/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220114.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, January 14, 2022, Vol. 23, No. 5 Headlines B R A Z I L BANCO DO BRASIL: Fitch Rates USD500MM Sr. Unsec. Notes Final 'BB-' BANCO MODAL: Moody's Affirms Ba3 Deposit Ratings, Outlook Pos. ITAPEMIRIM TRANSPORTES: Brazil Blocks Carrier From Selling Tickets G U A T E M A L A CENTRAL AMERICA BOTTLING: Fitch Rates USD1.1BB Sr. Unsec. Notes BB+ J A M A I C A JAMAICA: Coffee Distributors to Get Ministry's Help for Compliance M E X I C O GRUPO AEROMEXICO: Halts Some Flights as COVID-19 Hits Crews GRUPO AEROMEXICO: Reports December 2021 Traffic Results P E R U VOLCAN COMPANIA: Moody's Affirms 'B1' CFR, Outlook Stable U R U G U A Y URUGUAY: Montevideo Tourism Loses Cruisers - - - - - =========== B R A Z I L =========== BANCO DO BRASIL: Fitch Rates USD500MM Sr. Unsec. Notes Final 'BB-' ------------------------------------------------------------------ Fitch Ratings has assigned Banco do Brasil S.A.'s (BdB) USD500 million senior unsecured notes 'BB-' final rating. The notes were issued through its Grand Cayman branch and have a seven-year tenor with a 4.875% annual interest rate. The bonds proceeds will be used for the financing and/or refinancing of existing or future social projects defined by the bank. The final rating is in line with the expected rating that Fitch assigned to the proposed debt on Jan. 6, 2022. KEY RATING DRIVERS The final rating on the notes corresponds to BdB's Long-Term Foreign Currency Issuer Default Rating (IDR; BB-/Negative) and ranks equal to its other senior unsecured debt. BdB's ratings are equalized with Brazil's IDRs (BB-/Negative) and are further underpinned by the bank's Viability Rating (VR). In Fitch's view, the bank would receive support from the federal government, if needed. This reflects the majority of federal government ownership, its key policy role, particularly in rural lending and systemic importance. Fitch believes that the Brazilian government's willingness to support BdB in case need is high; however, its capacity to do so has fallen, as reflected in the successive sovereign rating downgrades. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- BdB's VR would be negatively affected if its common equity Tier 1 ratio falls below 9% and/or its regulatory capital ratios to approach the minimum requirements, due to a combination of asset quality deterioration, weakening of profitability or higher than expected growth. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- BdB's VR, IDRs and its issuance ratings would be affected by potential changes in the sovereign ratings of Brazil and/or in the sovereign's willingness to provide support to the bank, should the need arise. Fitch currently rates BdB as follows: -- Long-Term Foreign and Local Currency IDRs 'BB-'/Outlook Negative; -- Short-Term Foreign and Local Currency IDRs 'B'; -- National Long-Term rating 'AA(bra)'/Outlook Stable; -- National Short-Term rating 'F1+(bra)'; -- Support Rating '3'; -- Support Rating Floor 'BB-'; -- Senior unsecured notes due 2022, 2023, 2025 and 2026 'BB-'; -- VR 'bb-'. 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 Bdb's ratings are driven by Brazil's Sovereign Support. ESG CONSIDERATIONS Banco do Brasil S.A. has an ESG Relevance Score of '4' for Governance Structure (GGV). A GGV score of '3' is the standard score assigned to all banks rated by Fitch. Given BdB's ownership and a track record of the Brazilian federal government's ability to influence and interfere in the policies of the banks it controls, Fitch believes that an increase of government influence on BdB's management and strategy could impact negatively on creditors' rights. This has a negative impact on the bank's credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means 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. BANCO MODAL: Moody's Affirms Ba3 Deposit Ratings, Outlook Pos. -------------------------------------------------------------- Moody's Investors Service has affirmed all ratings and assessments assigned to Banco Modal S.A. (Modal), including the long- and short-term local and foreign currency deposit ratings of Ba3 and Not Prime, respective, as well as the bank's baseline credit assessment (BCA) of ba3. At the same time, Moody's changed the outlook on Modal's ratings to positive, following the announcement published on January 7, 2022 that XP Inc. plans to acquire Banco Modal, a transaction expected to be concluded over the outlook horizon. RATINGS RATIONALE The