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/raid1/www/Hosts/bankrupt/TCRLA_Public/210909.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 Thursday, September 9, 2021, Vol. 22, No. 175 Headlines A R G E N T I N A PAMPA ENERGIA: S&P Affirms 'CCC+' Rating, Alters Outlook to Stable B E R M U D A NABORS INDUSTRIES: Moody's Affirms B3 CFR, Alters Outlook to Pos. B R A Z I L BRAZIL: Agriculture Ministry Suspends Beef Exports to China BRAZIL: Energy & Fuel Price Inflation Jeopardizes Recovery Plans C A Y M A N I S L A N D S KT21 T2 COMPANY: Fitch Rates USD350MM Tier 2 Sukuk 'B(EXP)' C H I L E EMPRESA NACIONAL: S&P Rates New Senior Unsecured Notes 'BB+' LATAM AIRLINES: No Plan of Selling Brazilian Branch to Rival Azul D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Time to Strike Tax Break Morass Says World Bank J A M A I C A JAMAICA: Enters Deal with Newport-Fersan to Make Products Cheaper JAMAICA: Government to Allocate More Funds to COVID Fight M E X I C O ALPHA LATAM: Seeks to Hire Richards Layton & Finger as Co-Counsel - - - - - ================= A R G E N T I N A ================= PAMPA ENERGIA: S&P Affirms 'CCC+' Rating, Alters Outlook to Stable ------------------------------------------------------------------ On Sept. 7, 2021, S&P Global Ratings affirmed the 'CCC+' ratings on Argentine energy company Pampa Energia S.A., because they continue to be capped by its 'CCC+' transfer and convertibility assessment (T&C) of Argentina. However, S&P revised its outlook to stable from negative and revised upwards Pampa's stand-alone credit profile (SACP) to 'b-' from 'ccc+'. The stable outlook on Pampa now mirrors that on the sovereign and incorporates S&P's view of the company's adequate liquidity and comfortable debt maturity profile in the next 12 months, given that it doesn't face significant debt maturities until 2023. In the company's gas segment, higher revenue stems from new volumes and prices awarded in the second round under the Plan to Promote Argentine Natural Gas Production ('Plan Gas.Ar'). Pampa's injection commitment totaled 318 million cubic feet per day (9 million cubic meters per day) for the winter of 2021-2024. Compared with the 2020 level, this represents an annual production growth of 15% and a 28% rise during the peak season, the country's highest gas-demanding months. In Pampa's generation segment, despite recent technical problems at a gas turbine in Genelba's new combined-cycle plant that reduced capacity by approximately 50% in two months, higher revenue is likely after the 29% ad-hoc rate hike (Resolution 440/2021) for fiscal 2022 (April 2021 - April 2022). In this sense, S&P expects Pampa's adjusted EBITDA to be about $650 million and margin to stay healthy at above 40% in 2021 and 2022. S&P said, "We expect Pampa to maintain financial discipline and low leverage for the rating level, with gross debt to EBITDA between 2.5x and 3.0x in 2021 and 2022 (including $97 million guaranteed debt at Greenwind subsidiary). Despite higher working capital needs to fund higher collection days from CAMMESA (90 days in 2021 versus 80 in 2020 and 55 in 2019), we forecast conservative capital expenditures (capex; $250 million - $300 million), which should allow for free operating cash flows at about 10% of debt in 2021 and 2022. "The stronger SACP also reflects our view of Pampa's adequate liquidity, with $462 million in cash as of June 2021. This was thanks to Pampa's sale of its stake in Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor; CCC-/Negative/--) for $99 million and a comfortable debt maturity profile. After the recent payment of series VI local bond of ARP6.35 billion (about $65 million) in late August, Pampa doesn't face significant debt maturities until July 2023. Financial obligations until that date mainly consist of interest payments, which aren't subject to the restrictions imposed by Argentina's central bank through the Resolutions 7106 and 7230. In the meantime, the administration is planning to send a bill to Congress in the coming days to promote investments in the hydrocarbon sector, granting greater access to foreign currency for the sector's players. "Our ratings also incorporate Pampa's exposure to high volatility and country risks. Argentina's economic and regulatory volatility continues to limit the company's credit quality. Despite the recent ad-hoc rate increase for Pampa's generation segment, absent a permanent and predictable adjustment mechanism, this unit's cash flows will remain uncertain and likely to lag cost inflation. Our 'CCC+' rating on Pampa mainly reflects its operations in Argentina (CCC+/Stable/C), exposing the company to exacerbating business conditions and exchange rates, high interest rates, and restrictions on accessing and/or transferring funds abroad. Although the latter currently doesn't pertain to Pampa, it has some degree of exposure to currency fluctuations. We believe business conditions in