/raid1/www/Hosts/bankrupt/TCRLA_Public/220202.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, February 2, 2022, Vol. 23, No. 18
Headlines
A R G E N T I N A
ARGENTINA: Curbing $11B Energy Bill Key for New IMF Deal
ARGENTINA: IMF Payment Deepens Divide Within Ruling Bloc
B A H A M A S
BAHAMAS: Must Redouble Efforts to Remain Competitive in Tourism
EMBRAER SA: Azorra Places Order for 20 Embraer E2 Aircraft
B R A Z I L
RIO OIL: Fitch Affirms BB- Rating on 5 Note Classes, Outlook Neg.
USINA CORURIPE: Moody's Assigns '(P)B1' CFR, Outlook Stable
USINA CORURIPE: S&P Assigns Prelim. 'B' ICR, Outlook Stable
J A M A I C A
JAMAICA: JMEA Calls for BOJ to Stem Sliding Dollar
ORGANIC POWER: Court Confirms Chapter 11 Plan
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A R G E N T I N A
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ARGENTINA: Curbing $11B Energy Bill Key for New IMF Deal
--------------------------------------------------------
Scott Squires and Jonathan Gilbert at Bloomberg News report that
Argentina's agreement with the International Monetary Fund has
several unknowns but one thing is clear: for it to succeed, the
government will have to unwind a politically sensitive strategy of
spending billions on energy subsidies.
Economy Minister Martín Guzmán said it had reached an agreement
with the IMF to gradually reduce the country's budget deficit, with
the Washington-based organization adding that cutting energy
subsidies will be "essential for improving the composition of
government spending," according to Bloomberg News.
But cuts to the popular subsidies, which proved politically
damaging for former president Mauricio Macri when he attempted it
late last decade, may be easier said than done, the report notes.
Argentina spent close to US$11 billion in energy subsidies last
year, according to the General Mosconi Argentine Energy Institute,
the report relates.
"Utility prices would have to be much higher than what the
government promised last year to really make a difference," Daniel
Kerner, a managing director for Latin America at the Eurasia Group,
said in a report, the report says. "The details on this will be key
to evaluating whether this understanding is sustainable," he
added.
Argentina is preparing 2022 utility fee increases for households,
with a ceiling of 17% for electrical power prices and 20% for
natural gas prices, depending on the user's income bracket, the
report discloses. Annual inflation ended last year above 50%,
meaning that the planned increases only cover part of the consumer
price gains, the report says.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8, 2020.
Moody's credit rating for Argentina was last set at Ca on Sept.
28, 2020. Fitch's credit rating for Argentina was last reported on
Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS'
credit rating for Argentina is CCC, given on Sept. 11, 2020.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Formal negotiations on the new financing
began in November 2020. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
ARGENTINA: IMF Payment Deepens Divide Within Ruling Bloc
--------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that
Argentina's looming deadline to pay over $700 million to the
International Monetary Fund is exposing a growing divide within the
ruling coalition.
The public disagreements in the government of President Alberto
Fernandez, with its more radical wing suggesting the country could
default on the IMF, come as Economy Minister Martin Guzman leads
negotiations with IMF staff for a new program to reschedule
payments on over $40 billion in outstanding debt, according to
globalinsolvency.co.
The coalition has bickered for months over how to handle the record
debt load inherited from the previous administration of President
Mauricio Macri, the report notes.
Agreeing with the IMF would imply a faster pace of unpopular
spending cuts with a presidential election next year, the report
relates. But defaulting on the lender risks hurting Argentina's
economy even more with inflation already at 51%, the report notes.
Argentina plans to propose a fiscal primary balance in 2026 instead
of the previous goal of 2027 as part of the talks with the IMF
staff, according to people familiar with the matter who asked not
to be named because negotiations are private, the report relays.
IMF negotiators are pushing to reach fiscal equilibrium without
interest payments counted in 2025, said one of the people, the
report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8, 2020.
Moody's credit rating for Argentina was last set at Ca on Sept.
28, 2020. Fitch's credit rating for Argentina was last reported on
Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS'
credit rating for Argentina is CCC, given on Sept. 11, 2020.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Formal negotiations on the new financing
began in November 2020. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
=============
B A H A M A S
=============
BAHAMAS: Must Redouble Efforts to Remain Competitive in Tourism
---------------------------------------------------------------
RJR News reports the Bahamas Prime Minister Philip Davis says the
country must redouble its efforts to remain competitive in the
tourism industry and diversify its economy while allowing for more
tourism integration.
