/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220415.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, April 15, 2022, Vol. 23, No. 70 Headlines A R G E N T I N A EDENOR: S&P Places 'CCC-' ICR on Watch Pos. on Debt Exchange Offer GENNEIA SA: Fitch Affirms 'CCC' LT IDRs B R A Z I L BRAZIL: Moody's Affirms Ba2 Issuer Ratings, Outlook Remains Stable ELETROBRAS: S&P Affirms 'BB-' Issuer Credit Rating C H I L E [*] CHILE: To Reopen Land Borders with Argentina, Peru, and Bolivia C O L O M B I A [*] COLOMBIA: World Bank Raises GDP Forecast in 2022 M E X I C O GRUPO AEROMEXICO: S&P Upgrades ICR to 'B-' on Bankruptcy Emergence GRUPO KALTEX: Fitch Lowers LT IDRs to 'RD' GRUPO KUO: Fitch Affirms 'BB' LT IDRs, Alters Outlook to Positive P E R U CORPORACION AZUCARERA: S&P Withdraws 'B' LT Issuer Credit Rating P U E R T O R I C O BLD REALTY: Seeks to Hire C. Conde & Assoc. as Legal Counsel SEARS HOLDINGS: Judge Orders Creditors, Ex-Chairman to Mediation - - - - - ================= A R G E N T I N A ================= EDENOR: S&P Places 'CCC-' ICR on Watch Pos. on Debt Exchange Offer ------------------------------------------------------------------ S&P Global Ratings placed its 'CCC-' issuer credit and issue-level ratings on Argentine energy distribution company, Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor) on CreditWatch with positive implications. On April 12, 2022, Edenor announced an above-par exchange offer on its $98 million outstanding senior unsecured Class 9 notes due October 2022. The company expects to issue new 9.75% senior secured notes due 2025 for up to $120 million. S&P said, "The CreditWatch positive placement reflects our view that, once the transaction occurs, we would raise the ratings to a level that reflects the new capital structure with a smoother maturity schedule and near-term business prospects. "This is because we haven't seen enough evidence that the exchange offer will result in a loss in value to investors, compared with the original promise. Our value consideration is related to investors receiving a premium over the face value of the original obligation in any of the alternatives proposed." In the first alternative, bondholders will receive $1,050 or $1,030 of capital of the new notes for each $1,000 of capital of existing Class 9 notes, depending if creditors accept during the first 10 days from the offer or later, respectively. In the second alternative, bondholders will receive a share of an aggregate amount of cash equivalent to the lesser of 30% of the principal amount of the existing notes or the principal amount of the existing notes accepted for exchange under this alternative. Cash will be payable on a pro-rata basis, plus new notes totaling 1.04 or 1.02 times the difference between $1,000 of principal amount Class 9 notes and the pro-rata amount of cash received, depending if creditors accept the offer in the first 10 days or later, respectively. In addition, the new notes will have the same interest rate, security, and covenants as Class 9 notes. S&P said, "However, we view this exchange as distressed because we don't believe that Edenor can honor its financial commitment without refinancing. This is because despite the sufficient amount of cash in Argentine pesos, the company won't be able to convert them to dollars to make the payment, given that Argentina's central bank has stated that it will only supply dollars for only 40% of the principal maturities coming due by Dec. 31, 2022. Therefore, Edenor would fall short about $60 million for that maturity. "If Edenor completes the debt exchange, it won't face substantial debt maturities until 2025, which in turn would improve its capital structure and our view of its creditworthiness. However, if the company is unable to refinance its debt, we would expect a potential default scenario in the next six months. "In our view, Edenor's cash flows remain under pressure. Despite the recent announcement of rate adjustments that implies an 8% increase in the company's revenue since February 2022, we note Edenor's weakening ability to generate cash flows amid an increasingly uncertain regulatory framework related to the final approval of a rate adjustment scheme. This factor also heightens our concerns over the company's credit metrics and cash flows amid increasing operating costs, high inflation, and discretionary rate adjustments since March 2019. In that sense, we view Edenor's capital structure as unsustainable, given its strained finances and its reliance on favorable business and market conditions to meet its operating and financial needs starting in 2023. "The company is still waiting for the mechanism to settle debts it owes to the electricity