Argentina will remain difficult in the next 12 months." ============= B E R M U D A ============= NABORS INDUSTRIES: Moody's Affirms B3 CFR, Alters Outlook to Pos. ----------------------------------------------------------------- Moody's Investors Service changed the rating outlook of Nabors Industries Ltd. and its wholly-owned subsidiary Nabors Industries, Inc. (NII) to positive from negative. Moody's concurrently affirmed the company's B3 Corporate Family Rating and B3-PD Probability of Default Rating, as well as the Caa1 rating on Nabors' guaranteed senior unsecured notes, the B3 rating on NII's senior priority guaranteed notes due 2025, and the Caa2 rating on NII's senior unsecured notes. The Speculative Grade Liquidity (SGL) rating remained unchanged at SGL-3. "The positive outlook reflects our expectation that Nabors will continue to make progress towards its goal of reducing debt and extending maturities as global drilling activity gradually improves through 2022," said Sajjad Alam, Moody's Senior Analyst. "The company should be able to repay at least $220 million of debt in 2021 with free cash flow and asset sales proceeds, and does not have any material debt maturities until 2023." The following ratings/assessments are affected by the action: Affirmations: Issuer: Nabors Industries Ltd. Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Unsecured Notes, Affirmed Caa1 (LGD4) Issuer: Nabors Industries, Inc. Senior Unsecured Conv./Exch. Notes, Affirmed Caa2 (LGD5) Senior Unsecured Notes, Affirmed B3 (LGD3) Senior Unsecured Notes, Affirmed Caa2 (LGD5) Outlook Actions: Issuer: Nabors Industries Ltd. Outlook, Changed To Positive From Negative Issuer: Nabors Industries, Inc. Outlook, Changed To Positive From Negative RATINGS RATIONALE Rig demand has improved globally in 2021 and US rig activity has roughly doubled from the lowest point set in mid-2020. Moody's expects steady improvements in rig industry fundamentals through 2022 as E&P companies gradually increase spending to take advantage of favorable commodity prices. Nabors should be able to generate meaningful free cash flow in a positively trending market allowing it to redeem more debt and further improve its maturity profile in 2022. Nabors' B3 CFR reflects its high financial leverage, significant re-contracting risk through 2022 given the projected slow recovery in global rig demand, and large refinancing needs in 2023-25. Despite the sharp increase in oil and natural gas prices in 2021, land drillers will have limited pricing power to raise dayrates through mid-2022 as producers continue to invest conservatively and rig markets remain oversupplied. The B3 CFR is supported by Nabors' large scale, high quality rig fleet, long-standing contractual relationship with some of the world's largest oil companies, and a strong and diversified international footprint. The company's relationship with its largest customer, Saudi Arabian Oil Company (Saudi Aramco, A1 negative), will continue to provide a base level of earnings and stability. Moody's expects Nabors to have adequate liquidity through 2022, which is reflected in the SGL-3 rating. Moody's expects the company to generate $150-$200 million of free cash flow through 2022 and apply any surplus cash to reduce debt. As of June 30, 2021, Nabors had $400 million in cash and short-term investments and roughly $220 million of effective availability under its $1.01 billion revolving credit facility after accounting for LCs and minimum liquidity requirements. However, $305 million of its cash was held at its Saudi joint-venture that was not readily accessible. After executing an amendment in September 2020, $545.8 million of loans under the revolving credit facility are now secured, while the remaining commitment (~$468 million) remains unsecured. The credit facility will mature at the earlier of (a) October 11, 2023 and (b) July 19, 2022, if any of Nabors' existing 5.5% $24 million senior notes due January 2023 remain outstanding as of July 19, 2022. The company should be able to repay both the 5.5% notes and the 5.1% September 2023 notes ($120 million outstanding at June 30, 2021) with cash on hand and free cash flow. Nabors should be able to comply with its credit agreement financial covenants through 2022 after eliminating the previous net leverage covenant. The revolver financial covenants include a minimum liquidity requirement of $160 million and a guarantor coverage ratio of no less than 4.25x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade could be considered if Nabors generates free cash flow consistently and achieves meaningful debt reduction leading to a sustainable EBITDA/interest ratio above 2.5x and debt/EBITDA below 5.5x in a stable to improving industry environment. The ratings could be downgraded if the EBITDA/interest ratio falls below 1.5x, refinancing risk increases, or the company generates material negative free cash flow weakening its liquidity