Mr. Davis was speaking at the official reopening of the Sandals
Royal Bahamian Spa Resort & Offshore Island, which has undergone a
$55 million renovation, according to RJR News.
Bahamians will comprise the full complement of 900 employees to
return to work, the report relates.
Sandals Resort International Executive Chairman Adam Stewart says
the resort chain has additional investments slated across the
Caribbean this year, including The Bahamas, the report adds.
EMBRAER SA: Azorra Places Order for 20 Embraer E2 Aircraft
----------------------------------------------------------
Azorra has signed an agreement with Embraer (B3: EMBR3, NYSE: ERJ)
to acquire 20 new E2 family aircraft, plus a further 30 purchase
rights. This flexible deal enables Azorra to acquire E190-E2 or
E195-E2 aircraft. At list prices, the order is valued at USD3.9
billion. Azorra is a Florida-based aircraft leasing company
specializing in executive, regional and crossover aircraft.
Deliveries will begin in 2023, adding a further 20 Embraer aircraft
to the 21 already in Azorra's existing and committed portfolio.
"Our team has a long and productive history with Embraer. At
Jetscape, we were the first independent lessor to commit to
Embraer's E-Jet program in December 2007, which saw E-Jets
establish a global customer base of more than 80 operators.
Azorra's first new aircraft was a Phenom 300 acquired from Embraer
in December 2016. We are excited about this new chapter in our
longstanding partnership with Embraer," said John Evans, Azorra's
CEO. "This commitment underscores our belief in the E2; a modern
aircraft family with superior economics and environmental
performance, providing Azorra with a compelling opportunity to
build a position of leadership in the markets we serve."
Arjan Meijer, CEO of Embraer Commercial Aviation, said, "We thank
Azorra again for their selection of the E2, after recently
completing a sale leaseback transaction with Porter Airlines for
five new E195-E2 aircraft. Azorra offers an exciting and innovative
approach to the market, with a fierce focus on customer needs that
align solidly with Embraer's deserved reputation for outstanding
customer care. With this order for 20 E2 aircraft, Azorra have
further endorsed the exceptional value that the next-generation E2
family brings to the market as the most quiet and fuel-efficient
aircraft in the segment."
About Embraer
Embraer is a global aerospace company headquartered in Brazil. It
manufactures aircraft for Commercial and Executive aviation,
Defense & Security, and Agricultural customers. The company also
provides after-sales services & support through a worldwide network
of wholly-owned entities and authorized agents.
As reported in the Troubled Company Reporter-Latin America on Jan.
21, 2022, S&P Global Ratings revised its outlook on Brazil-based
aircraft manufacturer, Embraer S.A., to positive from negative, and
affirmed the 'BB' issuer credit rating.
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B R A Z I L
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RIO OIL: Fitch Affirms BB- Rating on 5 Note Classes, Outlook Neg.
-----------------------------------------------------------------
Fitch Ratings has affirmed the long-term series 2014 and 2018-1
notes issued by Rio Oil Finance Trust at 'BB-'. The Rating Outlook
remains Negative.
The ratings are not directly linked to the originator's credit
quality. The ratings are based on potential production and
generation risk and are ultimately linked to Petrobras' Issuer
Default Rating (IDR), as it is the main source of cash flow
generation. The ratings are capped at Petrobras' rating level
(BB-/Negative), as the largest obligor of royalties and special
participations payments. Additionally, the ratings are also capped
at Banco do Brazil's rating level (BB-/Negative), given it cannot
be replaced as collection account bank.
The assigned ratings address timely payment of interest and timely
payment of principal on a quarterly basis.