market administrator, Compania Administradora del Mercado Mayorista Electrico S.A. (CAMMESA). This may provide credits equivalent for up to five times the monthly average bill or for 60% of the company's existing debt it owes to CAMMESA, while the remaining debt is to be paid through up to 60 monthly installments, with a grace period of up to six months, and the interest rate of the debt will be reduced by 50%." GENNEIA SA: Fitch Affirms 'CCC' LT IDRs --------------------------------------- Fitch Ratings has affirmed Genneia S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CCC'. Fitch has also affirmed Genneia's senior secured notes due 2027 at 'CCC'/'RR4'. Like other Argentine utility peers, Genneia's 'CCC' ratings are linked to Argentina's sovereign ratings to reflect its exposure to off-taker Compania Administradora del Mercado Mayorista Electrico (CAMMESA). CAMMESA acts as a market agent on behalf of companies in the electricity sector and relies heavily upon the Argentine government for subsidies. The Recovery Rating for Genneia's 'CCC' USD366 million senior secured notes due 2027 have been capped at 'RR4' due to Argentina's designation as a Group D country within Fitch's Country-Specific Treatment of Recovery Ratings Criteria. Group D indicates concern that the solvency regime of a jurisdiction is not supportive of creditor rights and/or there is volatility in the application of the law. KEY RATING DRIVERS Heightened Counterparty Exposure: Genneia 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. CAMMESA's payment delays to the electricity sector have risen from 50 days at the beginning of 2019 to currently over 80 days. This risk is mitigated in Argentina's Renewable Energy Auction (RenovAR) program through Fondo Fiduciario para el Desarollo de Energias Renovables (FODER), a national trust fund for renewable energy, which is prefunded with one year of revenue. Payment days for the FODER are 42 days, resulting in a consolidated payment lag for Genneia of approximately 66 days. The company estimates 20% of its consolidated EBITDA is backed by a World Bank guarantee and 50% by FODER. Uncertain Regulatory Environment: The electricity market remains a priority of the Argentine government. Further regulatory reform is highly probable to reduce costs and prevent the system from becoming insolvent. Fitch estimates the government transferred USD5.7 billion in funds to CAMMESA in 2021. Fitch expects the portion of the system that is subsidized to have peaked in 2021, given the plan to raise tariffs in the Buenos Aires region, and Argentina's goal with its new IMF agreement to reduce electricity subsidies to 1.7% of GDP from 2.3%. Dominant Player in Renewables: Although Genneia is considered a relatively small player in the Argentine power generation industry, the company is the leading wind power generation provider in the country, with approximately 20% of the country's wind and solar installed capacity as of 2021. The company added 166MW (Chubut Norte II, III and IV) of wind capacity in 2021, and Fitch expects that renewables, including wind and solar, will constitute 80% of the company's revenue and 93% of its EBITDA in 2022. Predictable Operating Cash Flow: Genneia's cash flow generation is relatively stable and predictable. Almost all of the company's revenue is related to sales to the wholesale electricity market under contracts signed under RenovAR, the Renewable Energy Generation Program, known as GENREN, and Resolution No. 21/16. The company benefits from USD-denominated power purchase agreements (PPAs) expiring in 2027 for its thermal capacity and between 2027 and 2041 for renewables. These PPAs support the company's cash flow stability and predictability through U.S. dollar-denominated long-term variable payments and renewables priority dispatch. Strong EBITDA Margins: Fitch expects the company's EBITDA to be USD226 million in 2022, 93% of which will be from renewables. The company's EBITDA margins remained high in 2021 at 83%, in line with 83% in 2020. Fitch expects EBITDA margins to remain in the 74% to 75% range over the 2022 to 2026 period. The company has solar expansion plans for 2023 and 2024 and wind expansion plans in 2024. However, no PPA or regulatory changes are anticipated until 2027. Due to its low variable cost, EBITDA margins on the company's renewable assets are 88%, while margins for its thermal projects are approximately 84%. Genneia has relatively fixed and stable operating costs and does not need to acquire fuel. Improving Credit Metrics: Fitch expects Genneia to deleverage to 3.0x in 2022 and remain at similar levels, or at 3.1x in 2023, in line with its Argentine utility peers. The company's leverage peaked