cushion. The principal methodology used in these ratings was Oilfield Services published in August 2021. Nabors Industries Ltd., a Bermuda-incorporated entity, is one of the largest global land drilling contractors with operations in nearly two dozen countries and several offshore markets. Nabors Industries, Inc. is a wholly owned subsidiary of Nabors Industries Ltd. =========== B R A Z I L =========== BRAZIL: Agriculture Ministry Suspends Beef Exports to China ----------------------------------------------------------- Rio Times Online reports that the Ministry of Agriculture has suspended beef exports to China. The measure meets the health protocol between the two countries for the detection of mad cow disease, according to Rio Times Online. The decision was to come into force Sept. 4, according to a letter signed by the director of the Department of Inspection of Animal Products (Dipoa), Ana Lucia Viana, the report notes. It is not yet clear when Brazilian beef exports may resume, the report relays. In 2019, when Brazil recorded the last atypical case of mad cow disease, sales to China were suspended for 13 days, the report says. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. Fitch Ratings' credit rating for Brazil stands at 'BB-' with a negative outlook (November 2020). Fitch's 'BB-' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) has been affirmed in May 2021. Standard & Poor's credit rating for Brazil stands at BB- with stable outlook (April 2020). S&P's 'BB-/B' long-and short-term foreign and local currency sovereign credit ratings for Brazil were affirmed in December 2020. Moody's credit rating for Brazil was last set at Ba2 with stable outlook (April 2018). DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). BRAZIL: Energy & Fuel Price Inflation Jeopardizes Recovery Plans ---------------------------------------------------------------- Rio Times Online reports that essential in the daily life of families and companies, a group of products in the energy sector is eroding the economy's recovery. The electricity, gasoline, and diesel oil prices jumped at the end of last year and have not stopped rising since then, according to the report. In July, they were the main item responsible for inflation, according to the Broad Consumer Price Index (IPCA) - released by the IBGE, the report notes. According to specialists, the scenario for 2022 is even more worrying, especially given the water crisis and the perspective of readjustments that impact the electricity bill, the report relays. In the 12-month period until July this year, the two fuels, gasoline, and diesel have appreciated more than filet mignon (33.56%), considered a luxury product, the report discloses. Electricity, meanwhile, rose 20.09%, the highest since September 2018, the report adds. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. Fitch Ratings' credit rating for Brazil stands at 'BB-' with a negative outlook (November 2020). Fitch's 'BB-' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) has been affirmed in May 2021. Standard & Poor's credit rating for Brazil stands at BB- with stable outlook (April 2020). S&P's 'BB-/B' long-and short-term foreign and local currency sovereign credit ratings for Brazil were affirmed in December 2020. Moody's credit rating for Brazil was last set at Ba2 with stable outlook (April 2018). DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). =========================== C A Y M A N I S L A N D S =========================== KT21 T2 COMPANY: Fitch Rates USD350MM Tier 2 Sukuk 'B(EXP)' ----------------------------------------------------------- Fitch Ratings has assigned Kuveyt Turk Katilim Bankasi A.S.'s (Kuveyt Turk; B+/Stable/b+) USD350 million subordinated fixed rate resettable sustainability Tier 2 sukuk an expected long-term rating of 'B(EXP)'/RR5. The sukuk is issued through KT21 T2 Company Limited (KT21 T2). The sukuk will mature in December 2031, with a call date in December 2026. The certificates will constitute direct, unsecured, and subordinated obligations of Kuveyt Turk that rank pari passu with all of its other subordinated obligations, but in priority of junior obligations. The certificate holders' right to receive payment of the principal amount of the Tier 2 certificates and the periodic distribution amounts in respect of Tier 2 certificates, may be written down (in whole or in part) upon the occurrence of a non-viability event. KT21 T2, the issuer and trustee, is a special purpose vehicle, incorporated in the Cayman Islands as a trust for charitable purposes with shares held by Maples FS Limited as share trustee. KT21 T2 was established solely to issue certificates (sukuk) and enter into the transactions contemplated by the transaction documents. The assignment of the final rating is contingent on the successful issuance of the sukuk and final documents materially conforming to information already reviewed. KEY RATING DRIVERS The Tier 