/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210618.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 Friday, June 18, 2021, Vol. 22, No. 116 Headlines B R A Z I L BANCO FORD: Moody's Affirms 'Ba2' Deposit Ratings, Outlook Stable BANPARA: S&P Affirms 'BB-/B' ICRs & Alters Outlook to Stable SAMARCO MINERACAO: Vale, BHP Propose BRL1.2-Bil. DIP Financing D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Price Hikes are a Concern in Santiago DOMINICAN REPUBLIC: Producers Complain Price Reduction of Milk J A M A I C A JAMAICA: Inflation Increased in May, STATIN Reports P U E R T O R I C O CARIBBEAN MOTEL: Case Summary & 7 Unsecured Creditors J.J.W. METAL: Hires Arturo Cancel as Environmental Consultant J.J.W. METAL: Seeks to Hire RAM Group as Environmental Consultant T R I N I D A D A N D T O B A G O CARIBBEAN AIRLINES: Takes US$103 Million Covid Lash - - - - - =========== B R A Z I L =========== BANCO FORD: Moody's Affirms 'Ba2' Deposit Ratings, Outlook Stable ----------------------------------------------------------------- Moody's Investors Service has affirmed Banco Ford S.A.'s long and short term local and foreign currency deposit ratings at Ba2 and Not Prime, as well as its long and short-term Brazilian national scale ratings of Aa3.br and BR-1, respectively. At the same time, Banco Ford's Baseline Credit Assessment was downgraded to b1 from ba3. Moody's affirmed the adjusted BCA at ba2 which incorporates support from its parent Ford Motor Credit Company LLC (FMCC, Ba2 stable). The outlook on the ratings remains stable. RATINGS RATIONALE The downgrade of Banco Ford's BCA to b1 from ba3, reflects the downsizing of the bank's lending activities in 2021 following the end of car manufacturing in Brazil by Ford Motor Company (Ford, Ba2 stable) announced in January 2021. A reduction in the bank's operations raises uncertainties about the bank's future profitability, capital and asset risk metrics until the conclusion of the adjustments to the captive lenders' business volumes. Focused on financing only Ford car dealers, Banco Ford has had to contend with the number of Ford dealerships in Brazil falling to 200 in May 2021 from over 280 at the beginning of 2021, as a result of a change in strategy to sell vehicles imported primarily from Argentina and Uruguay. This has significantly affected Banco Ford's loan origination volumes in the first months of 2021 and will continue to slowdown the growth of the bank's portfolio. There may also be potential changes to portfolio concentration risk given fewer car dealers. Historically, the bank reported a low problem loan ratio that averaged 1.4% of gross loans over the past five years (0.2% in 2020), largely supported by secured loans to floor plans and adequate risk controls with strong reserves for credit losses. As the bank's lending activities continue to shrink, future earnings generation will be affected requiring swift adjustments to its operating cost structure. In 2020, Banco Ford's cost to income ratio had already jumped to 59%, from a 33% average between 2016-2019, reflecting the slowdown in car sales due to the pandemic. Lower business volumes in the coming months will add further pressure on Banco Ford's efficiency profile with a potential hit to its bottom line results. The bank has a long track record of a maintaining an adeuqate capital ratio, as measured by Moody's as tangible common equity (TCE) relative to risk weighted assets (RWA). For the last five years, the TCE ratio remained at about 14%. The resizing of the bank's balance sheet will likely require an adjustment to capitalization and liquidity needs, which have increased in the first months of 2021 due to loan book shrinkage, but new target levels are still uncertain. In December 2020, Banco Ford's liquid assets to tangible banking assets stood at 8%, slightly below peers' average of 8.5%, but not far off from the bank's 9.5% average over the past five years. Banco Ford's ba2 adjusted BCA incorporates two notches of uplift from the b1 BCA, reflecting Moody's assessment of a very high likelihood of support from its parent, FMCC, based on the bank's main business strategy that is shared between the parent and the bank. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of Banco Ford's BCA would be considered if the bank maintains adequate profitability and efficiency ratios after the resizing of its businesses in Brazil, while also maintaining superior asset quality ratios and capitalization. A material decline in asset quality and profitability that negatively affects the bank's capitalization could put further downward pressure on the bank's standalone ratings, potentially impacting supported deposit ratings. The principal methodology used in these ratings was Banks Methodology published in March 2021. Banco Ford is indirectly owned by Ford Motor Credit Company LLC (USA) (Ba2 stable), which, in turn, is 100% controlled by Ford Motor Company (Ba2 stable). Banco Ford has a mono-line operation with close ties to the volume of cars sold by Ford in Brazil. The bank's core business is to provide floor plan financing to authorized Ford car