in 2018 at 6.1x to finance the addition of 500MW of renewable energy capacity between 2017 and 2020, with an additional 166MW of new wind capacity in 2021. Fitch estimates Genneia will be FCF positive starting in 2024 after its imminent expansion capex has concluded. DERIVATION SUMMARY Genneia's Long-Term Foreign and Local Currency IDRs reflect the company's exposure to CAMMESA as an offtaker, which is reliant on subsidies from the Argentine government. This is similar for Argentine utility and energy peers Pampa Energia S.A. (B-), Capex S.A. (CCC+) and Genneia S.A. (CCC). Genneia is the leading wind power generation provider in the country, having just completed an aggressive expansion plan in renewables. Pampa has a more diversified business profile as a leading company in electricity generation, distribution, transmission, gas production and transportation. While capex has an advantageous vertical integration in the thermoelectric generation, with the flexibility of having its own natural gas reserves to supply its plants. In term of credit metrics, Genneia's gross leverage as of Dec. 31, 2021 was 3.8x, compared with Pampa at 1.6x, AES Argentina Generacion at 2.7x, capex at 1.7x, Generacion Mediterranea S.A. (CCC) at 5.6x, and MSU Energy S.A. (CCC) at 5.1x. On a net basis, Genneia's leverage was 2.8x in 2021, reflecting USD232 million of cash and equivalents. Fitch estimates that Genneia's projected gross leverage will average 2.5x over the rating horizon, slightly below its Argentine peers' median of 3.0x. KEY ASSUMPTIONS -- Thermal power purchase agreements (PPAs) awarded under Resolution 21 expire with no renewal; -- Average thermal plant availability of 93% and load factor of 10% over the rating horizon; -- Wind availability of 98% and load factor of 43%; -- Solar availability of 100% and load factor of 25%; -- Further solar capacity expansion in 2023 and 2024 and wind capacity expansion in 2024; -- USD200 million debt issuance in 2023 to fund planned capex. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade to the ratings of Argentina; -- Given the company's high dependence on payments from CAMMESA, any further regulatory developments leading to a more independent market--less reliant on support from the Argentine government--that positively impacts the company's collections/cash flows. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Genneia below 'CCC' would be due to Fitch's belief that a default of some kind appears probable or a default or default-like process has begun, which will be represented by a 'CC' or 'C' given that the ratings of Genneia are linked to those of the Argentine sovereign at 'CCC' due to the high reliance on government subsidies to the electricity sector. 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: Cash and short-term investments amounted to approximately USD232 million as of YE 2021, equivalent to 3.2x the interest expense. Fitch notes that while the company reported consolidated cash and short-term investments of USD232 million as of YE 2021, approximately USD47 million of that amount was held at unrestricted subsidiaries. The unrestricted subsidies have non-recourse debt and their cash may not be available to service the company's corporate debt. As of December 2021, Genneia had gross leverage of 3.8x. Historically, Genneia has strong access to financing in Argentina, given the company's relationship with local banks and financing from export credit agencies and development finance institutions. Additionally, some of its shareholders are significant holders of Banco Macro S.A. Genneia's funding capacity and financial flexibility are considered adequate, given its pro-forma debt level. ISSUER PROFILE Genneia S.A. (Genneia) is an Argentine power company, primarily engaged in the generation of electrical power from both renewable (wind and solar power) and conventional (thermal power) sources. As of December 2021, Genneia had a total installed capacity of 1,229MW. 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. DEBT RATING RECOVERY PRIOR ---- ------ -------- ----- Genneia S.A. LT IDR CCC Affirmed CCC LC LT IDR CCC Affirmed CCC senior secured LT CCC Affirmed RR4 CCC =========== B R A Z I L =========== BRAZIL: Moody's Affirms Ba2 Issuer Ratings, Outlook Remains Stable ------------------------------------------------------------------ Moody's Investors Service has affirmed the Government of Brazil's long-term Ba2 issuer ratings and senior unsecured bond ratings, (P)Ba2 senior unsecured shelf ratings and maintained the stable outlook. The key drivers of the ratings affirmation were: 1. Structural changes in fiscal and monetary policy frameworks will support economic performance and fiscal consolidation in the coming years. 