2 certificates' expected rating is one notch below Kuveyt Turk's 'B+' Long-Term Foreign-Currency IDR (LTFC IDR). Fitch includes zero notches for incremental non-performance risk, reflecting that the terms of the certificates do not provide for loss absorption on a going concern basis. Fitch only includes one notch for loss severity, reflecting Fitch's view that institutional support (as reflected in the bank's LTFC IDR) somewhat mitigates losses, also incorporating that the bank's LTFC IDR is already capped at 'B+', one notch below the sovereign, reflecting Fitch's view that government intervention risk, which would impede the bank's ability to service its FC obligations, is more likely than a sovereign default. Kuveyt Turk's LTFC IDR is driven by institutional support from its higher rated parent, Kuwait Finance House (A+/Negative). Fitch uses the LTFC IDR as the anchor rating for the certificates as Fitch believes that potential extraordinary institutional support is likely to flow through to the bank's subordinated certificate holders. Fitch's view of support is based on Kuveyt Turk's strategic importance to its parent, ownership, integration and role within the wider group. Fitch's assessment of Kuveyt Turk's Standalone Credit Profile, which is at the same level as its support-driven LT IDR, is undermined by exposure to heightened operating environment risks. Fitch has given no consideration to any underlying assets or any collateral provided under the transaction, as Fitch believes that the issuer's ability to satisfy payments due on the certificates will ultimately depend on Kuveyt Turk satisfying its unsecured payment obligations to the issuer under the transaction documents. In addition to the bank's propensity to ensure repayment of the sukuk, in Fitch's view Kuveyt Turk would be required to ensure full and timely repayment of KT21 T2's obligations due to its various roles and obligations under the sukuk structure and documentation, especially, but not limited to, the features below: -- Pursuant to the servicing agency agreement, Kuveyt Turk as servicing agent will ensure sufficient funds are available to meet the periodic distribution amount payable by the trustee under the certificates on the periodic distribution date. Fitch notes that Kuveyt Turk can take other measures to ensure that there is no shortfall and that funding of the principal payment and the portfolio income is paid in full, and in a timely manner. -- In respect of the Tier 2 certificates, upon the occurrence of any dissolution event, if requested in writing by the holders of at least 25% of the aggregate face amount of the certificates, or by extraordinary resolution, the trustee or the delegate will exercise its rights under the purchase undertaking and the sale and substitution undertaking against Kuveyt Turk and/or institute proceedings for Kuveyt Turk to be declared bankrupt or insolvent, or for there otherwise to be a subordination event, or for Kuveyt Turk's winding-up, dissolution or liquidation, and prove in the winding-up, dissolution or liquidation of Kuveyt Turk. -- On the scheduled dissolution date or upon a dissolution event, (i) the aggregate amounts of deferred sale price then outstanding pursuant to the Murabaha agreement, if any, will become immediately due and payable; and (ii) KT21 T2, acting as trustee will have the right, under the purchase undertaking, to require Kuveyt Turk to purchase all of the trustee's rights, ownership interests, benefits and entitlements in, to and under the wakala assets at the relevant exercise price. -- The outstanding deferred sale price and the exercise price together are intended to fund the dissolution distribution amount payable by the trustee on the scheduled dissolution date, which should equal the sum of the aggregate outstanding face amount of certificates; plus all accrued and unpaid periodic distribution amounts in respect of the certificates. -- Kuveyt Turk's payment obligations in relation to any amount payable in respect of the subordinated Tier 2 sukuk will be direct, unsecured and subordinated obligations to claims in respect of senior obligations, and will at all times rank at least equally with all other subordinated unsecured obligations but in priority in respect of junior obligations. -- If a non-viability event occurs that results in the sukuk certificates being fully written down, the certificate holders' rights to the trust assets will automatically be deemed to be irrevocably and unconditionally cancelled and the certificates will be cancelled and not restored under any circumstances, irrespective of whether the amounts have become due and payable prior to the date of the non-viability event write-down date. -- The transaction documents include an obligation for Kuveyt Turk to ensure that at all times following the issuance date, the tangibility ratio is greater than 50%, meaning that at least 50% of wakala assets (based on