/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220301.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 Tuesday, March 1, 2022, Vol. 23, No. 37 Headlines A R G E N T I N A ARGENTINA: World Bank Approves US$2 Billion of Funds in 2022 PETROQUIMICA COMODORO: Fitch Affirms 'B-' LT IDRs, Outlook Stable B R A Z I L BRAZIL LOAN I: Fitch Affirms 'BB-' on Secured Pass-Through Notes BRAZIL: Russia-Ukraine Crisis Could Affect Country ENGIE BRASIL: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative SAMARCO MINERACAO: Presents New Debt Restructuring Proposal C H I L E LATAM AIRLINES: Discloses Changes to DIP Loan Deal D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Cabinet to Analyze Impact of Russia Conflict DOMINICAN REPUBLIC: NGO Worker Minimum Wage Increase to RD$14,500 J A M A I C A PALACE AMUSEMENT: Secures $653 Million in Financing - - - - - ================= A R G E N T I N A ================= ARGENTINA: World Bank Approves US$2 Billion of Funds in 2022 ------------------------------------------------------------ Buenos Aires Times reports that the World Bank has confirmed funding of "more than US$2 billion" in funding for projects in Argentina this year, according to an emailed statement. World Bank Chief Operating Officer Axel van Trotsenburg spoke with Argentina's Economy Minister Martin Guzman about the status of Argentina's negotiations with the International Monetary Fund, according to a statement from the institution, according to Buenos Aires Times. During the meeting, which was also attended by Strategic Affairs Secretary Gustavo Beliz, the World Bank said the new funds will be in addition to US$2.1 billion in funding that was approved in 2021, the report notes. During the Covid-19 crisis, Argentina received World Bank support to finance projects in the areas of pandemic response and vaccines, expansion of basic public services for the poor and vulnerable, and sustainable employment and productivity, the report relays. The Bank did not elaborate on which projects these new funds will be used for, 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. PETROQUIMICA COMODORO: Fitch Affirms 'B-' LT IDRs, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Petroquimica Comodoro Rivadavia S.A.'s (PCR) Long-Term Foreign Currency (FC) and Local Currency Issuer Default Ratings (IDRs) at 'B-'. The Rating Outlook Stable. PCR's ratings reflect its small oil production size, concentrated cement business in the Patagonia region of Argentina, and exposure to the Argentine electricity industry's regulatory risk. PCR's Argentine operations and cash flows are slightly offset by its Ecuadorian oil operations, which cover its hard-currency consolidated interest expense. Fitch expects PCR's ex-Argentine EBITDA will cover its hard-currency consolidated interest expense over the rated horizon, mitigating the impact of capital controls in Argentina. KEY RATING DRIVERS Applicable Country-Ceiling: PCR's FC IDR is rated at the country-ceiling of Ecuador (B-) as cash flow from its Ecuadorian operations cover its hard-currency consolidated interest expense. Fitch estimates PCR's hard-currency consolidated interest expense is USD35 million per annum and its Ecuadorian EBITDA will average USD74 million. This covers hard-currency interest expense. In the event that cash flow from Ecuador operations does not cover hard-currency interest expense, the applicable country ceiling will be that of Argentina, and the company's FC IDR will be revised in the event it is below its current level of 'B-'. Leverage Profile: Fitch estimates PCR's leverage decreased to 2.4x in 2021 from 3.3x in 2020, explained mainly by higher Brent prices as well as higher revenues from the renewable energy business after the San Jorge and Mataco wind farm COD. Fitch expects the company will maintain stable gross leverage, defined as total debt to EBITDA, averaging below 3.5x over the rated horizon. The decrease in leverage is due to improved EBITDA supported by higher Brent prices and predictable renewable energy EBITDA coupled with a manageable amortization schedule. Fitch assumes PCR's consolidated debt will end 2021 at approximately USD440 million as PCR continues expanding renewable generation and then debt decreasing to roughly USD380 million once it starts amortizing. Fitch estimates PCR's total debt to 2020 proved (1P) reserves will be USD13.67 barrels of equivalent (boe). Small Production Profile: PCR's ratings reflect its small and concentrated production profile, which is consistent to the 'B' rating category. Although the company has exploration and production interest in nine blocks in Argentina (five) and Ecuador (four), most of its asset base as 1P reserves and production is concentrated in Argentina at 70% and 60%, Ecuador 30% and 40%, respectively. This limited diversification exposes the company to operational and macroeconomic risks associated with small-scale oil and gas production. Fitch expects the company's working interest production to average 17,500boe per day (boed) from 2021-2024, maintaining a