affirmation of Modal`s ratings reflects the bank's improved asset risk metrics, its strong capitalization and its profitability that has been improving sustainably over the past 4 quarters. The BCA also acknowledges Modal's consistent reduction in the reliance of institutional funding sources and the higher liquidity levels held by the bank in the past 12 months, factors supported by a growing retail base of deposits. Moody`s decision to assign a positive outlook to Modal's ratings follows the publication of a Material Fact that Banco Modal S.A. has entered into a binding memorandum of understanding under which XP Inc. (Ba2 stable, XP) will acquire 100% of Modal's shares. Following the conclusion of this transaction, Modal will become part of XP's ecosystem and investment product and banking services, which will enhance the bank's funding and earnings capacity by leveraging its assets under custody (AUC) and customer growth potential. Modal's funding structure will likely benefit from having a large and profitable shareholder that will provide it opportunities to reinforce its retail and institutional funding base at an even lower cost. In 2016, Modal started a change of its business model by investing in an open architecture investment platform, modalmais, integrated with full digital banking capabilities focused on middle income retail clients as well as investment banking services amid the growing financial services opportunities created by Brazil's deepening capital markets. Through its retail investment service platform, the bank reached BRL31 billion in assets under custody as of September 2021, up by 117% versus a year earlier. XP was founded in 2001 and has become a leading position as a full-service securities company offering a broad array of market-making and brokerage services to retail and institutional clients in Brazil's growing capital markets. As of September 2021, XP reported AUC BRL789 billion, up by 40% year over year due to its large and broad product offering and client base, which Modal will be able to target post acquisition. Modal's tangible common equity (TCE) to risk weighted assets (RWA) ratio was at 25.1% as of June 2021, up from 16.4% at the end of 2020, following the injection of BRL1.2 billion through an IPO which was concluded in April 2021. This capitalization will continue to support Modal's future growth plans in the competitive Brazilian investment market, providing comfortable buffers against rising asset risks as the bank increases its retail lending operation to investment service customers. Asset risks also improved in 2021, reflecting the completed run off of its legacy mid-sized corporate loan book by 2019, and the recent expansion of its loan book over the past two years. In June 2021, problem loan ratio reduced to 0.7% of gross loans from 2.5% at the end of 2020. However, asset risk will remain challenged by the bank's rapid loan growth projected for the next two years, and by its strategy in capital market activities that will also add credit risks. The legacy private equity investments still carried on its balance sheet accounted for 4.1% of total assets in June 2021. Modal's Ba3 deposit ratings also recognizes a growing participation of retail-related deposits in the bank's funding mix, with demand and time deposits representing 41% of total third-party resources as of June 2021, which has been helped by its proprietary digital platform that diminished the bank's reliance on more volatile and expensive institutional investors' resources. Although, Moody's does not have any particular governance concerns for Banco Modal, the ongoing transformation and expansion of its business model pose execution and operational risks and requires ongoing monitoring. The acquisition by XP is dependent on approval by Brazil's antitrust authority, Brazil's Central Bank as well as Modal shareholders. Moody's expects to maintain the positive outlook during the regulatory approval process. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive upward movement would arise at the materialization of the acquisition of Modal's shares by XP and the conclusion of regulatory approvals. Following the completion of the transaction, Modal's ratings would also consider support from XP that would be provided in a moment of stress. Improved profitability, sustained capitalization at higher levels and lower reliance on market funding would also be positive implications for the bank's BCA. Downward rating pressure does not exist at present given the positive outlook. ISSUERS AND RATINGS AFFECTED The following ratings and assessments of Banco Modal S.A. were affirmed: - Long-term local and foreign currency deposit ratings of Ba3, positive from stable outlook - Short-term local and foreign currency deposit ratings of Not Prime - Long-term local and foreign currency counterparty risk ratings of Ba2 - Short-term local and foreign currency counterparty risk rating of Not Prime - Baseline credit assessment of ba3 - Adjusted baseline credit assessment of ba3 - Long-term counterparty risk assessment of Ba2(cr) - Short-term counterparty risk assessment of Not Prime(cr) Outlook Actions: Outlook, positive from stable ITAPEMIRIM TRANSPORTES: Brazil Blocks Carrier From Selling Tickets ------------------------------------------------------------------ Daniel Martinez Garbuno at simpleflying.com reports that the future of Itapemirim Transportes Aereos is not looking promising. The Brazilian carrier temporarily ceased operations on December 17, 2021, and has not been able to restore its connectivity since. Moreover, Brazil's Civil Aviation National Agency (ANAC) has forbidden the airline to sell more tickets, according to simpleflying.com. What will happen with Itapemirim? Let's investigate further, the report notes. No More Ticket Sales Itapemirim Transportes Aereos had a short stint as a domestic carrier in Brazil. The airline operated flights between June 29 and December 17, 2021, although its long-term goal was to become one of Brazil's leading carriers competing directly with GOL, Azul, and LATAM, the report relays. Nonetheless, a lack of cash forced Itapemirim to stop operations last month. ANAC also temporarily suspended Itapemirim's Air Operator Certificate, the report notes. Since that happened, many of the airline's employees have migrated to other carriers. For instance, Azul is openly hiring former Itapemirim cabin crew members, the report discloses. The report notes that ANAC published a statement forbidding Itapemirim Transportes Aereos to resume sales of tickets. ANAC said, "The decision will remain in effect until the company demonstrates compliance with corrective actions such as re-accommodation of passengers, a full reimbursement of the airline tickets to customers who opted for this option, and a response to passengers on all complaints registered on the consumidor.gov.br platform," the report relays. A Bankruptcy Process? Itapemirim Transportes Aereos was a carrier belonging to the Brazilian ground transportation giant Itapemirim Group, the report notes. This company has one of the largest bus fleets in the Americas, but it is in a bankruptcy process since 2016, the report says. Brazil's justice system approved Itapemirim Group's judicial reorganization plan in 2019, and, although it hasn't been complied with, the company announced the launch of Itapemirim Transportes Aereos shortly after, the report discloses. Nonetheless, the fiasco of the shortly-lived carrier has raised alarms in Brazil, the report relays. On December 29, Brazilian 5th bankruptcy prosecutor Nilton Belli Filho asked a Brazilian court to declare the bankruptcy of Viacao Itapemirim and Itapemirim Transportes Aereos, the report relays. He is also looking to block the assets of Sidnei Piva de Jesus, owner of Itapemirim Group, the report says. Meanwhile, the Public Ministry of Sao Paulo is looking to add the airline to the whole bankruptcy process of the Itapemirim Group, the report discloses. What Could Have Been According to the report, time and time again, we have seen that it becomes complicated for a carrier to relaunch when it temporarily ceases operations. In Latin America, we previously had the example of Interjet, a company that stopped flying on December 11, 2020, the report notes. Therefore, it seems unlikely that Itapemirim will resume its commercial service, the report relays. Itapemirim Transportes Aereos once looked like a promising attempt of an airline, the report discloses. The Brazilian company promised to have a fleet of up to 50 aircraft within the first five years of operations; Itapemirim also dreamt of having a 40% market share in Brazil and even flying to Europe, the report says. Nonetheless, nothing came to fruition, the report notes. Itapemirim carried nearly 360,000 passengers in its brief history and became Brazil's fifth-largest domestic carrier, the report relates. It surpassed other operators like MAP Transportes Aereos and Azul Conecta, the report notes. The airline had a fleet of seven aircraft (six Airbus A320 and one A319), the report relays. Earlier, it