portfolio value) must be formed of eligible tangible assets. Failure of Kuveyt Turk to comply with this obligation does not constitute an obligor event, but the service agent must nonetheless take steps to restore the tangibility ratio to over 50%. If the ratio falls below 33%, this would constitute an obligor event. Fitch expects the tangibility ratio to be maintained at above 50% over the life of the transaction, facilitated by Kuveyt Turk's extensive asset base. For the purpose of this issuance, the bank has identified a pool of about USD230 million of eligible assets, equal to an initial tangible ratio of about 66%. The bank's total pool of eligible assets includes USD1.5 billion of Turkish sovereign sukuk (August 2021) and USD900 million of ijara financing (June 2021), implying strong coverage of the tangibility ratio requirement based on the planned USD350 million issuance size. In addition, Kuveyt Turk has adequate FC liquidity, meaning it should be able to repay the sukuk in full in case of a breach of the tangibility ratio (not Fitch's base case). Certain aspects of the transaction will be governed by English law while others are governed by the laws of Turkey and Cayman Islands. Fitch does not express an opinion on whether the relevant transaction documents are enforceable under any applicable law. However, Fitch's rating on the certificates reflects the agency's belief that Kuveyt Turk would stand behind its obligations. The intended transaction does not contain physical tangible real estate assets, so no total loss event has been included. When assigning ratings to the certificates to be issued, Fitch does not express an opinion on the certificates' compliance with sharia principles. RATING SENSITIVITIES The certificates' rating is sensitive to changes in Kuveyt Turk's LTFC IDR. The rating may also be sensitive to changes to the roles and obligations of Kuveyt Turk under the sukuk's structure and documents. The certificates' rating is also sensitive to a change in notching should Fitch change its assessment of loss severity or relative non-performance risk. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade of Kuveyt Turk's LTFC IDR would result in an upgrade of KT21 T2's Sukuk rating. Positive rating action on Turkey's LT IDR or Outlook would likely lead to similar action on the bank's LT IDR. A material improvement in Turkey's external finances or a marked increase in its net FX reserves position, resulting in a significant reduction in Fitch's view of government intervention risk in the banking sector, could lead to an upgrade of the bank's LTFC IDR. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Kuveyt Turk's LTFC IDR would result in a downgrade of KT21 T2's Sukuk's rating. The LTFC IDR is primarily sensitive to Fitch's view of government intervention risk in the banking sector and could be downgraded if we assess this risk as having increased. Negative rating action on the sovereign would likely lead to similar action on the bank. -- A reduced likelihood of institutional support from KFH could also put downward pressure on the rating, but the LTFC IDR would only be downgraded if the bank's VR was simultaneously downgraded. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS The subordinated Sukuk rating is notched down once from Kuveyt Turk's LTFC IDR. The notching includes one notch for loss severity and zero notches for non-performance risk. ========= C H I L E ========= EMPRESA NACIONAL: S&P Rates New Senior Unsecured Notes 'BB+' ------------------------------------------------------------ S&P Global Ratings assigned its 'BB+' issue-level rating to Empresa Nacional del Petroleo's (ENAP's; BB+/Stable/--) proposed 10-year senior unsecured notes of up to $600 million. The company will use the proceeds to repay the $410 million international bond due December 2021 and for general corporate purposes, including the repayment of short-term debt maturities under its bilateral facilities. S&P said, "The ratings on ENAP continue to incorporate a highly leveraged financial profile, which we consider sustainable due to the company's ownership by Chile, which we rate at investment grade, and our assessment of a very high likelihood of extraordinary support from the sovereign in case of financial distress. Our ratings also incorporate our view of ENAP's liquidity as less than adequate, because its cash uses will exceed its sources in the next 12 months. Our liquidity assessment captures the company's well-established relationship with banks and access to capital markets, which we also attribute to its shareholding structure. "We view the issuance as neutral for the existing ratings, mainly because our base-case scenario incorporated ongoing access to debt and capital markets as a means for ENAP to manage its debt maturities in the short term. If the issuance occurs, it will alleviate the company's financial needs in 2021 by securing funds to repay the