DEBT RATING PRIOR
---- ------ -----
Rio Oil Finance Trust
2014-1 76716XAA0 LT BB- Affirmed BB-
2014-1 REGS USU76673AA72 LT BB- Affirmed BB-
2014-3 76716XAB8 LT BB- Affirmed BB-
2014-3 regs USU76673AB55 LT BB- Affirmed BB-
2018-1 76716XAC6 LT BB- Affirmed BB-
TRANSACTION SUMMARY
The notes issued by Rio Oil Finance Trust, a Delaware-based special
purpose vehicle (SPV) constituted for the sole purpose of this
transaction are backed by the royalty flows owed by oil
concessions, predominantly operated by Petrobras, to the government
of the state of Rio de Janeiro (RJS), which has assigned 100% of
the flows to RioPrevidencia (RP). For the purpose of this
transaction, RP sold its rights to Rio Oil Finance Trust.
KEY RATING DRIVERS
Ratings Not Directly Linked to Originator's: RP is an autonomous
government agency that is part of the Secretary of State for
Planning and Management of RJS (BB-/Negative). Performance of the
originator will not affect the collateral as the generation of the
cash flow needed to meet timely debt service is not dependent on
either RP or RJS.
Largest Obligor Rating Cap: Petrobras' rating is the ultimate cap
for the proposed transaction, as it is the main source of cash flow
generation. Petrobras carries Local and Foreign Currency (LC/FC)
IDRs of 'BB-'/Outlook Negative and 'AA(bra)'/Outlook Stable. The
company is majority controlled by the federal government of Brazil
and has the rights to E&P of the vast majority of Brazil's oil
fields.
Future Production Risk: The transaction benefits from growth in
production levels as it increases the total royalty flows.
Depressed oil prices have led Petrobras to reduce production
targets on multiple occasions. Nevertheless, Petrobras recently
increased their 2022-2026 capex projection from 2021-2025, and
increasing production levels would benefit the transaction in the
near to medium term.
Cash Flows Support Rating: The expected levels of annualized
average debt service coverage ratios (AADSCRs) over 2.0x partially
mitigate the transaction's exposure to fluctuations in oil prices
and production levels at the current rating level. Fitch expects
AADSCRs to be over 2.0x for the life of the transaction, assuming
Law 12,734 is implemented after 2020.
Oil Revenues Dedicated Account Modification Mitigates Redirection
Risk: Pursuant to the Oil Revenues Dedicated Account Modification
Legislation, the RioPrevi Oil Revenues initially deposited to the
RJS Oil Revenues Dedicated Account are no longer required by
legislation to be deposited into a state-owned account. Oil
revenues assigned to this transaction are instead deposited into an
account under the name of the issuer. This change in the account
mitigates potential redirection of flows to RJS. As Banco do Brasil
(BdB) cannot be replaced as a collection bank, the transaction is
directly linked to the credit quality of BdB (BB-/Negative).
Ample Liquidity for Timely Payment: The transaction benefits from
liquidity, in the form of a Debt Service Reserve Account (DSRA) and
a Liquidity Reserve Account. Funds in deposit in these two accounts
shall at all times be sufficient cover three principal and interest
(P&I) payments, which is considered sufficient to keep debt service
current on the notes under different stress scenarios.
Potential Exposure Political Risk Partially Mitigated: The state's
liquidity constraints, evidenced by various delays in commercial
and other payments, have heightened the transactions political risk
exposure. However, provisions included in the sixth rescission
waiver and amendment, such as the rescission of the trapping of
excess cash and of the early amortization period, will increase the
cash flows returned to the state, and, in turn, decrease the
transaction's exposure to potential political risk.
Legal Changes May Affect Collateral Stability: Although, to date,
no amendments affecting the distribution of royalties for the
existing concession Regime have been implemented, provisions
regarding the change in allocation percentages incorporated in Law
12,734 are currently under review. The transaction was analyzed
assuming the law will change and DSCRs remain sufficiently robust
and commensurate with the expected ratings.
True Sale Valid under Brazilian Law: Collateral backing this
transaction was transferred to RP by RJS through a state decree,
making RP the legal owner of the royalties. This transfer gives RP
the right to sell the collateral into the trust.
Transfer and Convertibility Risk: Series 2014-1, 2014-3 and 2018-1
notes are exposed to transfer and convertibility risk as royalty
flows are paid in an account in Brazil in reais. This exposure caps
the rating of the transaction at the country ceiling of Brazil,
which is currently 'BB'. To partially mitigate operational risk
that may arise from transferring and converting flows on a daily
basis to an off-shore account, the transaction contemplates reserve
funds that covers three P&I payment.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The transaction is exposed to oil price and production volume
risks. Sustained low prices or declines in prices or
production levels significantly below expectations may trigger
downgrades.