dealers for the acquisition of new vehicles from the automaker. Headquartered in Sao Paulo, the bank had total assets of BRL671 million and equity of BRL231.8 million, as of March 31, 2021. LIST OF AFFECTED RATINGS: The following rating assessment of Banco Ford S.A. was downgraded: Baseline credit assessment to b1, from ba3 The following ratings and assessments were affirmed: Long-term global local-currency counterparty risk rating at Ba1 Long-term global local -currency deposit rating at Ba2, stable outlook Long-term Brazilian national scale deposit rating at Aa3.br Long-term counterparty risk assessment at Ba1(cr) Long-term global foreign-currency counterparty risk rating at Ba1 Long-term Brazilian national scale counterparty risk rating at Aaa.br Long-term global foreign-currency deposit rating at Ba2, stable outlook Short-term Brazilian Counterparty Risk Rating at BR-1 Short-term counterparty risk assessment at NP(cr) Short-term global local-currency counterparty risk rating at NP Short-term global foreign-currency counterparty risk rating at NP Short-term global foreign-currency deposit rating at NP Short-term global local -currency deposit rating at NP Short-term Brazilian national scale deposit rating at BR-1 Adjusted baseline credit assessment at ba2 Outlook Stable BANPARA: S&P Affirms 'BB-/B' ICRs & Alters Outlook to Stable ------------------------------------------------------------ S&P Global Ratings revised its outlook on Banco do Estado do Para S.A. (Banpara) to stable from negative. S&P also affirmed its 'BB-/B' global scale and 'brAA+/brA-1+' Brazilian national scale issuer credit ratings on Banpara. The bank's stand-alone credit profile (SACP) remains at 'bb-'. S&P said, "In our view, the state of Para has benefited from the sovereign's substantial support last year, which has prevented the state's fiscal erosion in 2020 amid the COVID-19 pandemic. Moreover, the state's cash reserves have been improving in the past two years and provide a cushion to afront higher spending pressures, in our opinion. We now believe that the likelihood of a deterioration of Banpara's business conditions or quality of its assets is lower. This is because of the strengthening creditworthiness of the state of Para, which we view as Banpara's main counterparty exposure." S&P's ratings on Banpara continue to reflect its view of the following factors: -- Banpara's narrow product and service offerings, given that revenues mainly consist of interest from payroll-deductible loans and BanparaCard loans. Although S&P forecasts a widening of product offering in the next few years due to the growing exposure to mortgages and corporate loans, we still believe that payroll loans and BanparaCard should continue to generate the bulk of Banpara's revenue. -- S&P said, "Its above-average capitalization ratio and our expectation that the risk-adjusted capital (RAC) ratio will remain close to 9% in the following years. Capitalization could decrease to below 9% in 2021 as the bank's loan portfolio grows, but we believe that this will reverse next year as growth moderates." -- The bank's stable asset quality metrics, although that depends on the state's creditworthiness mainly due to Banpara's role as payer of many of Banpara obligors' salaries. S&P predicts that the nonperforming loan (NPL) ratios will increase slightly in 2021 but will remain lower than 2.0%. -- Banpara's stable funding structure, which benefits from recurrent deposits from state employees and state-related parties, while liquidity has remained robust. -- S&P said, "We predict Banpara's return on equity (ROE) to be close to 20% and lower than its five-year average of 25% due to decreasing net interest margins. As of the first quarter of 2021, Banpara had reported annualized ROE of 15.6%. On the other hand, we predict Banpara's customer loans to keep growing, due to a likely boost in payroll loan originations this year amid loosening of debt-to-income regulatory limits on such loans." SAMARCO MINERACAO: Vale, BHP Propose BRL1.2-Bil. DIP Financing -------------------------------------------------------------- Marta Nogueira at Reuters, citing court documents, reports that bankrupt miner Samarco Mineracao SA plans to receive a 1.2 billion reais (US$238 million) debtor-in-possession loan extended by controlling shareholders Vale SA and BHP Group Ltd. But a group representing 80% of Samarco's debt excluding Vale and BHP oppose the move, saying the DIP financing goal would be to protect Vale and BHP assets, according to Reuters. Among these creditors are York Global Finance, Ashmor, Solus and City National, the report relays. Samarco would pay a 9.5% annual interest rate, and be able to generate enough cash to meet obligations, according to the document, the report notes. The bankruptcy trustee determined that Samarco presents all DIP financing offers received to creditors, the report says. Creditors requested that Samarco stop making payments to Renova, a foundation set up by BHP Group and Vale SA to compensate for a deadly dam burst at a jointly owned Brazilian mine in 2015, the report notes. The dam collapse at the mine complex