reports that offshore drilling rig contractor Seadrill said on Aug. 31 it has proposed to creditors to turn over its stakes in oil services firms Archer and Seadrill Seabras to redeem its outstanding secured notes. The company controlled by Norwegian-born billionaire John Fredriksen has been in talks with creditors since the end of last year over new debt restructuring, Reuters relates. According to Reuters, Seadrill said it was approached by a group of noteholders in May about a potential deal, and it responded on Aug. 15 with the offer to transfer its stakes in Seadrill Seabras, a pipe-laying vessel contractor, and Archer, an oilfield services firm. Seadrill held a 50% stake in Seadrill Seabras and a 15.7% stake in Archer as of the end of February, according to its annual report, Reuters discloses. As part of its deal with creditors under U.S. Chapter 11 bankruptcy proceedings in 2018, Seadrill issued US$880 million in new secured notes, Reuters states. It had US$476 million outstanding in secured notes at the end of last year, Reuters relays, citing its annual financial report. Seadrill said the deal with noteholders could be implemented either via a new Chapter 11 process or under the laws of Bermuda, where the company is registered, Reuters notes. Seadrill warned on Aug. 25 that ongoing efforts to restructure its debt could leave current shareholders with minimal or no ownership, Reuters recounts. About Seadrill Ltd. Seadrill Limited is a deepwater drilling contractor providing drilling services to the oil and gas industry. It is incorporated in Bermuda and managed from London. Seadrill and its affiliates own or lease 51 drilling rigs, which represents more than 6% of the world fleet. On Sept. 12, 2017, Seadrill Limited and 85 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 17-60079) after reaching terms of a reorganization plan that would restructure $8 billion of funded debt. Together with the chapter 11 proceedings, Seadrill, North Atlantic Drilling Limited ("NADL") and Sevan Drilling Limited ("Sevan") commenced liquidation proceedings in Bermuda to appoint joint provisional liquidators and facilitate recognition and implementation of the transactions contemplated by the RSA and Investment Agreement. On July 2, 2018, Seadrill emerged from U.S. Chapter 11 bankruptcy protection. Seadrill also commenced dissolution proceedings in Bermuda in accordance with the confirmed Chapter 11 Plan. WEATHERFORD INT'L: Moody's Rates New $500MM Secured Notes Ba3 ------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Weatherford International Ltd.'s $500 million 8.75% senior secured notes due 2024. Weatherford's other ratings and negative outlook were unchanged. Net proceeds from the notes offering, which closed on August 28, 2020, were used to repay existing obligations under the company's ABL facility, cash collateralize any outstanding letters of credit (LCs) under the ABL, and add cash to the balance sheet. Concurrent with this note offering, Weatherford terminated its existing $450 million ABL facility. Moody's will withdraw Weatherford's ABL ratings following termination of the ABL facility. The company also upsized its separate $195 million secured LC facility to $215 million in conjunction with these transactions. "While the secured note issue will increase debt and interest burden, by replacing the ABL facility, which was subject to a borrowing base calculation and a springing fixed charge coverage covenant, Weatherford will have more cash and a more secured source of liquidity to navigate a challenging industry environment," said Sajjad Alam, Moody's Senior Analyst. Assignments: Issuer: Weatherford International Ltd. (Bermuda) Senior Secured Notes, Assigned Ba3 (LGD2) RATINGS RATIONALE Along with the upsized secured LC facility, the new senior secured notes will have a first-lien claim to substantially all of Weatherford's assets. However, through an intercreditor agreement, the LC facility has a first out over the secured notes with respect to existing collateral of the LC facility (but not certain future collateral). Moody's rated the new secured notes Ba3, the same as the $215 million LC facility, based on the view that recoveries would be similar for these secured instruments in a default scenario. Weatherford's $2.1 billion 11% senior unsecured notes are rated B3, one notch below the B2 Corporate Family Rating (CFR), because of the significant amount of priority-claim secured debt in Weatherford's capital structure. The new secured notes, the secured LC facility and the unsecured notes, all have the same guarantors. The negative outlook reflects Weatherford's increasing financial leverage and challenging cash flow prospects amid low oil prices and a challenged industry landscape. Weatherford's B2 CFR reflects its increasing financial leverage, weak interest coverage, execution risk surrounding its business transformation and rationalization efforts, and Moody's expectation of negative free cash flow generation through mid-2021. All oilfield services companies will face extreme competition and depressed contract rates through 2021, particularly in North America. The CFR is supported by Weatherford's large scale, diversified, and leading market position in several product categories; broad geographic and customer diversification with a substantial portion of revenue coming from less volatile international markets; and numerous patented products and technologies that are well-known and widely used in the oilfield services (OFS) industry giving the company some competitive advantage. Weatherford's SGL-2 rating reflects good liquidity through 2021. Following the secured notes offering, the company's cash balance has increased while the ABL agreement has been terminated. The company will have over $1 billion of pro forma unrestricted cash following the notes issue. Moody's expects the company to generate negative free cash flow through mid-2021 and rely on its cash balance to cover any funding gap. All of Weatherford's rated debt will mature in 2024, with the LC facility maturing in May, the new secured notes in September, and the unsecured notes in December of that year. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The CFR could be downgraded if leverage cannot be sustained below 6x, the company generates recurring negative free cash flow, or the unrestricted cash balance dwindles below $200 million. The CFR could be upgraded if Weatherford continues to make progress on its restructuring initiatives, reduces financial leverage below 4x, and sustains interest coverage above 2x in an improving industry environment. Weatherford International Ltd. (Bermuda) is a wholly-owned subsidiary of Weatherford International plc, which is incorporated in Ireland, and is a diversified international company that provides a wide range of services and equipment to the global oil and gas industry. The principal methodology used in these ratings was Global Oilfield Services Industry Rating Methodology published in May 2017. =========== B R A Z I L =========== BANCO ABC: Fitch Affirms 'BB+' LT LC IDR, Outlook Negative ---------------------------------------------------------- Fitch Ratings has affirmed Banco ABC Brasil's Long-Term Local-Currency Issuer Default Rating at 'BB+' and National Long-Term Rating at 'AAA (bra)'. The Rating Outlook on the LC IDR is Negative, and the Outlook on the National Long-Term rating is Stable. KEY RATING DRIVERS IDRs ABCBr's IDRs and National Ratings are driven by Fitch's assessment of the expected institutional support that ABCBr would likely receive from its parent, Arab Banking Corporation B.S.C. (ABC; Long-Term IDR BBB-/Negative) if needed. Fitch believes the economic impact of the coronavirus and related uncertainties could impact the parent's' ability and propensity to support its foreign subsidiaries, which Fitchwill continue to monitor. The Negative Outlook on the IDRs is in line with that of the bank's parent and also mirrors the Outlook on the sovereign ratings. ABCBr's LT Foreign Currency IDR is constrained by Brazil's Country Ceiling of 'BB', while its LT Local Currency IDR is two notches above Brazil's long-term rating (LT Foreign Currency and Local Currency IDRs BB-/Negative. This is the usual maximum uplift Fitch applies to Brazilian financial institutions owned by strong foreign shareholders. The bank's Support Rating of '3' reflects the expected support from ABC, which is based in Bahrain. Fitch believes the entity is a strategically important subsidiary for its ultimate parent, given its core role as a relevant contributor to the parent's revenues (around 50%), which also underpins the low potential for disposal. The latter is partially offset by its material size in respect to the parent, which limits ABC's ability to provide support if needed. These factors have a high influence on ABCBr's support ratings. The financial profile of the bank does not have a direct impact on the IDRs but is relevant in Fitch assessment of the parent's propensity of support as well as for the stand-alone creditworthiness evaluation as reflected in the VR. VR ABCBr's VR of 'bb- is highly influenced by the bank's company profile, being the 20th largest bank in the country focused in providing loans to medium and large corporates. The bank entered the crisis with a lower risk appetite and sound risk management. Profitability has been modest over the past few years, with ROAE and ROAA at 13.6% and 1.5% respectively during 2019, driven by more diverse sources of revenue, which served to offset higher provisions and operating expenses as the bank continues to invest in technology and personnel to support its growth strategy. For the first half of 2020 profitability was lower, Operating Profit/Risk-weighted assets was negative at 2.9%, due to the impact of the BRL devaluation, conservative provisioning, lower revenues and increased costs related to the pandemic and the weak operating environment. However, as the bank had hedges in place to mitigate the effects of the devaluation the bank was still able to report a net profit, ROAE and ROAA at 7.1% and 0.6% respectively. The bank's credit portfolio tenors continue to be conservatively matched to the tenors of its funding, providing comfortable levels of liquidity. ABCBr's ratings also reflect the well-positioned franchise as a wholesale-funded bank. The bank maintains a very strong liquidity position which enables lower funding costs. Funding evaluation is also benefited by the credit facility provided the parent, which is available for contingent purposes and contributes to its evaluation of the ordinary support. Until mid-2019, the bank had been operating under a well-defined strategy of providing credit and other banking services mainly to the large corporate segment (annual revenues over BRL2 billion) and also corporates (annual revenues between BRL250 million and BRL2 billion). However, given a reduction in demand from the large corporate segment and the related lower margins, and the strategy of lowering credit concentration, the bank increased its focus on the middle segment where as of June 30, 2020 the bank experienced a portfolio segment increased of 42% yoy. As of Dec. 31, 2019, ABCBr reported a relatively low level of NPLs over 90 days (E-H) to total credit exposure of 2.6% (down from 2.9%), while its impaired loan (D-H) to total loans ratio remained stable at 4.2% down from 5.3% a year earlier. By the end of the June 30, 2020 the level of impaired loans rose to nearly 5.4% due in part to conservative rating. However, the level of NPLs over 90 days fell to 1% and the coverage ratio for those exposures rose to 294%. Local authorities have taken measures to ease the potential impact of the recent crisis due to the global coronavirus outbreak on market liquidity. ABCBr advised that the balance of deferred credit transactions at June 30, 2020 was only equivalent to 4.7% of the loan portfolio. ABCBr capital ratios have been reduced over the past few years due to the modest profit generation and the credit portfolio growth. At June 30, 2019, the bank's CET1 reduced to 11.8% (12.5% at year-end 2019). In spite of the recent reduction of the core capital metric, Fitch evaluation on capital strength incorporates the ordinary support expected in the form of capital injections in order to sustain growth and strategy. The bank exceeds the Central Bank regulatory minimum total capital requirement. ABCBr had a total Regulatory Capital ratio of 15.7% and is in full compliance to Basel III rules. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade of the bank's ratings: VR -- A sovereign downgrade or negative rating action as the bank is closely linked with Brazil's operating environment; -- A significant deterioration of ABCBr's asset quality that results in credit costs that severely limit its profitability (operating profit-to-RWAs ratio consistently below 1.5%) and ability to grow its capital; -- A sustained decline in ABCBr's CET I ratio below 11%; IDRs AND SR -- A change in Fitch's assessment of ABC's willingness or ability (due to the material size of the subsidiary) to support ABCBr; -- A multiple-notch downgrade of ABC's ratings. National Ratings: -- Changes in ABCBr's IDRs or in the bank's credit profile relative to its Brazilian peers could result in a reduction in its National Ratings. Factors that could, individually or collectively, lead to positive rating action/upgrade of the ratings: VR -- ABCBr's VR has limited upside potential, as it is constrained by the operating environment. IDR AND SR -- ABCBr IDRs and SR remain constrained by the sovereign ratings. -- An upgrade or positive rating action on the sovereign (not likely given the current operating environment). National ratings -- Given that ABCBr's National Rating is currently at the top of the rating scale, an upgrade of this rating is not possible. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. 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). BANCO BOCOM: Fitch Affirms 'BB' LT FC IDR, Outlook Negative ----------------------------------------------------------- Fitch Ratings has affirmed Banco BOCOM BBM S.A.'s Long-Term (LT) Foreign Currency (FC) Issuer Default Rating at 'BB', LT Local Currency (LC) IDR at 'BB+' and LT National Rating at 'AAA (bra)'. The Rating Outlook remains Negative on the LT IDRs and Stable on National Ratings. Fitch also affirmed BOCOM BBM's Support Rating (SR) at '3' and Viability Rating (VR) at 'bb-'. KEY RATING DRIVERS BOCOM BBM's IDRs and National Ratings are driven by Fitch appreciation of expected support from the Bank of Communications Co, Ltd. (BOCOM; LT FC IDR A/Stable and VR bb-), which owns 80% of BOCOM BBM. BOCOM BBM's LT FC IDR is constrained by Brazil's Country Ceiling of 'BB', while its LT LC IDR is two notches above Brazil's long-term rating (LT FC and LC IDRs BB-/Negative), which is the usual maximum uplift Fitch applies to Brazilian financial institutions owned by strong foreign shareholders. The Negative Outlook on BOCOM BBM's IDRs mirror the Outlook on the sovereign ratings. Under Fitch's assessment, Chinese state support to BOCOM would flow through to BOCOM BBM, should the need arise. This is based, with higher influence, on the fact that any required support would be immaterial relative to the ability of BOCOM to provide it. Fitch considers BOCOM BBM a strategically important subsidiary of BOCOM, given its role in fulfilling the strategies and long-term growth plans of the group in Brazil and the potential synergies between the two entities, which is considered a high importance factor for the rating. Fitch believes Brazilian subsidiaries of foreign banks could be affected by a reduced propensity and ability of support if there are negative impacts on the business and financial profiles of their ultimate parents due to the Coronavirus contingency, which Fitch will closely monitor. Fitch also incorporates BOCOM's the high level of management and operational integration, BOCOM's large majority stake in BOCOM BBM, the expected rise in the proportion of parental non-equity funding, and the combined parent and local branding. BOCOM BBM's VR reflects its moderate franchise in the highly concentrated Brazilian banking sector and its stable but specialized business model that focuses on corporate lending. It also considers the bank's risk appetite that is increasing under its revised strategy following the change in ownership. BOCOM BBM's capitalization is solid and funding and liquidity is comfortable and benefits from ordinary support from BOCOM. The bank's Viability Rating also captures constraints imposed by the operating environment. In line with its strategy adopted since the ownership change, BOCOM BBM has grown faster than peers in the past two years. Total credit risk exposure (loans, guarantees and private securities) grew 16.0%, 37.5% and 20.2%, in 1H20, 2019 and 2018, respectively. In 2H20 and 2021, given the most challenging operating environment, growth should be slower. BOCOM BBM maintains executives with considerable experience in the local market and good corporate governance practices. The deteriorating operating environment as a result of the coronavirus will pressure the bank's asset quality and profitability metrics, representing a medium-term risk to the ratings. BOCOM BBM's impaired loans (D-H) ratios grew in the 1H20 to 3,6% of gross loans (2.6% if consider the total expanded loan portfolio) against 1.0% as of December 2019 and 0.9% as of December 2018. BOCOM BBM's profitability indicators declined in 1H20 with operating profit-to-RWAs in 1.0% against 2.3% in 2019 and 2.4% in 2018. BOCOM BBM has a solid capital base that was made up fully of Core Equity Tier 1 capital at in the 1H20 (13,9%) which provides the bank with some cushion to absorb pressures from the current Coronavirus crisis. BOCOM BBM has a stable and adequate funding base that benefits significantly from ordinary support provided by BOCOM and present a good position of liquidity in the June 2020. In June 2020, the bank's loans-to-deposits ratio (including deposit-like financial bills) was an adequate 134% (133% in December 2019). RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: IDRs AND SR -- A sovereign downgrade; -- A change in Fitch's assessment of BOCOM's willingness to support BOCOM BBM; -- A multiple-notch downgrade of BOCOM's ratings. NATIONAL RATINGS Changes in BOCOM BBM's IDRs or in the bank's credit profile relative to its Brazilian peers could result in changes in its national ratings. VR -- A sovereign downgrade or negative rating action; -- A sustained decline in BOCOM BBM'S operating profit-to-RWAs ratio below 1.0%; -- Any sustained pressures in the CET1 ratio to below 11%. -- An increase in impaired loans (D-H) above 7% of gross loans for a sustained period. Factors that could, individually or collectively, lead to positive rating action/upgrade: IDRS, VR AND SR -- BOCOM BBM's IDRs, VR and SR remain constrained by the sovereign ratings. -- An upgrade or positive rating action on the sovereign could benefit the rating, but it is not likely under current operating environment. ESG CONSIDERATIONS BOCOM BBM has an ESG Relevance Score of 4 for Governance Structure following the same score as the parent, as there is potential for significant state influence as owner or regulatory influence given a lack of independence from the state. This negatively affects the banks' credit profiles and is relevant to the rating in conjunction with other factors. Except for the matters discussed, the highest level of ESG credit relevance, if present, is a score of 3 - 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). BRAZIL: 