international bond due December 2021, while potentially creating additional liquidity to free up some space under its short-term bilateral facilities, for instance. In addition, the issuance would further lengthen the company's debt maturity profile. We view the issuance as part of the company's plan to manage its existing debt maturity profile and in line with our expectations, as commented in our publications dated June 17, 2021, and July 30, 2021. "Absent further coronavirus-related lockdowns, we maintain our expectation that ENAP's leverage will fall in 2021 from a peak of above 10x in 2020 as EBITDA recovers. The latter should cause debt to EBITDA to fall to 8x or potentially below that level this year, in our view, depending on capital expenditure levels for the full year, which were below guidance during first-half 2021." Ratings List NEW RATING EMPRESA NACIONAL DEL PETROLEO Senior Unsecured BB+ LATAM AIRLINES: No Plan of Selling Brazilian Branch to Rival Azul ----------------------------------------------------------------- Daniel Martinez Garbuno of Simple Flying reports that LATAM Airlines Group is not interested in selling its Brazilian branch to local competitor Azul, Jerome Cadier, the Brazilian CEO, recently said. Instead, the company is focused on exiting successfully from its Chapter 11 bankruptcy process in the next few weeks. Throughout 2021, LATAM has publicly declined any interest in selling its Brazilian branch. In a statement sent to Simple Flying in May 2021, LATAM said, "LATAM Group intends to compete in Brazil and other markets aggressively and doesn't have the intention of selling or breaking apart its Brazilian, or any other, branch. LATAM Group has not received any acquisition proposal. The ending of the domestic codeshare by LATAM is not related to this topic." Azul's CEO, John Rodgerson, has recently given strength to the possibility of a buyout. Rogerson argued that the Brazilian government should look into the possibility of merging both carriers. He said, "The deputies should look into this. If we see other countries worldwide, Air Canada has 70% of the Canadian market share; Avianca has 70% of the Colombian market; LAN has 85% of the Chilean market. We shouldn't think of this as something harmful, and instead, we should look at the opportunities." If Azul and LATAM Brazil did merge, they would create a powerhouse in the Brazilian market. They would have a combined market share of 68%, according to the latest stats provided by the Civil Aviation Authorities. In an interview with the Brazilian newspaper O Globo, Jerome Cadier denied the rumors again. He said that Azul's plan is to delay LATAM's exit from its Chapter 11 process. LATAM will present its reorganization plan next week. About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP serve as the Debtors' strategic advisors. Prime Clerk LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel to the Ad Hoc Committee of Shareholders. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Time to Strike Tax Break Morass Says World Bank ------------------------------------------------------------------- Dominican Today reports that The World Bank (WB) and the French Development Agency (AFD) said the complexity of the Dominican tax code "and the uneven history of its application on certainly very narrow tax bases" has caused large or established companies to have unfair advantages over others, something that, at the same time, has weakened the efficiency and progressiveness of the country's tax structure. "Tax expenditures should be viewed as a top reform priority, because the DR's elaborate system of exemptions, deductions, tax 'holidays' and other incentives favors established businesses, and removing these policies would boost revenues while it would encourage competition and level the playing field," said the multilaterals in their most recent report, "Dominican Republic, public spending review", according to Dominican Today. The tax exemptions, which especially benefit free zones, the electricity sector, tourism and mining, are governed by 39 different tax regulations, the report notes. 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: Enters Deal with Newport-Fersan to Make Products Cheaper ----------------------------------------------------------------- RJR News reports that Jamaica Agriculture Minister Floyd Green has announced an agreement with Newport-Fersan, the country's sole manufacturer of fertilizer, to look at developing new formulations utilizing cheaper inputs aimed at reducing the price to farmers. He expressed concern over the increase in the cost of fertilizers and feed that would negatively impact farmers' ability to produce and threaten the continued growth trajectory in the agricultural sector, according to RJR News. For the April to June quarter, the sector experienced a record high performance in domestic crop production of over 204,000 tonnes, representing a 20.3 per cent increase over the corresponding period in 2020, the report notes. 