killed 19 people and severely polluted the Doce River, the report relays. The company has been the focus of significant litigation from bondholders holding nearly $5 billion in debt, the report discloses. In December, Samarco restarted operations with resumption of one of three concentrators for processing iron ore at the Germano complex in Mariana, and one of four pellet plants at the Ubu complex in Anchieta, the report relays. Creditors say that any contribution to Renova should be made directly by Samarco's controlling shareholders, as they would also be responsible for the disaster, the report relays. "The DIP loan is in fact, the final blow by shareholders fraudulently using Samarco to shirk their responsibility," creditors say in the document, the report notes. Samarco filed for bankruptcy protection in April to prevent creditors' claims from affecting operations that resumed in 2020, the report relays. In an email to Reuters, Samarco said the financing proposed by Vale and BHP was essential "for the maintenance of its operations, jobs, payment of its suppliers, while defraying its cash needs," the report says. The creditors' opposition, Samarco said, would undermine its recovery and ability to repair damage from the dam collapse, the report discloses. Vale and BHP, in separate emails, said loans made in recent years were aimed at allowing resumption of Samarco's operations so it could fulfill its obligations, the report notes. Vale said creditors mentioned in the court documents were mostly funds that purchased Samarco debt at reduced prices after the collapse and never contributed funding toward the company's recovery, the report relays. On June 10, Samarco proposed a plan to restructure 50 billion reais (US$10 billion) in debt with an offer of preferred shares or a cash payout in 2041 equal to 15% of the current value of holdings, the report says. Samarco's debt with Vale and BHP totals 23 billion reais, while bondholders are owed the equivalent of 26 billion reais, the report adds. About Samarco Mineracao Samarco Mineracao SA is a Brazilian mining joint venture between BHP Group and Vale SA. erves as an iron ore processing company. The company provides blast furnace, direct reduction, sinter feed, as well as low and normal silica content pellets. On April 9, 2021, the Debtor filed a voluntary petition for judicial reorganization in the 2nd Business State Court for the Belo Horizonte District of Minas Gerais in Brazil pursuant to Brazilian Federal Law No. 11,101 of February 9, 2005. Samarco Mineracao filed for Chapter 15 bankruptcy recognition (Bankr. S.D.N.Y. Case No. 21-10754) on April 19, 2021, in New York, to seek U.S. recognition of its Brazilian proceedings. The Debtor's U.S. counsel: Thomas S. Kessler Cleary Gottlieb Steen & Hamilton LLP Tel: 212-225-2000 E-mail: tkessler@cgsh.com =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Price Hikes are a Concern in Santiago --------------------------------------------------------- Dominican Today reports that after the constant price changes in some products in the family basket, merchants in Santiago complain because they are forced to increase prices, which reduces daily sales. It has been evidenced during the last month throughout the Dominican Republic. Different merchants from Hospedaje Yaque de Santiago, the primary market in the region, commented that many products have increased in prices, according to Dominican Today. In this sense, Alfredo Diaz, a seller of "fried foods," stated that he decided to raise the cost of his merchandise after several weeks of buying more expensive products, the report notes. He added that the increase ranges between 30 and 40%, depending on the articles, among which he detailed oil, eggs, salami, sausage, among others, the report relays. In this context, Edward Martínez, a wholesaler, argued that the most worrying thing about the situation is the instability of prices: "today something has a price and tomorrow another." Regarding the primary products of the family basket, he acknowledged that the increase has been taking place for approximately a month and a half and that they are between 25 and 40%, after indicating essential products such as rice, oil, and sausages, the report notes. In addition to this, Silverio Bautista, owner of a "Minimarket" in the area, observed that during the last months, the price of all essential products has gradually risen, resulting in lower sales and profits for the companies, the report relays. He argued that depending on the salary that people have; they organize a means of subsistence. By increasing prices, these salaries are less proportionate to the situation, affecting not only the economy but also family welfare, the report discloses. Likewise, Melba Castillo, a regular consumer of the market, emphasized that "the minimum wage is not enough for a family to survive in this country, where basic necessities are the most expensive," the report says. "To survive here you have to earn more or less around RD $ 40,000 and even then it could not be sustained, because of how expensive things are, and how changing prices are," he