was reported that Deucalion Aviation, a leasing company, was taking back two planes, the report adds. ================= G U A T E M A L A ================= CENTRAL AMERICA BOTTLING: Fitch Rates USD1.1BB Sr. Unsec. Notes BB+ ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to The Central America Bottling Corporation's (CBC) proposed up to USD1.1 billion senior unsecured sustainability linked notes. The proceeds will be used to refinance the company's current financial obligations and for general corporate purposes, including potential acquisitions. Fitch currently rates CBC's Foreign Currency and Local Currency Issuer Default Ratings 'BB+'/Stable. CBC's ratings reflect its business position as an anchor bottler of the PepsiCo, Inc. system, with operations in Central America, the Caribbean, Ecuador, Peru and Argentina along with exports to other countries and a good distribution network in key markets. The rating incorporates that the additional debt proceeds of close to USD300 million will be directed to profitable investments that will recover CBC's gross leverage to 'BB+' levels within the next 12 to 24 months. Failure to direct these funds in sustained profitable investments will weakened the ratings. KEY RATING DRIVERS Recovery in Operating Results: CBC is expected to recover to its pre-pandemic levels of volumes and revenues in 2021 as a result of higher rates of economic growth and the ease of mobility restrictions and lockdowns in its main markets. During 2021, CBC's sales volume and revenues are estimated to grow by low double digits and 14%, respectively. For 2022 and going forward, the growth will normalize at 2%-3%. Pressures in profitability due to higher raw material prices are manageable for the company, with an estimated EBITDA margin (pre-IFRS 16) of around 13% in 2021-2022. Leverage to Recover Gradually: CBC's gross leverage will end YE2021 at 4.0x but this ratio should improve to levels close to 3.5x by YE2022 due to gradual EBITDA growth. Net leverage is expected to remain stable at around 2.5x during the next three years. As of Sept. 30, 2021, CBC's total debt was USD945 million, excluding USD176 million of a loan structure that the company implemented for its operations in Central America. For the LTM as of Sept. 30, 2021, the company's gross and net leverage, as calculated by Fitch, were 3.8x and 2.3x, respectively. Solid Position in Core Markets: CBC's ratings reflect its stable market share positions across its operations. In the carbonated soft drink (CSD) category, which represents around 56% of its total sales volume, the company has maintained a leading market share position in Jamaica and maintained significant positions in other core markets such as Guatemala, Ecuador and Puerto Rico. In addition, CBC has a strong presence in non-CSD categories such as water, juices and nectars, isotonics, energy drinks and teas, where it holds important positions in most of its markets. Non-CSD products represent close to 38% of its total sales volume. The company's brand portfolio, distribution capabilities and management strategies to design and execute commercial initiatives will support its business position in the long term. FCF Turning Positive in 2022: CBC's FCF is forecast to be around USD51 million in 2022, driven mainly by cash flow from operations (CFFO) of around USD195 million, a capex of USD93 million and dividends of USD52 million. Positive FCF is expected to strengthen over the medium term as EBITDA, calculated by Fitch (pre-IFRS 16), will be above the USD300 million starting 2023. For the LTM ended September 30, 2021, CBC's FCF calculated by Fitch was USD85 million after covering capex of USD75 million and USD82 million of dividends; however, it is expected to finish negative by year-end mainly due to normalization of working capital requirements. Foreign Currency IDR Above Country Ceiling: CBC's Long-Term Foreign Currency IDR is rated one notch higher than its applicable 'BB' country ceiling of Guatemala, mainly due to its cash position held abroad and, to a lesser extent, EBITDA generated in markets such as Puerto Rico, Peru and Jamaica. Both factors contribute to cover the company's hard currency debt service over the midterm at more than 1.0x. The company's operating performance is more likely to depend on the stability and economic development of Guatemala, as this market represents close to 42% of its total revenues and 30% of its total EBITDA. DERIVATION SUMMARY CBC's ratings, at 'BB+', are below those of other beverage peers in the region, such as Arca Continental, S.A.B. de C.V. (A/Stable), Coca-Cola FEMSA, S.A.B. de C.V. (A/Stable) and Embotelladora Andina S.A. (BBB+/Stable), given its lower size and scale and weaker brand recognition of PepsiCo and proprietary beverage brands when compared to the stronger brand equity of Coca-Cola products. Also, the company's ratings reflect its lower profitability margins and higher exposure to lower-rated countries. CBC's ratings are above those of other beverage companies, such as Grupo Atic (BB-/Stable), given its better operating performance, adequate leverage metrics and ample liquidity. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenue growth of around 14% in 2021 and 12.1% on average during 2022-2024; -- EBITDA margins of around 13.6% in 2021-2024; -- Annual capex around USD90 million in 2021-2024; -- Neutral to positive FCF in 2021 and positive FCF thereafter; -- Total debt to EBITDA and total net debt to EBITDA at around 3.6x and 2.5x, respectively, by YE22. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch does not foresee positive rating actions for CBC in the medium term unless the economic environments of Guatemala, Honduras, Nicaragua, El Salvador and Ecuador improve; -- Higher cash flow generation from investment-grade markets such as Peru and Puerto Rico; -- EBITDA margins above 16% on a sustained basis; -- A positive FCF margin across the rating horizon; -- Gross debt to EBITDA and Net debt to EBITDA ratios below 3.0x and 2.0x, respectively, on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade in Guatemala's Country Ceiling or sovereign ratings; -- Declines in volume and revenue on sustained basis; -- An EBITDA margin below 12% on sustained basis; -- Consistent negative FCF that deteriorates the company's liquidity position and financial profile; -- Gross debt to EBITDA and net debt to EBITDA that are higher than 4.0x and 3.0x, respectively, on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Ample Liquidity: CBC's liquidity is ample given its cash position of USD373 million and USD199 million in short-term debt as of Sept. 30, 2021. Approximately USD171 million of its cash balance is invested in liquid short-term instruments with banks. The company's debt amortizations are manageable for 2021-2022, and Fitch believes CBC has financial flexibility given its CFFO generation capacity and access to bank loans. With the proposed USD1.1 billion senior notes and after making the prepayment of its current debt, proforma cash balance for CBC will be closed to USD500 million. The sustainability-linked securities framework establishes a goal of reducing greenhouse gas emissions and the achievement and maintenance of a Carbon Trust Zero Waste to Landfill Certification by 2026. ISSUER PROFILE CBC produces, distributes and markets carbonated soft drinks (CSD) and beverages for PepsiCo in Central America, the Caribbean, Ecuador, Peru and Argentina. CBC has a long-standing relationship of over 70 years with PepsiCo (which holds a 12% stake in CBC) and has been considered an anchor bottler for the Central America region since 1998. In addition, CBC has a partnership with AmBev to distribute beer in Guatemala, El Salvador, Honduras, Nicaragua and some countries of the Caribbean. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch excludes from the total debt USD176 million of a back to back loans that the company implemented for its operations in Central America. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means 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. ============= J A M A I C A ============= JAMAICA: Coffee Distributors to Get Ministry's Help for Compliance ------------------------------------------------------------------ RJR News reports that local coffee distributors are to receive assistance from the Agriculture Ministry to achieve compliance with new China export requirements. This will be done via the Agriculture Trade Enforcement Advisory Mechanism (A-TEAM), according to RJR News. China recently changed its policy regarding the importation of Blue Mountain coffee and other items, the report notes. The new policy, which took effect on January 1, requires all green coffee beans entering China to be declared to its customs authorities in advance, in order to be allowed to clear customs, the report relays. The ATEAM comprises representatives from the Ministry of Foreign Trade, JAMPRO, Bureau of Standards Jamaica, the Jamaica Manufacturers and Exporters Association and the Ministry of Agriculture, the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 