-- The ratings are capped by the credit quality of Petrobras, the
main obligor generating cash flows to support the transaction,
and to the sovereign rating and country ceiling assigned to
Brazil. A downgrade of Petrobras or the sovereign would
trigger a downgrade on the notes.
-- The ratings are sensitive to the rating of BdB given the
excessive counterparty exposure to the transaction; therefore,
a downgrade of BdB would trigger a downgrade on the notes.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Given the Negative Outlook, an upgrade of the notes is
unlikely at this time. However, an upgrade of both Petrobras
and BdB, together with sustained high oil prices, which in
turn supports growth in production levels, could trigger a
positive rating action.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven 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 seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The future flow ratings are ultimately capped by the credit risk of
Banco do Brasil S.A. and Petroleo Brasileiro S.A. (Petrobras) as
measured by their Long-Term IDR.
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.
USINA CORURIPE: Moody's Assigns '(P)B1' CFR, Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has assigned a (P)B1 Corporate Family
Rating to S.A. Usina Coruripe Acucar e Alcool ("Coruripe"). At the
same time, Moody's assigned a (P)B1 rating to the company's
proposed up to USD400 million senior secured notes to be issued by
Coruripe Netherlands B.V. and guaranteed by Coruripe and GTW
Agronegocios S.A. The outlook is stable. The proposed issuance is
part of Coruripe's liability management strategy, proceeds will be
used to repay existing indebtedness as well as general corporate
purposes.
The provisional designation for the ratings will be removed once
the notes have been issued, assuming no material changes have
occurred to the draft documentation reviewed by Moody's, and
Coruripe's guarantee is in full force and effect. The notes will be
secured by collateral including: the Iturama mills and equipment,
and a second lien on receivables relating to the IAA claims
(indemnity credits from a judicial process against by the Brazilian
Federal Government as successor to the Brazilian Institute of Sugar
and Ethanol -- IAA). GTW Agronegocios S.A. will be the original
guarantor with Coruripe effective guarantee coming into effect in
up to 45 days from the issuance date after certain debt repayments
and restriction removals.
Assignments:
Issuer: Coruripe Netherlands B.V.
Senior Secured Regular Bond/Debenture, Assigned (P)B1
Issuer: S.A. Usina Coruripe Acucar e Alcool
Corporate Family Rating, Assigned (P)B1
Outlook Actions:
Issuer: Coruripe Netherlands B.V.
Outlook, Assigned Stable
Issuer: S.A. Usina Coruripe Acucar e Alcool
Outlook, Changed To Stable From Rating Withdrawn
RATING RATIONALE
Coruripe's (P)B1 ratings incorporate its scale as the 9th largest
sugar-ethanol group in Brazil with a crushing capacity of over 15
million tons of sugarcane per harvest and capacity utilization of
around 95% to 99%, cluster organization with ample access to
sugarcane and logistic infrastructure. The ratings are also
supported by the company's production in two distinct regions that
allow a more stable production throughout the year, because of
different harvest periods in each region. It also incorporates an
improved debt amortization schedule and lower interest burden
following the issuance of USD400 million (BRL2.2 billion) in senior
secured notes.
The (P)B1 ratings are constrained by Coruripe's exposure to the
volatile sugar-ethanol sector coupled with its reliance on the
Minas Gerais cluster which concentrates 78% of total crushing
capacity. Coruripe has a lower cost than Brazil's average, but
higher than close peers such as Adecoagro S.A. (Ba2) and São
Martinho. Despite the higher cost profile, agreements with local
farmers associations allow Coruripe costs to fluctuate along with
its selling prices, mitigating market volatility and increasing
flexibility for the company to create a long-term hedging curve.
Coruripe also presents a lower production mix flexibility than
peers, being more focused on sugar than ethanol, which Moody's
perceives as a competitive disadvantage. Coruripe is a family-owned
private company, with developing governance.
Historically Coruripe's liquidity has been weak with large
short-term amortizations and large exposure to dollar denominated
debt entailing high refinancing risks. Following the issuance of
the proposed notes Moody's believes Coruripe will have an adequate
liquidity profile with much lower yearly amortizations. In
September 2021 cash balance was of BRL227 million and readily
marketable inventory BRL524 million, compared to BRL1 billion in
short-term maturities. After the issuance of USD400 million
short-term maturities should reduce to around BRL182 million.