added. During a tour of markets in Santiago, a Listín Diario press team was able to verify the complaints of merchants and consumers regarding the increases registered in various essential products, the report relays. Families The instability of prices in the basic consumer products of the family basket has been increasing, causing merchants to raise their voices in the face of a possible crisis, as daily sales have decreased in the last month, the report notes. Sales Merchants and consumers consulted regretted that due to price increases in some groceries, sales have fallen. There is also a shortage of products, for which they requested the intervention of the authorities, 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. Luis Rodolfo Abinader Corona is the current president of the nation. 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. Fitch Ratings on Jan. 18, 2021, assigned a 'BB-' rating to Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041. Concurrently, the Dominican Republic reopened its 2030 4.5% notes for an additional USD1.0 billion, which Fitch rates 'BB-', raising the total outstanding amount of the 2030 notes to USD2.0 billion. Standard & Poor's, on December 4, 2020, affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings on the Dominican Republic. The outlook remains negative. S&P also affirmed its 'B' short-term sovereign credit ratings. The negative outlook reflects S&P's view that it could lower the ratings on the Dominican Republic over the next six to 18 months, given the severe impact of the COVID-19 pandemic on the sovereign's already vulnerable fiscal and external profiles, as well as the potential for a weaker-than-expected economic recovery. 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: Producers Complain Price Reduction of Milk -------------------------------------------------------------- Dominican Today reports that a video circulated on social networks where some milk producers poured their product on the ground. The reason that triggered this action by the Yasica Cattle Ranchers Association in Puerto Plata was that the company that buys their milk began to pay them RD$23 and not RD$25 as it did days before. However, Miguel Laureano, executive director of the National Council for the Regulation and Promotion of the Dairy Industry (Conaleche), explained that at this time, companies begin to pay less for milk tanks because they are small cheese factories that have ample storage of milk product on current dates, according to Dominican Today. "This was not the time to make a claim of this nature, what you have to do is put those cold milk collection centers into operation because there is a significant demand for milk in the country, there is even a plant that is buying from the DR $ 31.30 on the northwest line", Laureano assured when asked by Listin Diario, the report notes. On average, grade A milk is being paid to producers at RD$29.30. The representative of Conaleche indicated that for ten months, he has been in talks with the Association of Cattle Ranchers of Yasica so that they store milk in the collection centers and thus get them better markets, the report relays. However, he admitted not knowing why they have not changed companies, offering them help to find new markets in other cold milk processing plants, the report notes. High Prices The National Confederation of Agricultural Producers (Confenagro) expressed concern about the recent increases in food prices, the report discloses. However, its executives assured that they would take advantage of the national and international situation of the increase and shortage of food currently being produced in the country and in the world to turn it into an opportunity to advance in the guarantee of food security, the report says. "The increases are due to several factors, but the main one is the disproportionate increase in raw materials in the world, which translates into an increase in finished products, which are not the responsibility of the producers," said Eric Rivero, president of Confenager, the report notes. He pointed out that the population must understand that this situation is global and is the consequence of a whole year of paralysis of the economy due to the coronavirus pandemic, 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. Luis Rodolfo Abinader Corona is the current president of the nation. 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. Fitch Ratings on Jan. 18, 2021, assigned a 'BB-' rating to Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041. Concurrently, the Dominican Republic reopened its 2030 4.5% notes for an additional USD1.0 billion, which Fitch rates 'BB-', raising the total outstanding amount of the 2030 notes to USD2.0 billion. Standard & Poor's, on December 4, 2020, affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings on the Dominican Republic. The outlook remains negative. S&P also affirmed its 'B' short-term sovereign credit ratings. The negative outlook reflects S&P's view that it could lower the ratings on the Dominican Republic over the next six to 18 months, given the severe impact of the COVID-19 pandemic on the sovereign's already vulnerable fiscal and external profiles, as well as the potential for a weaker-than-expected economic recovery. 