2. Improving fiscal performance mitigates the impact of rising interest rates on debt dynamics. 3. Strong external position and foreign exchange reserves support Brazil's credit profile. The stable outlook reflects Moody's expectations that recent reforms to the fiscal and monetary policy frameworks are structural in nature and will be largely preserved against the risk of fiscal slippage and weak growth impacting fiscal consolidation. Brazil's country ceilings remain unchanged. The local-currency country ceiling is positioned four notches above the sovereign rating at Baa1, reflecting the economy's large size and diversification, and limited external imbalances and macroeconomic risks, but also the government's large footprint on the economy. One notch below, the Baa2 foreign-currency country ceiling reflects effective foreign exchange policy and large foreign exchange reserves, indicating that the risk of restrictions on transfer and convertibility in times of stress remains contained. RATINGS RATIONALE FIRST DRIVER - STRUCTURAL CHANGES IN FISCAL AND MONETARY POLICY FRAMEWORKS WILL SUPPORT ECONOMIC PERFORMANCE AND FISCAL CONSOLIDATION Brazil's economy demonstrated resilience to the pandemic shock, with a strong rebound in GDP growth and improvement in fiscal metrics in 2021, as the government regained momentum in approving key fiscal and structural reforms. Moody's expects fiscal reforms to remain in place, gradually improving fiscal results and stabilizing the debt burden. The government broadly complied with the spending ceiling last year, leading to a rapid reduction in expenditures from exceptional high levels in 2020. To ensure compliance with the ceiling, Brazil's Congress approved a constitutional amendment that will reduce spending rigidities by allowing the government to cut mandatory spending, including hiring and salary freezes, if primary spending reaches 95% of allowed spending under the ceiling. Progress on structural reforms, including approval of central bank independence, and progress on advancing the divestment of government assets and increasing private sector participation in infrastructure investment, will improve the business environment. Despite a strong rebound from the pandemic, with real GDP growth of 5% in 2021, Moody's expects growth to decelerate markedly in 2022 due to tightening financial conditions and weaker consumption as high inflation erodes purchasing power. In addition, relatively subdued investor confidence ahead of the presidential elections is weighing on near-term investment decisions. However, there is upside potential to growth performance in the medium term given the strong rebound in private investment in 2021 and further investment commitments for infrastructure projects in the coming years. If the strong pick up in investment persists, it would create upside potential to GDP growth in the coming years, supported by continued reforms to boost employment, productivity and competitiveness, leading private sector investment to fill the gap in domestic demand created by the retrenchment in public sector investment since 2015. SECOND DRIVER - IMPROVING FISCAL PERFORMANCE MITIGATES THE IMPACT OF RISING INTEREST RATES ON DEBT DYNAMICS After exceptionally high government spending in 2020 to mitigate the impact of the pandemic on economic activity, the increase in government debt was contained, with the debt ratio declining significantly as a share of GDP at the end of 2021. At 80.3% of GDP, Brazil's government debt burden has increased around five percentage points from its 2019 level. The debt burden reached a peak of 89% of GDP in 2020 and dropped nine percentage points last year as the government resumed compliance with the spending ceiling and the economy rebounded. Moody's expects the debt burden to remain around 82% of GDP this year as a result of higher interest payments and stagnant real GDP growth. Relatively robust nominal GDP growth of around 11% in 2022 will support revenue collection and keep the increase in debt indicators contained. In 2021, the government (Non Financial Public Sector) achieved a primary surplus of 0.75% of GDP, which contributed to a decline in the sovereign's debt burden. As of end-February, the Brazilian Treasury accumulated a sizable cash buffer, equivalent to nearly 11 months of upcoming debt-service payments. Moody's expects fiscal prudence to be maintained in the coming years, guided by adherence to the spending ceiling. Last year's improved fiscal results has created fiscal space to accommodate the anticipated increase in interest payments without a large increase in debt levels. Between 2017 and 2021, interest rates were on a downward