flat level over that time. Hydrocarbon Reserves: The company reported gross 2020 1P reserves estimated at 32.5 million boe, excluding the Colombia asset PCR sold in 2021 for USD13 million. Fitch expects the company will maintain its 5.1 years 1P reserve life by maintaining production at 17,500 boed. Further, Fitch estimates the company's total debt to 1P increased by 34% to USD13.67/bbl in 2021 from USD10.14/bbl in 2020. The company has strong concession life with the earliest material concession expiring in 2025 (El Sosneado). PCR's largest concession is El Medanito, currently accounts for approximately 34% of working interest production, expiring in 2026. Other concessions have longer expiration dates. Expansion into Renewables: Fitch views PCR's successful completion of 329MW of wind capacity and 86MW of capacity in construction as a credit positive. The company currently operates four wind farms: Bicentenario (PEBSA I & II) 125MW capacity, El Mataco 102.6MW capacity, and San Jorge 100.8MW. These wind farms were financed via project finance and bank loan debt totaling roughly USD410 million of capex. PCR's two new projects are Mataco III, 36MW capacity, and Vivorata, 50MW capacity, both started construction 4Q21 and will be completed during 3Q23 and 4Q23, respectively. These new wind farms will be private PPAs with high quality offtakers and the estimated financing capex will be USD68 million for Mataco III and USD88 million for Vivorata. Heightened Counterparty Exposure: PCR depends on payments from CAMMESA, which acts as an agent on behalf of an association representing agents of electricity generators, transmission, distribution and large consumers or the wholesale market participants (Mercado Electrico Mayorista; MEM). CAMMESA's payment delay risk is slightly mitigated in the RenovAR program with the presence of the FODER trust fund, which is prefunded with six months to one year of revenue. Payment days for the FODER are 42 days and no delays have been reported recently from the company. The company estimates USD21 million of its EBITDA from renewables is backed by a World Bank guarantee. DERIVATION SUMMARY PCR is a small oil and gas producer with operations in Argentina and Ecuador. Argentina represents 60% of production while Ecuador contributed 40%. Production is expected to remain relatively flat averaging 17,500 boed through 2024, which is comparable with its 'B' rated peers, GeoPark Ltd (B+/Stable), Frontera Energy (B/Stable), Gran Tierra Energy (B-/Stable) and Compania General de Combustibles (CGC; B-/Stable). Over the rated horizon, PCR will have the smallest production profile amongst rated peers in Latin America. Fitch estimates, Geopark will average roughly 40,000 boed over the rated horizon, Gran Tierra around 33,000boed, CGC with increasing over 45,000 boed, and Frontera Energy 40,000 boed. Further, PCR reported 32.5 million boe of 1P reserves, ex-Colombia, at the end of 2020 equating to a reserve life of 5.1 years is lower than line GeoPark at 7.4 years and Frontera Energy's 6.2 years, Gran Tierra's 9.5 years but higher than CGC's 4.6 years. PCR's cement segment is small and geographically focused and does not compare well to some of its peers in the region. PCR has a capacity of producing 750,000 tons per year compared with Cementos Pacasmayo (BBB-/Stable) with capacity: 4.9 million metric tons a year and GCC, S.A.B. de C.V. (BBB-/Stable) with 5.8 million metric tons. PCR's cement business is focused in the Patagonia region and has a strong market share due to its geographic location and production efficiencies caused by the lower freight and energy costs. PCR's cement margins historically have averaged in the 10%-12% range from 2014 through 2018 but recently increased to the higher 30% range, which is more in line with peer's median of approximately 30%. PCR's gross leverage is expected to decrease to 2.4x in 2021, explained by higher EBITDA in its upstream business due to Brent prices. PCR's gross leverage is higher than oil and gas peer CGC (1.4x), Geopark (1.8x). Frontera (1.4x), and Gran Tierra (2.2x). Unlike its oil and gas peers, PCR does have a more diversified business model with its cement segment and renewable energy segment. The power business compares to Pampa Energia (B-/Stable), MSU Energy (CCC), Capex S.A. (CCC+) and Genneia (CCC). Similar to PCR, Pampa Energia and Capex both have oil and gas as well as energy business segments, taking into consideration that Capex is a closer peer by scale compared with the much larger Pampa Energia. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Fitch's EOP and average foreign exchange rate for ARS to USD; -- Average working interest production to be 17,500 boed in from 2020 until 2024; -- Fitch's price deck for Brent per barrel (bbl) 2021 USD71, 2022 USD70, 2023 USD60, and USD53 in the long term; -- Cement sales growth linked to Fithc's real GDP growth of Argentina; -- Capex between 2021-2024 of USD340 million with an average annual capex of USD85 million; -- Average dividends of USD5 million paid each year from 2021 through 2024; -- Installed Capacity of 329 MW increasing to 415MW in 2024; -- Renewables having 98% availability and 55% capacity factor at a monomic price of USD44MWh in 2021 increasing USD46 by 2024; -- CAMMESA/FODER pay on time. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Diversification of operations outside of Argentina and Ecuador with cash flows covering 12 months of hard currency debt service; -- Net production rising consistently to 30,000 boed on a sustained basis while maintaining a total debt to 1P reserves of USD8bbl or below; -- Reserve life is unaffected as a result of production increase at approximately seven years; -- Sustained conservative capital structure and investment discipline. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Downgrade of the country ceiling of Ecuador and/or Argentina; -- Sustainable production size decreased to below 15,000 boed; -- Material delay in CAMMESA/FODER payments that materially affect working capital; -- Significant cost overruns that result in increased leverage and/or weaken liquidity; -- A significant deterioration of credit metrics to total debt/EBITDA of 5.5x or more. 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 Adequate Liquidity: As of 3Q21, PCR reported a cash balance of USD105 million, which covers two years of interest expense. Fitch believes with a strong cash balance and cash flow from operations, the company will adequately cover its interest expense and upcoming maturities. Fitch believes the company maturity profile is manageable and the company has strong access with local banks in the event it needs additional liquidity. ISSUER PROFILE PCR is an Argentine independent energy company focused on three main activities: the exploration and production of hydrocarbons, the production and distribution of cement and construction materials, and renewable power generation. 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. =========== B R A Z I L =========== BRAZIL LOAN I: Fitch Affirms 'BB-' on Secured Pass-Through Notes ---------------------------------------------------------------- Fitch Ratings has affirmed the senior secured pass-through notes issued by Brazil Loan Trust I at 'BB-sf' with a Negative Rating Outlook. DEBT RATING PRIOR ---- ------ ----- Brazil Loan Trust I Senior Secured Pass LT BB-sf Affirmed BB-sf Through Notes 105859AA0 Senior Secured Pass LT BB-sf Affirmed BB-sf Through Notes Reg S USU0952YAA83 TRANSACTION SUMMARY The transaction is a pass-through securitization of a 10-year amortizing loan originated by Bank of America N.A. (AA/Stable) to the Brazilian State of Maranhão (BB-/Negative). The loan is guaranteed on an unconditional and irrevocable basis by the Federative Republic of Brazil (BB-/Negative). Payments on the loan are made to a bank account of Wilmington Trust N.A. (administrative agent; A/Negative). On the next day, funds are transferred to an issuer account at the Bank of New York Mellon (indenture trustee; AA/Stable). Payments are made under the notes immediately thereafter. Fitch's rating addresses timely payment of interest and principal on the scheduled payment date until legal final maturity. KEY RATING DRIVERS Transaction Rating Linked to Sovereign IDR: The transaction benefits from an unconditional an irrevocable guarantee from Brazil as primary obligor on the underlying loan. Therefore, the rating of senior secured pass-through notes is equivalent to Brazil's Long-Term (LT) Foreign Currency (FC) Issuer Default Rating (IDR), which was affirmed by Fitch on Dec. 14, 2021, at 'BB-' with a Negative Outlook. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- The senior secured pass through notes' ratings are linked to the LT FC IDR of Brazil; hence, a downgrade of Brazil's IDR would trigger a downgrade of the rated notes in the same proportion. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- As the transaction is on Outlook Negative, Fitch does not currently anticipate developments with a high likelihood of triggering an upgrade. Nevertheless, the senior secured pass through notes' ratings are linked to the LT FC IDR of Brazil; hence, an upgrade of Brazil's IDR would trigger an upgrade of the notes in the same proportion. 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 notes' ratings are driven by Brazil's sovereign LT FC IDR. BRAZIL: Russia-Ukraine Crisis Could Affect Country -------------------------------------------------- Rio Times Online reports that the first analyses of the consequences for Brazil of the conflict between Russia and Ukraine point to an almost immediate economic impact. Experts alert to the direct effect on Brazilian inflation of the rise in oil prices, which will reach values above US$100, according to Rio Times Online. Petrobras' pricing policy allows the pass-through of international price oscillations directly to the fuel pumps, the report cites. 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. 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 2021 with stable outlook. 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 December 2021. 