Coruripe has a good cash flow from operations to debt metric at an
average 18.9% in the last three years and relatively low gross
leverage at an average 3.6x. Gross leverage should remain lower in
the two harvests with increased sales and higher EBITDA generation
in 2022-23 and 2023-24. In 2021-22 Moody's expects EBITDA to be
in-line with that observed in 2020-21 because of higher selling
prices for ethanol and sugar compensating the lower crushing
volumes, following a drought and frost events which compromised
plantations. Moody's expects an EBITDA of BRL1.3 billion in
2021-22, as of March 2022, and 3.0x gross leverage. In the last 10
years Coruripe has averaged a 1.25x (EBITDA-Capex)/Interest Expense
and Moody's expects it to maintain the metric above 1.0x.
The stable outlook considers that Coruripe will maintain an
adequate liquidity profile with a cash balance that will always be
enough to cover its short-term maturities through commodity price
cycles.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade would require the maintenance of a strong
liquidity profile represented by a cash position consistently above
short-term debt levels during the harvest cycle. Also, an increase
in effective crushing levels, remaining consistently above 15
million tons per harvest. Quantitatively, the maintenance of
Cash/ST Debt above 1.00x, Debt/EBITDA below 3.9x, Cash flow from
operations/debt above 20%, and an improvement in interest coverage
with EBITA/Interest Expense above 2.5x.
A rating downgrade could result from Coruripe's inability to
conclude its liability management process and a deterioration of
liquidity profile, with Cash/ST Debt below 1.00x coupled with
expected negative free cash flow. Quantitatively: EBITA/Interest
Expense below 1.5x, Debt/EBITDA expected to remain above 4.5x, and
Cash flow from operations/debt below 10%.
The principal methodology used in these ratings was Protein and
Agriculture published in November 2021.
Headquartered in the State of Alagoas, Brazil, Coruripe is a sugar
and ethanol producer and electricity cogenerator. It has five
crushing units, one in the State of Alagoas and other four in the
State of Minas Gerais. During the 2020-21 harvest, the company
generated revenue of BRL3.0 billion and Moody's adjusted EBITDA of
BRL1.4 billion. Coruripe financial statements year coincides with
the harvest starting in April and ending in March.
USINA CORURIPE: S&P Assigns Prelim. 'B' ICR, Outlook Stable
-----------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B' global scale issuer
credit rating to S.A. Usina Coruripe Acucar e Alcool (Coruripe), as
well as a 'B' issue-level rating to Coruripe Netherlands' bond. The
credit rating is preliminary and contingent on successful bond
issuance and use of proceeds to prepay specific loans. The final
rating is subject to these conditions, and the preliminary one
shouldn't be viewed as evidence of a final rating.
Accordingly, the preliminary rating shouldn't be construed as
evidence of the final rating. If the company doesn't place the bond
in the next 90 days, or if conditions are materially different from
the assumptions S&P considered, S&P may withdraw or revise its
ratings, which it expects could be one or more notches lower.
Factors that could influence a revision include, but are not
limited to, the use of bond proceeds, maturity, amount, hedge,
financial and other covenants, security, and ranking.
Coruripe has capacity to crush 15.1 million tons of sugarcane per
harvest across its five mills. However, it's crushing about 12.1
million in the current harvest season due to the drought and frost
in the Brazilian state of Minas Gerais, partly offset by its
unscathed operations in the country's northeast. Coruripe's cash
cost is higher than those of most peers we rate, although there has
been some improvement in the past two harvests after sizeable
investments in plantations and industrial plants. The high
percentage of hedged sugar prices for the next two harvests also
reduces volatility, but the company's low flexibility to change its
mix towards ethanol could hurt cash flows in the future, as seen
during fiscals 2019, 2020, and the current one.
S&P said, "We expect Coruripe's EBITDA to reach close to R$1.3
billion in the current fiscal year, slightly below R$1.325 billion
in fiscal 2021. This stems from the strong sugar and ethanol
prices, offsetting the drop of more than 15% in the company's
harvest. We also expect the company to keep investments close to
maintenance levels, with minor expansion projects, contingent on
adequate funding." Coupled with the projected bond issuance and
higher cash position, adjusted gross debt to EBITDA should pick up
to about 3.5x in the current fiscal year, slipping afterwards to
about 3.0x, while Coruripe generates R$250 million - R$300 million
of FOCF per year, most of which the company will use to pay down
leasing costs.