7% of Bars and Restaurants Closed Due to Pandemic --------------------------------------------------------- Richard Mann at Rio Times Online reports that a survey conducted by the Brazilian Service of Support to Micro and Small Companies (SEBRAE) shows that 6.7 percent of bar and restaurant owners decided to close their businesses permanently as a result of the crisis triggered by Covid. According to the survey, 92 percent of the companies in the sector had a drop in revenue, the report relays. A total of 1,191 food and beverage establishments in 26 states and the Federal District were interviewed, the report says. As reported in the Troubled Company Reporter-Latin America on May 8, 2020, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and has revised the Rating Outlook to Negative. The Outlook revision to Negative reflects the deterioration of Brazil's economic and fiscal outlook, and downside risks to both given renewed political uncertainty, including tensions between the executive and congress, and uncertainty over the duration and intensity of the coronavirus pandemic. On April 10, 2020, the TCR-LA reported that S&P Global Ratings revised on April 6, 2020, its outlook on its long-term ratings on Brazil to stable from positive. At the same time, S&P affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings. S&P also affirmed its 'brAAA' national scale rating and its transfer and convertibility assessment of 'BB+'. The outlook on the national scale rating remains stable. RIO DE JANIERO: Fitch Affirms 'BB-' LT IDR, Outlook Negative ------------------------------------------------------------ Fitch Ratings has affirmed the State of Rio de Janeiro's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'BB-'. The Rating Outlook is Negative. Fitch has also affirmed the state's national long-term rating at 'AA (bra)' and revised the Outlook to Stable from Negative. Fitch has also assessed ERio a Standalone Credit Profile (SCP) of 'd'. The affirmation of ERio's ratings reflects the federal government's (Brazil; BB-/Negative) continuous support to provide timely service of ERio's guaranteed debt. The state has been unable to fully service its debt since mid-2016 given the increased deep financial imbalances that became evident in late 2015. This led the state to adhere to the Fiscal Recovery Regimen (FRR) signed with the federal government in September 2017. All of ERio's guaranteed financial debt has been serviced by the federal government on its behalf. The federal government has temporarily waived the state's significant federal debt contingent to some FRR conditions being met, including the successful adoption of several measures to increase revenues and curb expenditures. This waiver can be extended once (until 2023). ERio's payment capacity is irrevocably impaired. The state has entered into a grace period following non-payment of a material financial obligation in mid-2016. This is commensurate with a SCP of 'd'. Government effectiveness and institutional & regulatory quality were not sufficient to prevent the state from resorting to external financial support to pursue fiscal balance. KEY RATING DRIVERS Risk Profile Assessment: Weaker There are six weaker assessments for the risk factors that, in combination with the sovereign rating of 'BB-', resulted in a weaker risk profile assessment. Revenue Robustness: Weaker Brazilian states have a revenue source mostly based on tax collections and federal transfers. Rio de Janeiro presents revenue growth prospects in line with the national GDP and low dependency on transfers from the Federal Government of Brazil with proprietary tax revenues corresponded to 58% of operating revenues in 2019 in line with previous years. However, ERio has posted a history of deep fiscal imbalances since 2015 given the state's dependency on oil related activities, which were negatively affected by the historical low international prices in addition to the deep economic recession affecting the state's most relevant tax payers that belong to the oil sector. Revenue Adjustability: Weaker Brazilian states and municipalities have a low capacity level for revenue increase in response to downturn. There is low affordability of additional taxation given that tax tariffs are close to the constitutional national ceiling. The most relevant state tax, the ICMS tax base, is heavily influenced by the oil, commerce, combustibles, utilities and telecom sectors. Oil royalties' revenues reached the equivalent to 13.3% of operating revenues in 2019. Revenue adjustment is more difficult because tax tariffs are close to the constitutional limit even considering the affordability to increase tariffs derived from an average GDP per capita of around USD10,000. Expenditure Sustainability: Weaker Responsibilities for states are moderately countercyclical since they are engaged in healthcare, education and law enforcement. ERio presents moderate control over expenditure growth given the high percentage of committed expenditures. In light of the recent severe fiscal imbalances and restrictions imposed by the FRR, the state has reported mounting unpaid short-term obligations that are higher than the local average, leading this factor to weaker. Also, pension payments represent a relevant stake of the state's operating expenditure structure, accounting for roughly 26% of operating expenditure in 2019, in a rising trend. Expenditure Adjustability: Weaker Brazilian local governments suffer from a fairly rigid cost structure. As per the Brazilian Constitution, there is low affordability of expenditure reduction especially in salaries. As a result, whenever there is an unpredictable reduction in revenues, operating expenditure does not follow automatically. Also, despite the restrictions imposed by the FRR, the proportion of inflexible costs remains high, with more than 90% of expenditures being mandatory and committed. ERio has a limited track record of stimulus packages aside from tax exemptions given to companies. Liabilities and Liquidity Robustness: Weaker There is a moderate national framework for debt and liquidity management. Given its adherence to the FRR, ERio is authorized to raise debt to cover operating expenditure. On the other hand, the state cannot borrow new credit with Federal Government guarantee, due to its CAPAG (capacidade de pagamento) rated D. The federal government guarantees all USD denominated debt of the states. As of Dec. 31, 2019, the dollar-denominated portion of total debt totaled BRL13 billion. Debt directly owed to the