trajectory, improving debt dynamics and leading to a slower pace of government debt accumulation. Although this dynamic will change amid the ongoing monetary policy tightening. Moody's projects the government interest burden will increase in 2022, reaching almost 23% of revenues, but will decrease thereafter to below 20% of revenues as monetary policy shifts to a more neutral stance later in 2023. THIRD DRIVER - STRONG EXTERNAL POSITION AND FOREIGN EXCHANGE RESERVES SUPPORT BRAZIL'S CREDIT PROFILE Brazil's external vulnerability is limited - a long-standing feature that supports the sovereign's credit profile. The current account deficit narrowed to 1.7% of GDP in 2021 from 3.5% in 2019. Direct investment remains robust and net direct investment is set to exceed the current account deficit in 2022. Brazil's overall external vulnerability is very low due to a strong international reserve position, which provides more than sufficient liquidity coverage to manage external financial shocks. Foreign-currency-denominated debt accounts for less than 5% of federal government debt. The government's balance sheet is thus resilient to exchange rate shocks, and the government has limited exposure to tightening global liquidity. The bulk of federal public debt is denominated in local currency, issued domestically, and held by a diversified investor base. Domestic pension funds, financial institutions and mutual funds are the main holders of federal public debt. The share of debt held by nonresidents remains stable around 10%. Brazil's strong external buffers and its position as commodity exporter is particularly important as a credit support factor in the current environment of tightening global liquidity and heightened risk aversion related to the Russia-Ukraine military conflict. RATIONALE FOR STABLE OUTLOOK The stable outlook incorporates Moody's expectations that the recent, positive changes to the fiscal and monetary policy frameworks are structural in nature and will be largely preserved, materially reducing the risk that adjustments to the spending ceiling could compromise the path of fiscal consolidation. Structural reforms are expected to encourage sustained increase in private investment and potentially raise growth rates, which have been hampered by weak infrastructure investment and productivity growth. ESG considerations Brazil's ESG Credit Impact Score is moderately negative (CIS-3) reflecting moderate exposure to environmental and social risks, and moderately strong institutions. Social risks are moderately negative, due to high income inequality, and exposure to environmental risk is moderately negative. Brazil's exposure to environmental risks is moderately negative (E-3 issuer profile score) reflecting high carbon-transition risk, impacting one of its key industries; balanced against Brazil's rich natural capital and large landmass, and high economic diversification. Exposure to social risks is moderately negative (S-3 issuer profile score), balancing broadly supportive demographic trends and a large social safety net, against high income inequality and some deficiency in the provision of basic services. Future social pressure may arise if economic growth continues to remain subdued, leading to persistent deterioration in standards of living. The influence of governance on Brazil's credit profile is neutral-to-low (G-2 issuer profile score) reflecting the impact of relatively weak governance indicators related to corruption and rule of law. However, the country's relatively low rankings in terms of government effectiveness and control of corruption, as measured by the Worldwide Governance Indicators, understate the strength of Brazil's institutional arrangements, particularly the effectiveness of the judiciary and improving monetary policy framework. GDP per capita (PPP basis, US$): 14,890 (2020 Actual) (also known as Per Capita Income) Real GDP growth (% change): -4.2% (2020 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 4.5% (2020 Actual) Gen. Gov. Financial Balance/GDP: -13.3% (2020 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -1.7% (2020 Actual) (also known as External Balance) External debt/GDP: 44.1% (2020 Actual) Economic resiliency: baa2 Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On April 07, 2022, a rating committee was called to discuss the rating of the Brazil, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has materially increased. The issuer's susceptibility to event risks has not materially changed. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The outlook on Brazil's sovereign rating could change to positive if fiscal reforms and consolidation efforts continue and prove effective in stabilizing and gradually reducing the debt burden. An improved and sustained growth performance supported by a steady rebound in private investment could also lead to a positive outlook. Negative pressure on Brazil's credit profile would emerge in a scenario where fiscal reforms were reversed, leading to deteriorating fiscal performance and an increase in government debt, eroding fiscal strength. Persistent low growth rates would also put downward pressure on Brazil's credit profile. The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable. ELETROBRAS: S&P Affirms 'BB-' Issuer Credit Rating -------------------------------------------------- On April 13, 2022, S&P Global Ratings affirmed its 'BB-' global scale issuer credit and issue-level ratings on the Brazilian electric utility Centrais Eletricas Brasileiras S.A. - Eletrobras, because the sovereign rating caps its ratings on Eletrobras, given that S&P considers it a government-related entity (GRE) with an extremely High likelihood of receiving extraordinary government support. S&P also affirmed its 'brAAA/brA-1+' national scale ratings. The outlook on Eletrobras remains stable, mirroring that on the sovereign. S&P said, "The outlook also reflects our view that even if the likelihood of receiving extraordinary government support further diminishes as the capitalization advances, our issuer credit rating on Eletrobras will remain unchanged thanks to the influence of the Brazilian regulations, which we currently view as supportive." Eletrobras has been reducing its costs, and sales and administrative expenses since 2017. In addition, it reduced its workforce to 12,126 by December 2021 from 21,563 in December 2017. Moreover, Eletrobras sold its eight distribution companies that generated EBITDA losses, while it shrunk its investment portfolio to 81 special purpose entities (SPEs) by December 2021 from 175 in December 2017. At the same time, Eletrobras' provisions for contingencies reached a record high of R$14.9 billion in 2021, including R$10.9 billion for its compulsory loans. Due to these factors, Eletrobras generated R$9.5 billion in EBITDA (a 27% margin), while its adjusted debt to EBITDA rose to 6.5x and FFO to adjusted debt dropped to 7% in 2021. Excluding non-recurring items, adjusted EBITDA would have been around R$14 billion (a 39% margin) and FFO to adjusted debt at around 14%. Such metrics would have aligned with EBITDA of R$13.6 billion (a 43% margin), adjusted debt to EBITDA of 5.1x, and FFO to adjusted debt of 12% in 2020. In April 2022, Eletrobras completed the sale of its 33% stake in CEEE-T for R$1.1 billion, as part of its strategy of focusing on its core generation and transmission businesses, while it divests its non-strategic assets. S&P said, "Going forward and according to our base case forecasts, we expect the company to continue reducing leverage, evidenced by adjusted debt to EBITDA at 3.5x-4.0x and FFO to adjusted debt above 12% in the next two years. These metrics are commensurate with a healthier financial risk profile and therefore, we revised our assessment of the company's financial risk profile to aggressive from highly leveraged, resulting in the upward revision of the SACP that is now 'bb'." S&P believes that the proposed privatization framework, with capitalization through primary and secondary share offerings until the government's share is diluted to a maximum of 45% of Eletrobras' voting shares, and consequent change in the company's bylaws should limit the government interference in Eletrobras' strategic and management decisions. Under the proposed privatization framework, a single shareholder (direct or indirect) will have its voting rights limited to 10%. In addition, there will be a poison pill mechanism to limit the ownership by any shareholder to 30%, and the government will retain a golden share with sole purpose of exercising veto to any changes to the new corporate bylaws - in particular, the one that limits single or multiple shareholder voting rights to 10% of the voting rights. This should allow dilution of the majority control of the company and limit influence on its governance. S&P said, "Until the privatization is completed, we continue to assess the likelihood of Eletrobras receiving extraordinary government support as extremely high. This assessment still reflects a high degree of influence of the company's controlling shareholder, the sovereign and its incentives, capacity, and tools to support Eletrobras, if necessary. We base this assumption on the following factors: "We continue to view Eletrobras's critical role in the Brazilian electricity sector. The company is Brazil's largest integrated electric utility, accounting for about 30% of