The company's current capital structure and liquidity are highly
pressured by its sizeable short-term debt and exposure to FX rate
variation, given that close to 50% of its debt is in dollars. The
preliminary rating incorporates our expectation that at least 80%
of the bond's principal will be hedged. This will improve
Coruripe's liquidity significantly and reduce exposure to the
dollar-denominated debt. However, the interest burden, which won't
be hedged, will reduce currency-depreciation gains for the
company's sugar exports and expose it to the NY#11 international
prices variation.
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J A M A I C A
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JAMAICA: JMEA Calls for BOJ to Stem Sliding Dollar
--------------------------------------------------
RJR News reports the Jamaica Manufacturers and Exporters
Association (JMEA) is calling for the Bank of Jamaica to take the
action required to stem the continuing devaluation of the Jamaican
Dollar.
The JMEA says it is concerned the Jamaican dollar has hit an
all-time low against the US dollar on Jan. 26 at $156.70 to US$1,
according to RJR News.
This decline represents a devaluation of 1% for the first 26 days
of 2022 and follows a devaluation of 7.4% for 2021, the report
notes.
The JMEA argues these devaluations have a direct impact on
inflation and make Jamaicans poorer as they are less able to afford
to purchase the necessities of life, the report relays.
The JMEA says the devaluation could have been averted by the BOJ
through timely intervention in the foreign exchange market, the
report discloses.
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.
ORGANIC POWER: Court Confirms Chapter 11 Plan
---------------------------------------------
Judge Edward A. Godoy of the U.S. Bankruptcy Court for the District
of Puerto Rico entered an order confirming the bankruptcy-exit plan
of Organic Power LLC.
On Oct. 12, 2021, debtor Organic Power LLC filed with the U.S.
Bankruptcy Court for the District of Puerto Rico a Disclosure
Statement referring to a Chapter 11 Plan.
On Nov. 22, 2021, Judge Godoy approved the Disclosure Statement and
ordered a Jan. 12 hearing on the Plan.
"Based on the debtor's proffer as to what the financial advisor
would testify, and there no being no objection raised to either the
proffer or to the feasibility report (docket #195), the court
accepted in open court the debtor's proffer and admitted into
evidence the feasibility report (docket #195). Upon the court's
review of the feasibility report (docket #195), the debtor's 1129
statement (docket #190), and based on the proffered testimony of
the financial advisor, the court finds that the amended chapter 11
plan filed at docket#129, as supplemented at docket #194 and as
clarified at docket #197, meets all the requirements of Sec.
1129(a) of the Bankruptcy Code and is hereby confirmed," according
to the minutes of the Jan. 12 hearing.
Under the Plan, the Debtor's proposed dividend to General Unsecured
Claims and Priority Tax Claims will be funded from its normal
operations, cash available in the Debtor's DIP accounts, and the
conversion of debt to capital. Payments to the Holders of Allowed
Administrative Expense Claims will be paid from the cash
accumulated in Debtor's DIP Accounts.
A full-text copy of the First Amended Disclosure Statement dated
October 12, 2021, is available at https://bit.ly/3p7jMgo from
PacerMonitor.com at no charge.
About Organic Power
Organic Power, LLC, -- https://www.prrenewables.com/ -- is a Vega
Baja, P.R.-based company that offers food processing companies,
restaurants, pharmaceuticals, and retail outlets an alternative to
landfill disposal -- a low cost and environmentally friendly
recycling option.
Organic Power sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D.P.R. Case No. 21-00834) on March 17, 2021. Miguel E.
Perez, the president, signed the petition. In its petition, the
Debtor disclosed assets of between $10 million and $50 million and
liabilities of the same range.
Judge Edward A. Godoy oversees the case.
The Debtor tapped Fuentes Law Offices, LLC as bankruptcy counsel,
and Godreau & Gonzalez Law, LLC, and Vidal, Nieves & Bauza, LLC as
special counsel.
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S U B S C R I P T I O N I N F O R M A T I O N
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
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