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). ============= J A M A I C A ============= JAMAICA: Inflation Increased in May, STATIN Reports --------------------------------------------------- RJR News reports that the Statistical Institute of Jamaica (STATIN) is reporting that inflation increased in May. The All-Jamaica Consumer Price Index (CPI) shows prices rose by 1.2 per cent, according to RJR News. The increase was caused mainly by a 3.4 per cent upward movement in the index for the 'Housing Water, Electricity, Gas and Other Fuels' division, the report notes. The division 'Food and Non-Alcoholic Beverages' also increased by 1.1 per cent, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. Fitch Ratings affirmed in March 2021 Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+', with a stable outlook. Standard & Poor's credit rating for Jamaica stands at B+ with negative outlook (April 2020). Moody's credit rating for Jamaica was last set at B2 with stable outlook (December 2019). According to Fitch, Jamaica 'B+' rating is supported by World Bank Governance Indicators that are substantially stronger than the 'B' and 'BB' medians, a favorable business climate according to the World Bank Doing Business Survey, moderate inflation and moderate commodity dependence. These strengths are balanced by vulnerability to external shocks, a high public debt level and a debt composition that makes the sovereign vulnerable to exchange rate fluctuations. The Stable Outlook is supported by Fitch's expectation that the public debt level will return to a firm downward path post-pandemic, which is underpinned by political consensus to maintain a high primary surplus, the resilience of external finances, and stronger economic policy institutions. ===================== P U E R T O R I C O ===================== CARIBBEAN MOTEL: Case Summary & 7 Unsecured Creditors ----------------------------------------------------- Debtor: Caribbean Motel Corporation DBA Hotel Caribbean Carretera 114 Km 4.6 Barrio Guanajibo Cabo Rojo, PR 00623 Business Description: Caribbean Motel Corporation operates in the traveler accommodation industry. The Debtor is the owner of fee simple title to a land located at Guanajibo Ward, Cabo Rojo, PR with real properties used as motel. Chapter 11 Petition Date: June 15, 2021 Court: United States Bankruptcy Court District of Puerto Rico Case No.: 21-01831 Debtor's Counsel: Wigberto Lugo Mender, Esq. LUGO MENDER GROUP, LLC 100 Carr 165 Suite 501 Guaynabo, PR 00968-8052 Tel: (787) 707-0404 Email: wlugo@lugomender.com Total Assets: $683,781 Total Liabilities: $2,399,246 The petition was signed by Margaro Rivera Guzman, president. A full-text copy of the petition containing, among other items, a list of the Debtor's seven unsecured creditors is available for free at PacerMonitor.com at: https://bit.ly/3xIRtWH J.J.W. METAL: Hires Arturo Cancel as Environmental Consultant ------------------------------------------------------------- J.J.W. Metal Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Arturo Vazquez Cancel, a professional practicing in Puerto Rico, as its environmental consultant. Mr. Cancel will assist the Debtor in the area of environmental requirements for its operations and compliance. He will be compensated at his hourly rate of $250. In a court filing, Mr. Cancel disclosed that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Cancel can be reached at: Arturo Vazquez Cancel Calle 4 1043 Jose Severo Quinones Carolina, PR 00985 About J.J.W. Metal Corp. Palmer, P.R.-based J.J.W. Metal Corp. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-04536) on Nov. 23, 2020. Jorge Rodriguez Quinones, president, signed the petition. In the petition, the Debtor disclosed total assets of $1,649,341 and total liabilities of $1,750,865. Judge Edward A. Godoy oversees the case. The Debtor tapped Charles A. Cuprill, P.S.C., Law Offices as bankruptcy counsel; Luis R. Carrasquillo & Co. P.S.C. as financial consultant; and Gino Negretti Lavergne, Esq., and Frank Inserni Milam, Esq., as special counsel. Risk Assessment & Management (RAM) Group, Inc., Arturo Vazquez Cancel, and ISFPE, LLC serve as the Debtor's environmental consultants. J.J.W. METAL: Seeks to Hire RAM Group as Environmental Consultant ----------------------------------------------------------------- J.J.W. Metal Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Risk Assessment & Management (RAM) Group, Inc. as its environmental consultant. The firm will assist the Debtor in the area of environmental requirements for its operations and compliance. The hourly rates of the firm's professionals are as follows: Administrative Assistant $62 per hour Junior Professional $77 per hour Mid-Level Professional $130 per hour Project Professional $155 per hour Senior Professional $190 per hour Principal Professional $325 per hour Dr. Atul Salhotra, president of Risk Assessment & Management (RAM) Group, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Dr. Atul Salhotra Risk Assessment & Management (RAM) Group, Inc. 5433 Westheimer Rd. Houston, TX 77056 About J.J.W. Metal Corp. Palmer, P.R.