total generation capacity and 40% of transmission lines in the country. Given its size and considerable time to replace and/or build new assets, we believe that these services couldn't be undertaken by another entity in the medium term. For example, a disruption of Eletrobras' transmission lines could have a deep economic impact on the country. Therefore, we believe that the government has incentives to support." A very strong link to the government. While the government guarantees just 3% of Eletrobras' debt--loans from multilateral institutions such as the World Bank--the government has a track record of providing cash injections in periods of financial distress. Given that the government is the controlling shareholder of Eletrobras, S&P continues to view the government as exerting influence, until a capitalization and the government's share dilution materializes. The latter depends not only on administrative approval (including by TCU, the federal audit authority), but also on market sentiment, given the presidential election in October 2022. Additional advancement of the privatization process would likely diminish the currently very strong link, given the board's greater independence, while likely have lesser impact on role given the company's key role in supplying electricity to the Brazilian market. ========= C H I L E ========= [*] CHILE: To Reopen Land Borders with Argentina, Peru, and Bolivia ------------------------------------------------------------------- Buenos Aires Times reports that the Chilean government has announced the re-opening of all of the country's land borders that were closed as a preventative measure during the coronavirus pandemic. "The Interior and Public Security Ministry, alongside the Foreign Affairs Ministry and Health Ministry of the Republic of Chile, confirm the opening of the entirety of the land border crossings as of May 1, 2022," confirmed the government in a post on Twitter, according to Buenos Aires Times. In a press release, Chile said that on "specific measures from a health point of view" that will be implemented for safe border crossing will be announced, the report relays. The border closures were put in place on March 17, 2020, after the first Covid-19 cases in the country were registered, the report notes. With the control of the pandemic and the vaccination process, Chile conducted a gradual reopening, the report discloses. The air border was opened in November 2021 via Santiago Airport, and flights were subsequently resumed at three more air terminals (Antofagasta and Iquique in the north and Punta Arenas in the south), the report relays. On December 22, five border crossings with Argentina were opened, the report notes. With the announcement, land connections with Bolivia and with Peru in the north, in the Atacama desert, will again be available, the report says. In the last two years these zones have registered a high flow of migrants into Chile, primarily Venezuelan nationals, the report adds. =============== C O L O M B I A =============== [*] COLOMBIA: World Bank Raises GDP Forecast in 2022 ---------------------------------------------------- Rio Times Online reports that the World Bank updated its 2022 growth forecast for Colombia, raising it from 4.1% in January to 4.4%, despite the complex panorama facing the world due to high inflation and the war in Eastern Europe. Likewise, the international organization delivered its upward forecasts for 2023 and 2024 of 3.5% and 3.3%, respectively, according to Rio Times Online. While the organization raised to 4.4% the rebound of the Colombian economy, it lowered to 2.4% for the region, the report relays. =========== M E X I C O =========== GRUPO AEROMEXICO: S&P Upgrades ICR to 'B-' on Bankruptcy Emergence ------------------------------------------------------------------ On April 13, 2022, S&P Global Ratings raised its global scale issuer credit rating to Mexico's leading airline Grupo Aeromexico S.A.B. de C.V. (Aeromexico) to 'B-' from 'D'. S&P also assigned its 'B' issue-level rating to the company's new notes, one notch above the issuer credit rating, given its recovery rating of '2' reflecting its expectation for substantial recovery (70%-90%; rounded estimate: 80%) in the event of a payment default. The developing outlook reflects S&P views that Aeromexico could experience a slower-than-expected cash flow recovery if oil prices continue increasing, while the company takes the actions to mitigate the negative effects on its jet fuel costs. This could impair its cost structure reorganization, which aims to raise EBITDA while air passenger traffic continues to recover. This could delay its expectations of a gradual deleveraging for the next 