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). ENGIE BRASIL: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed Engie Brasil Energia S.A.'s (Engie Brasil) Foreign Currency (FC) and Local Currency (LC) Long-Term Issuer Default Ratings (IDRs) at 'BB' and 'BBB-', respectively. Fitch has also affirmed the Long-Term National Scale Rating at 'AAA(bra)' for Engie Brasil and its senior unsecured debenture issuances. The Rating Outlook for the IDRs is Negative, while the Outlook for the National Scale Rating is Stable. Engie Brasil's ratings reflect its prominent market position as the largest private electric energy generation company in Brazil, with a sizable and diversified asset base and operational efficiency. The company's credit profile also benefits from a conservative financial profile, with a track record of robust operating cash flow generation, conservative leverage and strong financial flexibility. The company's FC IDR is constrained by Brazil's country ceiling of 'BB', while Brazil's operating environment limits the LC IDR. The Negative Outlook for the FC IDR reflects Brazil's 'BB-' sovereign Outlook. The Negative Outlook for the LC IDR reflects the potential weaker operating environment for the country. KEY RATING DRIVERS Robust Business Profile: Engie Brasil's ratings benefit from a strong business position in the electric power generation segment in Brazil. It is the largest private energy generation company in the country, with a total installed capacity of 8,219MW, to be expanded by 305MW to 8,524MW in 2022. The company presents a successful track record in its commercial strategy and monthly allocation of its assured capacity, also benefiting from the dilution of operational risks through its diversified asset base. The recent entrance into the transmission segment provides further diversification and improves predictability to operating cash flow. Engie Brasil has around 2,800km of transmission lines under development with Permitted Annual Revenues (RAPs) of BRL645 million to be completed by the end of 2022. This segment should represent about 10% of the consolidated EBITDA in 2023. Manageable Exposure to Hydrologic Risk: Fitch estimates that Engie Brasil's uncontracted energy volumes of 11% in 2022 and 16% in 2023, will be sufficient to support the expected generating scaling factor (GSF) of 0.80 in 2022 and 0.85 in 2023. This scenario mitigates the company's exposure to the energy price in the spot market (PLD), whose ceiling defined by the regulator for 2022 is BRL640/MWh. If needed, Engie Brasil has to obtain energy purchase contracts at prices compatible with those established in the sales contracts or maintain uncontracted energy to cover the reduction in its own generation to avoid higher negative impacts on cash generation. The company also has protection against hydrological risk in sales contracts in the regulated market, which represents around 35% of the energy sold. This limits its assured energy exposure to GSF to 31% of the total. Aggressive Capex Pressures FCF: High investments of BRL6.9 billion during 2022 and 2023, considered at Fitch's base case, combined with strong distribution of dividends (corresponding to 100% of net income), will pressures free cash flow (FCF). However, Fitch believes Engie Brasil has room to reduce dividends if necessary. The ratings base case estimates EBITDA and cash flows from operations (CFFO) of BRL5.0 billion and BRL4.3 billion in 2022 and BRL6.6 billion and BRL5.4 billion in 2023, respectively, with negative FCFs at BRL1.3 billion in 2022 and BRL1.4 billion in 2023. Fitch expects the EBITDA margin to increase over the next few years, reaching 60% in 2023, due to the start-up of transmission lines and the reduction in energy purchase expenses resulting from the start-up of Santo Agostinho Wind complex. Fitch anticipates sales of 5.2GW average and 5.1GW average in 2022 and 2023, with average tariffs of BRL231/MWh and BRL234/MWh, respectively. Conservative Leverage to Remain: Fitch's base case estimates Engie Brasil's net debt-to-adjusted EBITDA ratio at 3.0x and 2.5x and net debt-to-funds from operations (FFO) ratio at 3.4x and 2.8x, respectively, in 2022 and 2023. These ratios are still consistent for the current LC IDR despite the pending disbursement of BRL625 million to finance an acquisition in March 2022, which will be supported by the current cash position. Additional debt is also planned to finance investments in greenfield projects. Santo Agostinho is the company's largest project under development, totalling an investment of BRL2.3 billion, mainly concentrated in the second half of 2022. In 2021 the company presented a net debt/EBITDA of 2.7x. Weak Parent Company Linkage: Engie Brasil's ratings are based on its standalone credit profile, as overall legal, operational and strategic incentives to its parent company Engie S.A. (IDR 'A-'/Stable) to support Engie Brasil, if needed, are weak. Engie S.A. controls 68.71% of Engie Brasil, but there are no guarantees or cross-default