25, 2021, Moody's Investors Service has affirmed the Government of Jamaica's long-term issuer and senior unsecured ratings at B2. The senior unsecured shelf rating has also been affirmed at (P)B2. The outlook on the ratings remains stable. =========== M E X I C O =========== GRUPO AEROMEXICO: Halts Some Flights as COVID-19 Hits Crews ----------------------------------------------------------- Daina Beth Solomon, Kylie Madry and Valentine Hilaire at Reuters report that more than 70 Grupo Aeromexico pilots have tested positive for the coronavirus during a surge of infections from the Omicron variant, leading to 22 canceled flights, a union that represents pilots of the Mexican airline said. Jose Suarez, press secretary for pilots' association ASPA, told television station Milenio the cases triggered a "domino effect," forcing Aeromexico to isolate entire crews to prevent the virus from spreading, according to Reuters. ASPA Secretary General Jose Gual told the same TV station that the pilots who tested positive made up 5% of Aeromexico pilots represented by ASPA, the report notes. He added the cancellations represented 5% of Aeromexico's operations and affected planes heading to the Mexican cities of Guadalajara, Cancun and Monterrey, plus an international flight, the report relays. Among Aeromexico's flight attendants, 140 had tested positive, according to a statement by the Trade Union Association of Aviation Flight Attendants of Mexico (ASSA), the report discloses. An additional 65 of the company's flight attendants were suspended for not having the valid travel documents, ASSA said, the report says. The absent workers represent 10.3% of the airline's staff, the statement added, the report relays. "We are seeing a quite severe wave of infections," ASPA's Gual said. He attributed the jump to the highly contagious Omicron variant that has caused airlines around the world to cancel hundreds of flights during the busy winter travel season, the report relays. Aeromexico said the new spread of COVID-19 had affected "some flights," without providing details, the report says. "The safety of our customers and collaborators is and will always be the main priority," Aeromexico said in a statement, the report notes. The company did not respond to questions about COVID-19 cases among its pilots and crew members, or about exactly how many flights had been canceled, the report discloses. Mexico is likely to surpass 300,000 deaths from COVID-19 this week as infections rise after the holiday season, fueled by Omicron and largely unrestricted tourism to Mexico City and beach destinations Cancun and Los Cabos, the report adds. About Grupo Aeromexico Grupo Aeromexico, S.A.B. de C.V. (BMV: AEROMEX) -- https://www.aeromexico.com/ -- is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. Grupo Aeromexico and three of its subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30, 2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker, the Debtors reported consolidated assets and liabilities of $1 billion to $10 billion. The Debtors tapped Davis Polk and Wardell LLP as their bankruptcy counsel, KPMG Cardenas Dosal S.C. as auditor, and Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as financial advisor and investment banker. White & Case LLP, Cervantes Sainz S.C. and De la Vega & Martinez Rojas, S.C., serve as the Debtors' special counsel. Epiq Corporate Restructuring, LLC, is the claims and administrative agent. The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors on July 13, 2020. The committee is represented by Willkie Farr & Gallagher, LLP and Morrison & Foerster, LLP. GRUPO AEROMEXICO: Reports December 2021 Traffic Results ------------------------------------------------------- Grupo Aeromexico S.A.B. de C.V. ("Aeromexico") (BMV: AEROMEX) reported December 2021 operational results. Grupo Aeromexico transported 1 million 744 thousand passengers in December 2021. Passengers carried were at 98.9% of December 2019 levels. Aeromexico transported 11.6% more Domestic passengers in December 2021 than in December 2019, with International passengers carried at 77.5% of 2019 levels. Aeromexico's total capacity, measured in available seat kilometers (ASKs), was at 82.6% of December 2019 levels. Domestic capacity increased by 13.6% compared to December 2019 and international ASK recovery reached 70.7% of December 2019 levels. Demand, measured in passenger-kilometers (RPKs), was at 81.6% of December 2019 levels. Domestic demand increased by 17.2% compared to December 