-based J.J.W. Metal Corp. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-04536) on Nov. 23, 2020. Jorge Rodriguez Quinones, president, signed the petition. In the petition, the Debtor disclosed total assets of $1,649,341 and total liabilities of $1,750,865. Judge Edward A. Godoy oversees the case. The Debtor tapped Charles A. Cuprill, P.S.C., Law Offices as bankruptcy counsel; Luis R. Carrasquillo & Co. P.S.C. as financial consultant; and Gino Negretti Lavergne, Esq., and Frank Inserni Milam, Esq., as special counsel. Risk Assessment & Management (RAM) Group, Inc., Arturo Vazquez Cancel, and ISFPE, LLC serve as the Debtor's environmental consultants. ===================================== T R I N I D A D A N D T O B A G O ===================================== CARIBBEAN AIRLINES: Takes US$103 Million Covid Lash --------------------------------------------------- Trinidad Express reports that majority State-owned Caribbean Airlines (CAL) reported an after-tax loss of US$103 million in its financial year ended December 31, 2020, compared with a US$6.7 million profit in 2019. CAL's management accounts for 2020 lay bare the damage that the Covid-19 pandemic has wreaked on the airline, which stopped its international flights into and out of Piarco International Airport in March 2020, according to Trinidad Express. Since that time, T&T's borders have been closed to scheduled commercial passenger flights but have been open for repatriation and cargo flights as the Government struggled to contain the Covid-19 pandemic, the report notes. CAL's total revenue in 2020 was US$137.3 million, a decline of 69.7 per cent on the US$453.7 million it generated in 2019, the report relays. The airline's total expenses also plummeted by 47.3 per cent, declining to US$227.7 million in 2020 from US$432.3 million in 2019, the report discloses. That left CAL with an operating loss of US$90.4 million in 2020, compared with an operating profit of US$21.4 million in 2019, the report notes. Its last audited accounts, the Sunday Express was told, were in 2015. The accounts show that CAL's operating revenue moved from US$369,306,018 million in 2019 to a decline of US$87,873,456 million in 2020, the report relays. Its fuel costs decreased from US$85,356,403 million to US$20,936,035 million, the report notes Maintenance also declined from US$52,795,375 million to US$31,48,146 million, the report discloses. Its employee costs moved from US$77,439,366 million in 2019 to US$66,205,523 in 2020, the report relays. In September 2020, CAL announced that it would temporarily lay off close to 600 employees in T&T and Jamaica for three months and there would be salary reductions for eight months-from October 15, 2020 to June 15, 2021-as the airline hoped to save around US$1.6 million a month, the report says. CAL said it was applying those "temporary measures to support its recovery during the Covid-19 pandemic," the report notes. Those measures, according to a statement from the airline, will involve sending some employees on no-pay leave, some salary cuts and some would be temporarily laid off, the report discloses. The criteria was based on the principle of Last In First Out "unless there was justifiable and reasonable operational considerations to do otherwise," the report says. Its marketing and CRS, which cost US$19,953,535 million in 2019 declined to US$4,815,931 million in 2020, the report notes. The commissions that are paid to travel agents moved from US$20,517,974 million in 2019 to US$4,640,465 million in 2020, the report relays. In February, the airline issued a press release of its accounts which said its unaudited financial results for the year to the end of December 2020, with the impact of the global pandemic resulted in an operating loss (Earnings Before Interest & Taxes-EBIT) of TT$738 million (US$109.2 million) on revenue of TT$802 million (US$118.6 million), the report notes. The company noted that was "in stark comparison to 2019, which saw a positive EBIT of TT$76m (US$11.2m) on revenue of TT$3bn (US$440m) for the 12-month period. Operating expenses for 2020 were TT$1.54bn (US$228m), 47% lower than 2019 due to fewer flights and strict cost controls," the report relays. In commenting on the results, Garvin Medera, CAL's CEO, said: "The first two months of 2020 continued our upward trajectory of the previous three years and the next phase of our strategic plan was commencing strongly, the report discloses. However, Covid-19 has taken a sledgehammer to international travel and tourism for the past ten months and our financial results for last year fully reflect this new reality," the report says. Medera pointed out that CAL provided support through repatriation flights for a number of Caribbean nations and resumed operations in some destinations outside of Trinidad and Tobago where borders are open, the report relays. CAL noted that during 2020 passenger flights were 90 per cent lower than the same period for the previous year as a result of