clauses. Although both have the same core business, Fitch views operational integration as weak. Strategic incentives are moderate due to reputation risks related to the use of a common name. DERIVATION SUMMARY Engie Brasil's FC IDR 'BB'/Stable is two to four notches below peers in Latin America, such as Engie Chile (BBB+/Stable), the fourth largest generator in Chile, Emgesa (BBB/Negative), the second largest generation company in Colombia, and AES Andes (BBB-/Stable), the second largest generator in Chile and one of the leaders in Colombia, primarily as a result of the Brazilian country ceiling at 'BB'. Engie Chile, Emgesa and AES Andes benefit from a better economic environment in Chile and Colombia, which are rated higher than Brasil. Engie Brasil's FC IDR is capped by the Brazilian Country Ceiling. Engie Brasil's 'BBB-'/Stable LC IDR is more comparable with these 'BBB' category rated peers. It is well positioned relative to other Latin American power generators in installed capacity, asset diversification and contracted position. Engie Brasil has an installed capacity of approximately 8.2GW, which compares favorably with AES Andes (5.1GW), Emgesa (3.5GW) and Enel Generacion Chile (2.2GW). The energy mix of Engie Chile and AES Andes differs from the related company in Brazil and Emgesa. Engie Brasil and Emgesa are more exposed to hydrological conditions, while AES Andes and Engie Chile need to deal with the coal and natural gas prices volatility. All the companies have predictable and robust cash flow generation since they have managed business risks properly, but Engie Brasil has a stronger financial profile. KEY ASSUMPTIONS The main assumptions of Fitch's base scenario for the issuer include: -- Energy sales of 5.2 average GW in 2022 and 5.1 average GW in 2023, not including thermal and quotas capacity; -- Average sales price of BRL231/MWh in 2022 and BRL234/MWh in 2023; -- Energy purchase of 1.9 average GW in 2022 and 1.3 average GW in 2023; -- SG&A expenses adjusted by inflation; -- GSF of 0.8 in 2022 and 0.85 in 2023; -- Capital expenditures of BRL6.9 billion from 2022 to 2023; -- Dividends pay-out of 100%; -- Acquisition of HPP Jirau not considered until 2025. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Positive rating action for the company's FC IDR would be associated with an upgrade of Brazil's sovereign rating; -- Positive rating action for the company's LC IDR would be associated with improvements in Brazil's operating environment; -- Upgrades are not applicable to the National Scale Rating as it is at the highest level. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Negative rating action for the LC IDR would be associated with a deterioration in Engie Brasil's consolidated financial profile, with net adjusted leverage above 3.5x and funds from operations net leverage above 4.0x, both on a sustainable basis; -- A downgrade on Brazil's sovereign rating would result in a similar rating action on Engie Brasil's FC IDR; -- A weaker operating environment in Brazil could result in a downgrade of the LC IDR; -- A two-notches downgrade of Engie Brasil's LC IDR would lead to a downgrade of the National Scale Rating. 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 High Financial Flexibility: Engie Brasil has ample access to funding sources and a strong liquidity profile, with robust cash position and no short-term debt concentration. As of December 2021, cash and marketable securities of BRL5.2 billion was significantly above the short-term debt of BRL3.5 billion. The high cash balance will be partially used to finance the acquisition of two solar complexes (BRL625 million), while capex financing should add to fund the negative FCF in 2022. At the end of 2021 the company had BRL1.7 billion of pending disbursement in long-term project finance loans already contracted. As of December 2021, Engie Brasil's total debt of BRL20.0 billion was mainly composed of Banco Nacional de Desenvolvimento Economico e Social (BNDES) (BRL7.9 billion) and debentures (BRL6.6 billion). ISSUER PROFILE Engie Brasil is the second largest power generation company in Brazil, with a total installed capacity of 8.5 GW. It is also developing two transmission lines projects (2.805 km) and has a 32.5% stake in the gas transportation company Transportadora Associada de Gas S.A. 