2019, while international demand represented 68.3% of 2019 levels. December load factor was 80.3%, a decrease of 0.6 p.p. versus December 2019. Domestic load factor was 81.9%, an increase of 2.5 p.p. versus December 2019. International load factor was 79.4%, a 2.1 p.p. decrease compared to December 2019. During December 2021, Aeromexico extended its operations at Mexico City International Airport (AICM) to Terminal 1, offering 20 daily departures. Aeromexico relocated operations of nine domestic routes to T1: Campeche, Durango, Los Mochis, Matamoros, Nuevo Laredo, Reynosa, Tampico, Zacatecas and Zihuatanejo. In addition, Aeromexico began to operate the Monterrey - Madrid, Guadalajara - Madrid and Cancun - Sao Paulo routes with three weekly frequencies for each route. A full text copy of the press release is available free at https://prn.to/3zJUl7F About Grupo Aeromexico Grupo Aeromexico, S.A.B. de C.V. (BMV: AEROMEX) -- https://www.aeromexico.com/ -- is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. Grupo Aeromexico and three of its subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30, 2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker, the Debtors reported consolidated assets and liabilities of $1 billion to $10 billion. The Debtors tapped Davis Polk and Wardell LLP as their bankruptcy counsel, KPMG Cardenas Dosal S.C. as auditor, and Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as financial advisor and investment banker. White & Case LLP, Cervantes Sainz S.C. and De la Vega & Martinez Rojas, S.C., serve as the Debtors' special counsel. Epiq Corporate Restructuring, LLC, is the claims and administrative agent. The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors on July 13, 2020. The committee is represented by Willkie Farr & Gallagher, LLP and Morrison & Foerster, LLP. ======= P E R U ======= VOLCAN COMPANIA: Moody's Affirms 'B1' CFR, Outlook Stable --------------------------------------------------------- Moody's Investors Service has affirmed Volcan Compania Minera S.A.A. y Subsidiarias (Volcan)'s B1 corporate family rating (CFR) and senior unsecured ratings. The outlook is stable. The rating affirmation reflects the company's recently announced liability management to refinance Volcan's $410 million in senior unsecured notes due February 2, 2022 with proceeds of a $400 million syndicated facility signed on December 29, 2021. Upon closing, the company's liquidity will be adequate as Volcan will not have material debt maturing in the next two years. Liquidity will be further supported by the company's cash on hands at $177 million as of September 2021 and a $50 million committed credit facility that is fully available until October 2022. The company's refinancing risk materially increased following the announcement that the company's board agreed to delay the $400 million equity injection previously expected by 3Q21 and prompting the company to look for alternatives with very little cushion. Moody's sees Volcan's tolerance to high debt levels and high refinancing risk as an aggressive financial policy. Absent the equity injection, debt will not be reduced, putting some pressure on the company's credit metrics. Nonetheless, the company will be able to self-fund the expansion of Romina's project, which will demand funding for $135 million in the 2022-2024 period. The stable rating outlook reflects Moody's expectation that Volcan's liquidity will remain adequate and that the company's operating performance will continue improving on the back of more favorable metal prices and its competitive cost position supporting adequate credit metrics. Affirmations: Issuer: Volcan Compania Minera S.A.A. y Subsidiarias Corporate Family Rating, Affirmed B1 Senior Unsecured Regular Bond/Debenture, Affirmed B1 Outlook Actions: Issuer: Volcan Compania Minera S.A.A. y Subsidiarias Outlook, Remains Stable RATINGS RATIONALE The B1 incorporates Volcan's competitive cost position, operational diversification in terms of metals produced and assets; and its status as a leading producer of zinc and silver globally, with some of the largest zinc reserves. Glencore plc (Glencore, Baa1 stable) became a controlling shareholder of Volcan in November 2017, with positive implications for Volcan's strategy, operations and corporate governance standards. However, Volcan's ratings are constrained by the company's modest scale (revenue of $843 million for the last twelve months ended September 2021) compared with that of its global peers and its concentration in one country, as well as its