federal government represented 77% of total debt in 2019. Liabilities and Liquidity Flexibility: Weaker There is a framework of providing emergency liquidity support from the federal government via the granting of extended maturities over the prevalent federal debt portion. Also, the State of Rio de Janeiro presents weak liquidity levels since reported short-term financial obligations represent less than 75% of free cash positions, as calculated by the Brazilian national treasury (CAPAG liquidity ratio). Debt Sustainability: Fitch does not calculate debt sustainability for the State of Rio de Janeiro, since the state is not able to comply with its financial obligation. ERio has an ESG Relevance Score of 4 for Rule of Law, Institutional & Regulatory Quality, Control of Corruption as government effectiveness and institutional & regulatory quality was not sufficient to prevent the state from resorting to external financial support (namely the federal government) to pursue fiscal balance. The state has an ESG Relevance Score of 5 for Creditor Rights, which reflects the track record in the breach of legal documentation stating the full debt service payments, reflecting the very low willingness to pay. All guaranteed financial debt has been paid by the federal government under the FRR signed with the federal government in September 2017. DERIVATION SUMMARY Erio's SCP is assessed at 'd', reflecting its failure to make payment of its financial obligations. The state's 'BB-' IDR reflects the federal government's honoring of its guaranteed obligations. KEY ASSUMPTIONS Fitch assumes ERio will be under the FRR at least until 2023 when the state should be required to service its debt without resorting to federal support. RATING SENSITIVITIES The IDRs are linked to the sovereign: Any rating action affecting Brazil would result in a similar rating action for State of Rio de Janeiro. Factors that could, individually or collectively, lead to positive rating action/upgrade: --Once ERio recovers and it is able to honor its committed financial obligations in due time with no federal government aid, then Fitch will revise its Standalone Credit Profile. Factors that could, individually or collectively, lead to negative rating action/downgrade: --Should the state leave the Fiscal Program (RRF) and its debt should not be honored by the federal government or by the state, Fitch would downgrade Rio de Janeiro's ratings. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch-adjusted debt includes an adjustment made on restricted cash from 2015 to 2019 as reported by the State on Relatorio de Gestao Fiscal (RGF) as 'caixa nao vinculado'. ESG CONSIDERATIONS ERio has an ESG Relevance Score of 4 for Rule of Law, Institutional & Regulatory Quality, Control of Corruption as government effectiveness and institutional & regulatory quality was not sufficient to prevent the state from resorting to external financial support (namely the federal government) to pursue fiscal balance. The state has an ESG Relevance Score of 5 for Creditor Rights, which reflects the track record in the breach of legal documentation stating the full debt service payments, reflecting the very low willingness to pay. All guaranteed financial debt has been paid by the federal government under the Fiscal Recovery Agreement (FRR) signed with the federal government in September 2017. Except for the matters discussed, 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 the way in which they are being managed by the entity(ies). SANTA CATARINA: Fitch Affirms 'BB-' LT IDR, Outlook Negative ------------------------------------------------------------ Fitch Ratings has affirmed the Brazilian state of Santa Catarina's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with a Negative Outlook and its Short-Term Foreign- and Local-Currency IDRs at 'B'. Fitch has also affirmed Santa Catarina's National Long-Term Rating at 'AA (bra)' and changed the Outlook to Stable from Negative. The agency has affirmed the state's Standalone Credit Profile (SCP) at 'b+'. Fitch has revised the key rating factor Liabilities and Liquidity Flexibility to Midrange from Weaker. Despite this, the risk profile remains weaker and the Standalone Credit Profile (SCP) remains in the 'b' category. State of Santa Catarina's ratings reflect the combination of weaker risk profile and 'b' debt sustainability under Fitch's rating case scenario. Santa Catarina's IDRs benefit from an uplift from the state's SCP due to the fact that the Federal Government is a relevant creditor of the state. As of December 2019, intergovernmental debt represented almost 50% of total debt. KEY RATING DRIVERS Risk Profile: Weaker Fitch has assessed the State of Santa Catarina's risk profile at weaker, reflecting the blend of three weaker and three midrange attributes on the six key risk factors, which in combination with the sovereign rating of 'BB-' resulted in a weaker risk profile. Revenue Robustness: Midrange Brazilian states have a revenue source mostly based on tax collections and federal transfers. Santa Catarina presents revenue growth prospects in line with the national GDP average and has posted a history of fairly stable operating revenue growth due to the state's low dependency on transfers from the Federal Government of Brazil. Proprietary tax revenues corresponded to almost 69% of operating revenues in 2019 in line with previous years. Revenue Adjustability: Weaker Despite the affordability to increase tax tariffs in light of adequate GDP per capita, tax tariffs are close to the constitutional limit, thus making revenue adjustment more difficult. Like other Brazilian states, Santa Catarina has a fairly concentrated tax base, in which the 10 largest taxpayers were responsible for around 38% of total tax collections, similar to previous years. Taxpayers belong to the combustibles, utility and beverage sectors. Expenditure Sustainability: Midrange Santa Catarina presents moderate control over expenditure growth given the high percentage of committed expenditures. Operating expenditure has been increasing slower than operating revenues in the last two years. Responsibilities are moderately countercyclical since the state is engaged in healthcare, education and law enforcement. In addition, Santa Catarina does not present aggressive offloading of investments and borrowings, also corroborating the midrange assessment. Expenditure Adjustability: Weaker As per the Brazilian Constitution, there is low ability to reduce expenditure, especially on salaries. As a result, whenever there is an