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. SAMARCO MINERACAO: Presents New Debt Restructuring Proposal ----------------------------------------------------------- Reuters reports that Samarco Mineracao presented a new debt restructuring proposal it hopes can win the support of creditors at a meeting on March 10 and help take the Brazilian iron ore miner out of bankruptcy. Creditors of the joint venture between Vale SA and BHP Group had been expected to vote on the latest proposals to restructure some $5 billion in debt. But due to a lack of quorum, the meeting was rescheduled, Samarco said in a statement. A final vote will now be held on to March 10, 2022, the eve of the deadline for Samarco's restructuring, regardless of the number of creditors present, Reuters notes. Federal and state authorities have been in talks with Samarco since last year on potential reparations related to a deadly dam burst in 2015. State prosecutors in Minas Gerais said they expect to begin discussing total amounts by next month. To address creditor concerns, the new proposal would cap the amount Samarco would have to pay to Renova Foundation at $2.4 billion, sources with knowledge of the matter told Reuters. Any additional cost would be funded by shareholders Vale and BHP. Samarco, however, is still seeking to pay bondholders just 25% on their holdings, offering bonds that mature in 2041. According to documents in the bankruptcy proceedings, creditors are demanding payment in full, with accrued interest, in new bonds guaranteed by the shareholders Vale and BHP. But the miner improved slightly the proposal for bondholders interested in converting their debt into equity. In December 2021, it had proposed converting all debt into equity, and allowing creditors to reach a stake above 15%. Under the new proposal, creditors that participate in an expected capital raise of $1.4 billion can be compensated in part with other debt instruments. But Samarco is not offering debt guaranteed by shareholders as requested by creditors, Reuters relays. It is not yet clear if the changes will win creditors over. Earlier this month, Vale signed a 20-year production agreement with Samarco that is expected to add $5.1 billion in net revenue by 2042 and bring forward its iron ore output goal. If its creditors decide to reject Samarco's proposal, Brazilian law allows them to put forward alternative plans. In that case, Simon Duncombe, vice-president for Brazil Non-Operated Joint Ventures at BHP, said Vale and BHP would demand the right to vote in an assembly of creditors, which include asset managers York, Ashmore, Canyon, Maple Rock and Solus, Reuters relates. Samarco's bondholders are represented by law firms Padis Mattar Advogados, Davis Polk and Ferro, Castro Neves. They are advised by investment bank Houlihan Lokey. Samarco is represented by JPMorgan Chase, Vale by Moelis and BHP by Rothschild. About Samarco Mineracao SA Samarco Mineracao SA is a Brazilian mining joint venture between BHP Group and Vale SA. It serves as an iron ore processing company. The company provides blast furnace, direct reduction, sinter feed, as well as low and normal silica content pellets. On April 9, 2021, the Debtor filed a voluntary petition for judicial reorganization in the 2nd Business State Court for the Belo Horizonte District of Minas Gerais in Brazil pursuant to Brazilian Federal Law No. 11,101 of Feb. 9, 2005. Samarco Mineracao filed for Chapter 15 bankruptcy recognition (Bankr. S.D.N.Y. Case No. 21-10754) on April 19, 2021, in New York, to seek U.S. recognition of its Brazilian proceedings. The Debtor's U.S. counsel is Thomas S. Kessler of Cleary Gottlieb Steen & Hamilton LLP. ========= C H I L E ========= LATAM AIRLINES: Discloses Changes to DIP Loan Deal -------------------------------------------------- Eduardo Thomson of Bloomberg News reports that Latam Airlines requested changes and a refinancing of terms of its existing Debtor-in-Possession loan, according to a filing sent by Latam to Chile's regulators. Latam requested extension as current DIP loan matured April 8, 2022. Latam Airline's board reviewed and approved the modified DIP loan; and is still pending approval from court. Terms for parts A and B of the existing DIP loan will remain unchanged, while funds from part C will increase to $1.245 billion from $1.15 billion; Apollo Management and Oaktree Capital Management will provide the additional funds. Parts A, B and C of the DIP loan will mature Aug. 8, 2022. 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: Cabinet to Analyze Impact of Russia Conflict ---------------------------------------------------------------- The Dominican Today reports that President Luis Abinader suspended his activities scheduled to be held in the interior of the Dominican Republic and called for an emergency meeting of the Economic Cabinet to take extraordinary measures concerning the effects of the conflict between Russia and Ukraine, following the decision of the Russian government to invade Ukraine. Those special measures will be announced on February 27 during the accountability speech, according to the report. "Today, we are seeing the largest military operation in Europe since the Second World War. . . .this situation goes beyond the price of oil, which in the market is already over 100 dollars a barrel, but it is also affecting most of the raw materials, especially what has to do with the production of food such as wheat, soybeans and corn", The Dominican Today quotes Abinader as saying. The head of state said that this war conflict would cause a "special" economic crisis that can affect "drastically" the world situation, The Dominican Today cites. "We came out of the pandemic, the pandemic created a disruption in the channels of distribution and distribution