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. 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. JAMAICA: Government to Allocate More Funds to COVID Fight --------------------------------------------------------- RJR News reports that more funds are to be allocated by the government to deal with the COVID-19 pandemic. The money will be included in the first supplementary budget which Finance Minister Dr. Nigel Clarke says will be tabled by the end of this month, according to RJR News. In a news release, Dr. Clarke said the budget will address critical needs including expenditure pressures brought on by the surge in COVID-19 cases, the report notes. Dr. Clarke said the financing requirements of the health sector are significant, as the Government continues efforts to reduce the health impact of the pandemic on the population, as well as more targeted support for vulnerable groups, the report relays. During the April to July period, there was a primary balance surplus that exceeded the budgeted balance by $26.4 billion, the report notes. This resulted from revenues exceeding target by $17.3 billion while expenditure was $7.3 billion below budget, the report discloses. However, Dr. Clarke cautioned that reduce expenditure does not reflect fiscal savings as the spending may have been delayed, the report adds. =========== M E X I C O =========== ALPHA LATAM: Seeks to Hire Richards Layton & Finger as Co-Counsel ----------------------------------------------------------------- Alpha Latam Management, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ Richards Layton & Finger, P.A. as co-counsel with White & Case, LLP. The firm's services include: a. advising the Debtors of their rights, powers, and duties under Chapter 11 of the Bankruptcy Code; c. preparing legal papers; d. taking actions to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the estates; e. assisting the Debtors in the sale of their assets; f. preparing a disclosure statement and any related documents necessary to solicit votes on the Debtors' chapter 11 plan; g. prosecuting any proposed Chapter 11 plan and seeking approval of all transactions contemplated therein; and h. performing all other necessary legal services. The firm's hourly rates are as follows: Directors $775 to $1,250 per hour Counsel $700 to $725 per hour Associates $425 to $650 per hour Paraprofessionals $300 per hour The Debtor paid the firm a retainer in the amount of $225,000. The firm will also be reimbursed for out-of-pocket expenses incurred. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, the following is provided in response to the request for additional information: a) The firm did not agree to any variations from, or alternatives to, its standard or customary billing arrangements for this engagement. b) None of the firm's professionals included in this engagement have varied their rate based on the geographic location for these Chapter 11 cases. c) The firm has represented the Debtors since June 2021. Other than the periodic adjustments, the billing rates and material financial terms of the firm's engagement have not changed post-petition from the pre-bankruptcy arrangement. d) The firm, in conjunction with the Debtors and White & Case, is developing a prospective budget and staffing plan for these Chapter 11 cases. John Knight, Esq., a partner at Richards Layton & Finger, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: John H. Knight, Esq. Mark D. Collins, Esq. Brendan J. Schlauch, Esq. Megan E. Kenney, Esq. Richards Layton & Finger, P.A. One Rodney Square 920 N. King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Email: collins@rlf.com knight@rlf.com schluach@rlf.com kenney@rlf.com About Alpha Latam Management Wilmington, Del.-based Alpha Latam Management, LLC and its affiliates operate a specialty finance business that offers consumer and small business lending services to underserved communities in Mexico and Colombia. Alpha Latam Management and certain of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 21-11109) on August 1, 2021, disclosing assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. Judge J. Kate Stickles oversees the cases. The Debtors tapped Richards, Layton & Finger, P.A. and White & Case, LLP as legal counsel; Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as investment bankers; and AlixPartners, LLP as financial advisor. Prime Clerk, LLC is the claims and noticing agent and administrative advisor. On Aug. 11, 2021, Alpha Holding, S.A. de C.V. and AlphaCredit Capital, S.A. de C.V. SOFOM, ENR commenced in Mexico City a jointly administered voluntarily filed proceeding pursuant to the Ley de Concursos Mercantiles. Through this proceeding, the Mexican Debtors intend to pursue a controlled restructuring and possible sale of their assets. ********* 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 * * *