unpredictable reduction in revenues, operating expenditure does not follow automatically. In addition, inflexible costs are high with over 90% of expenditures being mandatory and committed. Santa Catarina has a limited track record of stimulus packages aside from tax exemptions given to companies. There are balanced expenditure rules in place and a reasonable track record of application. Liabilities and Liquidity Robustness: Weaker There is a moderate national framework for debt and liquidity management since there are prudential borrowing limits and restrictions on loan types. The federal government guarantees all U.S. dollar-denominated debt of the state. As of December 2019, external debt totaled BRL3.1 billion, corresponding to 16% of total debt with no significant maturity concentration. Debt directly owed to the Federal Government represented around 50% of total debt in December 2019. There is material off-balance-sheet risk stemming from the pension system, which compromised around 40% of personnel expenditures on average from 2014-2019, leading this factor to be assessed as weaker. Liabilities and Liquidity Flexibility: Midrange There is a framework of providing emergency liquidity support from the federal government via the granting of extended maturities over the prevalent federal debt portion. On the other hand, Fitch has revised this factor to Midrange from Weaker, as Santa Catarina has satisfactory liquidity levels since reported short-term financial obligations represent less than 75% of free cash positions, as calculated by the Brazilian national treasury (CAPAG liquidity ratio). Debt Sustainability: 'a' Category Fitch assesses Santa Catarina's debt sustainability at 'a'. Fitch's rating case forward-looking scenario indicates a payback ratio (net direct risk to operating balance), which is the primary metric of debt sustainability assessment, to reach levels between 5x and 9x in 2024. This corroborates with the 'a' assessment, considering the debt service coverage ratio (DSCR) is lower than 1x. Fitch distinguishes the debt owed to the federal government as it offers greater flexibility in its terms compared with traditional debt. All debt types are included in the debt sustainability metrics that produce the SCP. As a result, Fitch calculates a supplementary ratio excluding intergovernmental debt, known as the enhanced debt sustainability ratio. This is used to estimate the uplift between the SCP and IDR, which is limited by the sovereign's IDR. Santa Catarina is classified by Fitch as Type B local and regional governments (LRGs), which are required to cover debt service from cash flow on an annual basis. The state has a granular economy based on services, with increased activity mainly in the agricultural segment and presents a GDP per capita of roughly BRL36,000. Santa Catarina's population is approximately 7 million and corresponds to around 3% of Brazil's total population. A prolonged COVID-19 impact and much slower economic recovery lasting until 2025 would pressure tax receipts. Should the issuer be unable to proactively reduce expenditure or supplement weaker receipts from increased central government transfers, this may lead to a downgrade. DERIVATION SUMMARY Santa Catarina's SCP is assessed at 'b+', reflecting a combination of a weaker risk profile and debt sustainability metrics (payback ratio and coverage) assessed in the 'a' category under Fitch's rating case scenario. The SCP, positioned at 'b+', also reflects the peer comparison. The enhanced debt sustainability ratio is 'aa', meaning that the enhanced debt metrics are strong and commensurate with the IDR of 'BB-'. KEY ASSUMPTIONS Fitch's rating case scenario is a through-the-cycle scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on the 2015-2019 figures and 2020-2024 projected ratios. The key assumptions for the scenario include: - Income tax and fees fines and other operating revenues linked to inflation; - Transfers linked to nominal GDP growth; - Operating expenditures also linked to inflation; - Long-term debt increase based on estimates of new credits - Fitch is assuming BRL1.5 billion of new debt until 2024; - Cost of debt based on increase of historical average cost of debt; - Overall results adjusted to capex, assuming that the state would invest the remaining overall result. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade of Brazil's IDRs could positively affect Santa Catarina's IDRs; -- A positive rating action on Santa Catarina's SCP could result from an improvement of its operating balance, with a payback ratio lower than 9x and an actual DSCR higher than 2x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Brazil's IDRs (BB-/Negative) would negatively affect Santa Catarina's IDRs; -- Santa Catarina's IDRs could be downgraded if its operating balance deteriorates, triggering an enhanced payback ratio higher than 9x and/or enhanced DSCR lower than 1x in Fitch's forward-looking scenario. ESG CONSIDERATIONS The highest level of Environmental, Social and Governance (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). =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: 1.5MM Locals Leave Poverty From 2012 to 2019 ---------------------------------------------------------------- Dominican Today reports that the Dominican Government affirmed that from 2012 to 2019 more than 1.5 million Dominicans emerged from poverty and 650,000 Dominicans have overcome extreme poverty. On its website, the Presidency indicates that from September 2012 to December 2018, poverty dropped from 39.7% to 23% and people in extreme poverty decreased from 9.9% to 2.9%, according to Dominican Today. It notes that the middle class grew from 22.6% to 30% of the population, the report relays. It said they have created 823,389 jobs in seven years, "exceeding the goal of 100,000 jobs per year," adding that in 2018 alone the Government created 155,848 jobs, the report notes. "We are the Central America and Caribbean economy that has achieved the sharpest reduction in unemployment in the last 7 years, going from 8.8% in 2012 to 5.4 in 2018," 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: Launches US$28.9BB Tourism Recovery Push ------------------------------------------------------------ Dominican Today reports that the government unveiled the Responsible Recovery Plan of the Tourism Sector which seeks to recover one of the most productive sectors of the Dominican Republic, at a cost of US$28.9 billion. President Luis Abinader and the Minister of Tourism, David Collado, presented the