that has created a worldwide inflation and this is now going to worsen with this military crisis that will obviously create situations in all the prices of raw materials, commodities, oil, as we are seeing today," added the President, the report relays. He called on the Dominican people not to worry. Abinader exclaimed that the Dominican people "can trust" that the authorities will respond to the crisis "within their possibilities" and call on them not to worry but pay attention to what happens in this conflict. "But at the same time, we must remain calm, our activities that the economic recovery of the free zones, construction, tourism must continue," added the President, the report adds. The President said he was dismayed by the human losses caused by the armed conflict and that he would be speaking about the "armed aggression this afternoon," The Dominican Today relays. After Russian President Vladimir Putin announced a "military operation" in Ukraine, the markets plummeted, and oil prices soared above 100 dollars. Abinader's statements were made after leading a meeting of the police council at the National Police Palace, 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. TCRLA 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, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. DOMINICAN REPUBLIC: NGO Worker Minimum Wage Increase to RD$14,500 ----------------------------------------------------------------- Dominican Today reports that the minimum salary of a person in the Dominican Republic who works in incorporated non-profit associations, which provide health, education, rehabilitation services for people with disabilities and services to third parties, will rise beginning March from RD$11,500 to RD$14,500, for an increase of 26.1%. The Ministry of Labor provided the information. This entity reported that the increase was approved through the National Salary Committee (CNS) through a proposal by its general director, Angel Martin Mieses, according to Dominican Today. The Ministry of Labor issued Resolution number 01/2022, dated February 22 of the current year, which establishes the new salary scale for the sector, the report notes. This same resolution establishes the payment of the minimum salary of the apprentice, following the provisions of this rate, but calculating based on the hours of practical training carried out in the association where he provides his services, the report relays. The provision explains that the worker who, at the time of approval of this minimum wage rate, enjoys a higher salary than the one established by it, will continue to receive the same wage, following the provisions of Article 217 of the Labor Code, notwithstanding that Said salary is improved by agreement between the parties, the report discloses. The decision was derived from several tripartite meetings, the report notes. Representatives of employers and workers from the sector of incorporated non-profit associations participated as part of the dialogue and agreement policy carried out in the management of the Minister of Labor, Luis Miguel From Camps Garcia, the report says. During this government administration, five increases in the minimum wage have been applied in different sectors, such as the sugar sector agricultural and administrative workers. Also to workers in the tourism sector, industrial free zones operators of heavy construction machines, the report discloses. Another increase corresponded to workers in the non-sectorized private sector between 21% and 29%, according to the classification of the companies, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA 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, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. ============= J A M A I C A ============= PALACE AMUSEMENT: Secures $653 Million in Financing --------------------------------------------------- RJR News reports that Palace Amusement has secured $653 million in financing from Victoria Mutual Investments Limited. The money is being used to clear an existing loan with Scotiabank and as working capital, according to RJR News. Palace's cash resources increased to $114 million in the December quarter from a cash deficit of $3.9 million, the report notes. The cinema company, which has been fighting its way through challenges brought on by the COVID-19 pandemic, has already taken two loans, but this new loan is the largest yet, the report relays. As reported in the Troubled Company Reporter-Latin America on Feb. 22, 2022, RJR News said that movie theatre operator Palace Amusement continues to see mounting financial losses. For the quarter ended December, the company made a loss of $111.1 million, according to RJR News. That was up from the $81 million loss suffered during the same period in 2020, the report noted. The quarter's performance increased Palace's losses for the mid-point of its fiscal year, to $191 million, the report relayed. ********* 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. 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 * * *