international border closures from March 2020 onwards, the report discloses. "Passenger numbers for 2020 fell substantially by 71 per cent to a mere 741,676 (371,549 of which travelled on the domestic air bridge between Trinidad and Tobago), in comparison to 2019 when the airline carried 2,595,526 persons," the company had said, the report relays. According to the Auditor General's 2019 Report, the Ministry of Finance already services a US$75 million loan for CAL, taken under the People's Partnership administration, at First Citizens. That balance, according to the last report is TT$478,594,222.56, the report notes. Cash Crunch Earlier this year, Finance Minister Colm Imbert said that the Government had subsidised the airline to the tune of over $700 million in 2020, the report relays. At a news conference in February, Imbert had said: "Covid-19 has also adversely affected the air transportation sector, requiring subsidy by the Government of Caribbean Airlines to the tune of $700 million over the last year. The Airports Authority is also haemorrhaging, since with the borders being closed it is earning little or no revenue, while incurring significant operational costs," the report says. Last year, the Government agreed to guarantee a US$65 million ($442 million) loan to CAL, the report recalls. At the time, Medera told the company's staff that while CAL was able to fund April salaries, it would need external funding for the coming months, the report relays. Imbert said that "Caribbean Airlines is earning no money at this point in time so the Government agreed to guarantee the loan," the report notes. But Prime Minister Dr Keith Rowley has signalled his Government's intent to re-open the country's borders as the country moves ahead with its vaccination program, the report says. To this end, CAL has opted not to exit its contract to take 12 Max-8 aircraft when the opportunity was presented, the report notes. When the option to exit was presented the airline would not have faced any penalties for exercising the option but the beleaguered carrier opted to maintain it, the report relays. In December 2020, the Max-8 was cleared for flying after 20 months of being grounded by the Federal Aviation Authority (FAA), the report notes. The aircraft is already being used in the United States and in Canada. As it stands, CAL plans to reduce its jet fleet from 12 to nine and it has already returned two aircraft to lessors with another to be returned shortly, the report relays. All leases for the nine existing aircraft have been extended for at least another year until the company can take receipt of the Max 8 aircraft, the Sunday Express was told. CAL's current fleet comprises 12 Boeing 737-800. In November 2018, CAL announced that it had leased 12 of Boeing's Max 8 to replace its old fleet and had made a downpayment of US$7 million for the new planes, the report discloses. CAL was supposed to take receipt of the first Boeing aircraft in December 2019. But Boeing's Max 8 aircraft has been grounded since the crash of two aircraft-the Lion Air Flight 610 in October 2018 in Indonesia and Ethiopian Airlines Flight 302 in March 2019 in Ethiopia which killed a total of 346 people. Imbert, in his capacity as line minister for CAL, as well as Corporation Sole, at the post-Cabinet media briefing in 2019, had said he gave the State airline a directive to review the contract and "get international assistance from aviation experts," particularly lawyers specialising in aviation law, to look at the terms and conditions of the contract, the report relays. "One of the obvious conditions must be that the aircraft must be certified as fit for purpose. In the current situation, with the (US regulator) Federal Aviation Authority grounding the aircraft, clearly these aircraft would not be fit for purpose. We do not know what it will be like in December," he had added. Since Covid-19 hit the Caribbean in March 2020, the airline's flights dwindled as borders were closed to contain the spread of the coronavirus. T&T's borders closed on March 23 and have remained closed except for cargo flights and repatriation flights, the report notes. With T&T unable to be a hub, CAL set up a temporary hub in Barbados to service the Eastern Caribbean. CAL's fleet, which comprises Boeing 737-800 and ATR72-600 aircraft, has remained, for the most part, grounded, the report adds. About Caribbean Airlines Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. Caribbean Airlines is among many airlines whose business has been greatly affected in 2020 by the slowdown of international travel caused by the COVID-19 pandemic. The government of Trinidad & Tobago guaranteed a US$65 million loan for the airline, and that funding has helped with the airlines' cash flow shortfall since May 2020. In September 2020, the airline related it will be taking cost-cutting measures to help keep it afloat. The measures, which was to affect some 1,700 employees, included salary deductions, no-pay leaves and lay-offs. ********* 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 2021. 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 * * *