high earnings volatility because of its exposure to commodity prices, historically tight liquidity and aggressive financial policies. Higher average base and precious metals prices provided the company with some cushion to cover higher than expected costs during 2021. Volcan's cash cost increased due to additional expenses related to COVID-19, lack of personal, inflation, supply chain delays, among other factors. Volcan put in place a plan called "Volcan Avanza" to achieve a 10% cost reduction to around $47/ton compared to $51.7/ton for the nine months as of September 2021. In 2019, Volcan managed to reduce costs to $44/ton from $62/ton in 2016. Through "Volcan Avanza", the company already identified $35 million in costs they can reduce and manage involving reconfiguration of machines and managers in the units and implementing Glencore standards to improve efficiency in the mines. The new syndicated facility will benefit from the guarantee of the subsidiaries generating at least 90% of EBITDA and will rank at the same level of the company's $475 million senior unsecured notes due 2026. This facility will materially improve Volcan's liquidity, since it includes a 2-year grace period followed by seven equal quarterly amortizations plus a $160 million balloon payment in Q1 2026. With this, the company will have no major debt maturing in the next 2 years. While Moody's expects Volcan to generate neutral free cash flow in 2022 and negative $55 million in 2023, related to expansion capex at Romina, the company's $177 million of cash on hands as of September 31, 2021, its $50 million committed line, plus the lack of dividend distribution in the foreseeable future should protect liquidity. Cash is expected to remain at around $100 million in line with the company's target. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings would be downgraded if Volcan's liquidity deteriorates, including negative free cash flow on a sustained basis, or aggressive financial policies, particularly if these prompt the need to fund the gap with additional debt. Moody's adjusted EBIT margins falling below 6%, interest coverage measured as EBIT/interest expenses below 1.5 time and debt/EBITDA above 4 times on a sustained basis would prompt a negative rating action. Evidence of a more balanced financial policy including timely refinancing of short-term debt and debt reduction from current levels are necessary conditions for a ratings upgrade. Volcan's ability to improve its cost position, while continue investing for growth and achieving higher scale could prompt a positive rating action. An upgrade would also require an EBIT margin above 10% and a total adjusted debt/EBITDA below 3.5x on a sustained basis. Volcan is a Peruvian mining company, which primarily produces zinc and lead concentrate and some copper concentrate, all with high silver content. The company operates through five operating units including eight operating mines, six concentrator plants and one leaching plant for silver oxide production. All of Volcan's operations are located in Peru and it reported revenue of $843 million for the last twelve months ended September 2021. Volcan is a holding company listed on the stock exchanges of Lima, Santiago and Madrid (Latibex). Since November 2017, Glencore has a controlling stake of 55% in Volcan's Class A voting shares, which is equivalent to a 22% economic interest in Volcan. ============= U R U G U A Y ============= URUGUAY: Montevideo Tourism Loses Cruisers ------------------------------------------ Rio Times Online reports that some 50 tourists from the United States and Canada disembarked from the Viking Cruise ship to give stores on the Sarandi promenade a boost, but nothing seems to be enough to save the city from a poor season. Montevideo's tourism is fueled by business tourism throughout the year, according to Rio Times Online. During the summer, from cruise ships. The arrival of 15 cruise ships is scheduled from January 9 until the end of the month. In the 2017-2018 and 2018-2019 seasons, the Port of Montevideo hosted 86 and 89 cruise ships respectively, the report adds. But both in 2021 and 2022, MSC and Costa Cruceros cruise companies suspended their stopovers in Uruguay due to the Covid-19 pandemic, the report relays. Last September, only 30% of services were expected to be reestablished, the report discloses. ********* 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 2022. 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. 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