four-pronged plan: governance, risk management, communication and economic support to the private sector, according to Dominican Today. The plan, launched in the National Palace, attended by businessmen and officials of the Ministry of Tourism (Mitur), includes COVID-19 tests that will not be requested from tourists, nor will massive tests be applied in air terminals, but travelers will be randomly tested, the report notes. In addition, through the State bank Banreservas each visitor will be provided with medical insurance that includes emergency coverage, cost of long-term stay and change of flights to deal with any eventuality, 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: Scrambles to Save School Year ------------------------------------------------- Dominican Today reports that teaching for the 2020-2021 school year, virtually, will begin on November 2. To save the course and guarantee education for more than 2.8 million students, the Government will invest RD$27.0 billion to provide technological equipment to students and teachers, and connectivity for homes. President Luis Abinader announced that RD$3.0 billion will be spent in the conditioning of the schools "for the gradual return to normality", which would make an additional amount of RD$30 billion in equipment and reconditioning of the centers educational, according to Dominican Today. The Plan to save the year 2020-2021 was unveiled in the National Palace, the report notes. "The financial sacrifice is high, but no more than the satisfaction of closing technological, educational and social gaps that the national educational system has historically suffered," said Abinader, 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). ============= E C U A D O R ============= ECUADOR: Can Rework $17.4BB of Dollar Bonds with IMF Deal --------------------------------------------------------- Stephan Kueffner, Eric Martin and Ben Bartenstein, writing for Bloomberg News, report that the International Monetary Fund agreed to lend Ecuador $6.5 billion which will allow the nation to complete a bond restructuring plan and fund its 2020 budget. Bloomberg News says the deal announced Aug. 28 will enable the exchange of $17.4 billion of debt to go ahead before the Sept. 1 deadline. The country had agreed with bondholders that it would seek a new IMF deal, and that the restructuring wouldn’t go ahead without one. Ecuador bonds rebounded since March slump The so-called Extended Fund Facility is a staff-level agreement subject to approval by the IMF's board, and is repayable in 27 months, the IMF said in a statement, the report relates. Under the deal, says Bloomberg, $4 billion would be disbursed before the end of the year, according to four people with knowledge of the agreement, who asked not to be named because the details aren’t public yet. The deal replaces Ecuador's previous agreement with the IMF, which was shelved amid the pandemic. Under that, the country was slated to receive $4.2 billion over three years, the report recalls. Ecuador was badly ravaged by the Covid-19 outbreak, which led to corpses piled up on sidewalks in Guayaquil. The economy was also hit particularly hard, since the debt crisis made it impossible to deploy fiscal stimulus to soften the impact of lockdowns, says Bloomberg. At the same time, prices crashed for crude, while Ecuador’s use of the U.S. dollar as its currency made its exports more expensive as the greenback strengthened. Market Reaction The nation’s bonds are likely to rally on the news of the deal when trading resumes Sept. 1, said Siobhan Morden, the head of Latin America fixed income strategy at Amherst Pierpont Securities in New York, the report relates. "This IMF program shows clear international diplomatic and political support for a country that has pushed an opening agenda and avoided technical default with friendly investor relations," Morden said, in response to written questions, notes Bloomberg. The program is aimed at helping stabilize the economy, and then preparing the ground for a recovery, the fund said in its statement. By preventing a deeper meltdown of the economy, the IMF deal reduces the chances that socialists allied to former President Rafael Correa will perform strongly in elections next February, said Vicente Albornoz, dean of economics at UDLA in Quito. President Lenin Moreno leaves office next May, adds Bloomberg News. 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. Lenin Boltaire Moreno Garces is the county's current President, who has been in office since May 2017. As of May 12, 2020, Ecuador has defaulted on sovereign debt in 2020. As reported in Troubled Company Reporter-Latin America on July 27, 2020, S&P Global Ratings affirmed its 'CCC-' issue rating on Ecuador's social housing notes due 2035 and removed it from CreditWatch negative, where it had placed it on March 25, 2020. There is no outlook on this issue rating. The 'SD' (selective default) foreign and local currency sovereign credit ratings on Ecuador remain unchanged. 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. Egan-Jones Ratings Company, on May 18, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by the Republic of Ecuador to CCC- from CCC+. EJR also downgraded the rating on commercial paper issued by the Company to D from C. ======= P E R U ======= RUTAS DE LIMA: S&P Ups Issue-level Rating to CCC+, Off CreditWatch ------------------------------------------------------------------ S&P Global Ratings raised its issue-level rating on Rutas de Lima (RdL) to 'CCC+' from 'CCC' and removed it from CreditWatch with negative implications. S&P said, "Although bondholders approved a waiver due to the failure to achieve the Panamericana Norte and Panamericana Sur sub-tranches completion date on March 31, 2020 (which is valid up to Jan. 31, 2021), we believe the project will need about 18 months to conclude the work. Therefore, we think RdL will need a new waiver to extend the due date. The refusal of the bondholders to approve this extension in early 2021 could trigger a default, meaning that RdL's debt could, ultimately, be accelerated, which we view as a weakness from a credit perspective. "The upgrade to 'CCC+' mainly reflects our expectation of better financial performance in 2020 amid a faster recovery of traffic levels. This difference is mainly explained by the fact that a large portion of the Peruvian population has informal jobs, and in order to continue receiving an income, most people had to continue going to work. In addition, many industries in the country are now operating with protocols on site. "More importantly, the better financial performance was fueled by the reinstatement of toll collections since July 1, after almost two months of suspension. Additionally, on Aug. 25, the Peruvian court declared unconstitutional the law that suspended such collection of tolls, which, in our view, gives the project more visibility and predictability on cash flows since such a measure won't be allowed to be used again. "More precisely, we now anticipate a 30% decrease in revenues this year versus the 40% modeled in June. As a result, we expect CFADS during the second half of the year should be sufficient to cover interest payments, which represents an improvement versus our previous expectation. We still anticipate a shortfall in the long term, particularly between 2030, one year after the project starts amortizing its principal, and 2033 of $48 million. Still, we believe the project has sufficient liquidity to cover the shortfalls." ===================== P U E R T O R I C O ===================== ASCENA RETAIL: Seeks to Hire Prime Clerk as Administrative Advisor ------------------------------------------------------------------ Ascena Retail Group, Inc. and affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Prime Clerk LLC as their administrative advisor. The firm will provide the following bankruptcy administration services in connection with Debtors' Chapter 11 cases: (a) assist with solicitation, balloting and tabulation of votes, and prepare any related reports, as required in support of confirmation of a Chapter 11 plan; (b) prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; (c) assist with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs and gather data in conjunction therewith; (d) provide a confidential data room, if requested; (e) manage and coordinate any distributions pursuant to a Chapter 11 plan; and (f) provide such other processing, solicitation, balloting, and other administrative services. Prime Clerk will be paid at these rates: Claim and Noticing Rates TITLE HOURLY RATE Analyst $35 - $55 Technology Consultant $35 - $95 Consultant/Senior Consultant $70 - $170 Director $175 - $195 COO and Executive VP No charge Solicitation, Balloting and Tabulation Rates TITLE HOURLY RATE Solicitation Consultant $195 Director of Solicitation $215 Additionally, Prime Clerk will seek reimbursement from Debtors for work-related expenses. Benjamin Steele, vice president of Prime Clerk, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Benjamin J. Steele Prime Clerk LLC 830 3rd Avenue, 9th Floor New York, NY10022 Tel: (212) 257-5450 Email: bsteele@primeclerk.com About Ascena Retail Group Ascena Retail Group, Inc. (Nasdaq: ASNA) 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 Retail Group, through its retail brands, operates e-commerce websites and approximately 2,800 stores throughout the United States, Canada and Puerto Rico. Visit http://www.ascenaretail.comfor more information. Ascena Retail Group 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. On July 23, 2020, Ascena Retail Group and its affiliates sought Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of Feb. 1, 2020, Ascena Retail Group had $13,690,710,379 in assets and $12,516,261,149 in total liabilities. The Hon. Kevin R. Huennekens is the case judge. Debtors have tapped Kirkland & Ellis LLP, Kirkland & Ellis International LLP and Cooley LLP as bankruptcy counsel, Guggenheim Securities, LLC as financial advisor, and Alvarez and Marsal North America, LLC as restructuring advisor. Prime Clerk, LLC is the claims agent. ASCENA RETAIL: Taps Cooley LLP as Co-Counsel -------------------------------------------- Ascena Retail Group, Inc. and affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Cooley LLP as their legal counsel. Cooley will serve as co-counsel with Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP, the firms tapped to handle Debtors' Chapter 11 cases. The hourly rates charged by the firm's attorneys and paralegals who are anticipated to provide the services are as follows: Cullen D. Speckhart Partner $1,060 Michael Klein Special Counsel $1,015 Summer McKee Associate $970 Olya Antle Associate $800 Jared Kasner Associate $710 Elizabeth Rice Paralegal $370 Erin Combs Paralegal $355 Mollie Canby Paralegal $300 On July 15, Cooley received from Debtors a security retainer of $250,000. Debtors paid the firm the sum of $76,910.06 for fees and expenses incurred from the retainer on July 17. The firm currently holds $173,089.94 of the retainer. Cullen Speckhart, Esq., a partner at Cooley, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Ms. Speckhart also made the following disclosures in response to the request for additional information set forth in Paragraph D.1 of the U.S. Trustee Guidelines: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: No. Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Response: Cooley represented Debtors during the 12 months prior to the petition filing in connection with the bankruptcy preparation as well as in unrelated matters. Question: Has your client approved your prospective budget and staffing plan, and, if so for what budget period? Response: Cooley has submitted a staffing plan and budget that covers the period from July 23 to Nov. 23, 2020 to the Debtors. The firm can be reached through: Cullen D. Speckhart, Esq. Cooley LLP 1299 Pennsylvania Avenue, NW, Suite 700 Washington, D.C. 20004 Telephone: (202) 842-7800/(202) 776-2052 Facsimile: (202) 842-7899/(212) 479-6657 Email: cspeckhart@cooley.com About Ascena Retail Group Ascena Retail Group, Inc. (Nasdaq: ASNA) 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 Retail Group, through its retail brands, operates e-commerce websites and approximately 2,800 stores throughout the United States, Canada and Puerto Rico. Visit http://www.ascenaretail.comfor more information. Ascena Retail Group 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. On July 23, 2020, Ascena Retail Group and its affiliates sought Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of Feb. 1, 2020, Ascena Retail Group had $13,690,710,379 in assets and$12,516,261,149 in total liabilities. The Hon. Kevin R. Huennekens is the case judge. Debtors have tapped Kirkland & Ellis LLP, Kirkland & Ellis International LLP and Cooley LLP as bankruptcy counsel, Guggenheim Securities, LLC as financial advisor, and Alvarez and Marsal North America, LLC as restructuring advisor. Prime Clerk, LLC is the claims agent. ********* 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 * * *