6-12 months. S&P could revise its outlook once additional information about the company's strategy to mitigate such risks becomes available. Aeromexico will continue to offer premium quality services through its main hub in Mexico City, as well as its strategic alliance with Delta Air Lines, Inc. (BB/Stable/--) through which it reaches a wider range of destinations in North America, Asia, Europe, Latin America, and the Caribbean. In addition, the company will now focus on strengthening its strategic alliances primarily with Delta, Air France-KLM S.A., and LATAM Airlines Group S.A., which widen the airline's worldwide coverage. S&P believes that Aeromexico has a leading market position that allows it to have pricing power and takeoff time slots, through which it can increase its fares without denting its passenger traffic. As of Dec. 31, 2021, Aeromexico transported 30% of total domestic route passengers in Mexico and about 15% of international route passengers (excluding Delta's share), servicing 16.6 million passengers in total. The reorganization plan included Aeromexico's intention to maintain its business model, while shifting to a more flexible cost structure and increasing its revenue generation, market share, and capacity. The new cost structure will mainly consist of changing its fleet to highly efficient Boeing 737s, reassessing future aircraft deliveries, pay-by-the-hour (PBH) contracts, and mark-to-market terms, which will reduce ownership costs, fuel burn and maintenance costs. In addition, the company revised its labor and non-labor contracts to increase efficiencies in its labor cost and other operating costs (e.g. distribution channels). Moreover, Aeromexico will increase its revenue and available seat kilometers (ASK) growth thanks to: -- A market consolidation (taking advantage of Interjet's exit); -- A rising share of high demand-time slots; -- Total ownership of its loyalty program; and -- Increasing its market share through its alliances. This, together with about MXN20 billion in cash, will provide a liquidity cushion that will enable Aeromexico to reach its operating and financial goals without resorting to additional debt. Aeromexico emerged from bankruptcy with about 20% less debt than its filing date of June 30, 2020. The company focused on maintaining its well-established relationships with its lenders throughout the negotiations under Chapter 11. On March 17, 2022, Aeromexico issued $763 million under a first lien senior secured exit notes due 2027, which represents about 50% of total debt. This instrument is unconditionally and irrevocably guaranteed by Aerovias de México, S.A. de C.V., Aerolitoral, S.A. de C.V., and Aerovias Empresa de Cargo, S.A. de C.V., as well as a pledge on other assets, including the expected 100% share in PLM Premier, S.A.P.I. de C.V. (Club Premier, a loyalty program) that will provide additional collateral in the event of default. Moreover, under hypothetically adverse conditions in which the company would face a default on its financial obligations, S&P assumes a value of about 80% recovery from all its assets and collateral that will be used to meet its first lien financial obligations. Aeromexico continues improving its operating cash generation through higher volume while maintaining prices to cover base-line operating costs. Aeromexico, similar to other airlines emerging from bankruptcy proceedings, has adjusted its operating cost structure to raise the share of variable costs over that of fixed ones, through PBH contracts on aircraft, renegotiation of agreements with labor unions, as well as maintaining preferential prices on fuel. These factors will enable the company's EBITDA margins rise above 20%. In addition, S&P doesn't expect additional financial obligations because the company will be cautious in terms of growth prospects. S&P's base-case scenario assumes that the company's deleveraging will take about 18-24 months before funds from operations (FFO) to debt can rise above 20%. Environmental, Social, And Governance E-3, S-5, G-2 GRUPO KALTEX: Fitch Lowers LT IDRs to 'RD' ------------------------------------------ Fitch Ratings has downgraded Grupo Kaltex, S.A. de C.V.'s Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) to 'RD' from 'CC'. In accordance with the downgrade of Kaltex's IDRs to 'RD', Fitch has also downgraded the company's USD220 million proposed senior notes to 'C'/'RR4' from 'CC'/'RR4. At the same time, Fitch has withdrawn the rating of the USD220 million proposed senior notes. The downgrade follows Kaltex's missed payment of its 2022 senior notes principal maturity due in April 11, 2022. There is no cure period for repayment for the principal. Fitch is withdrawing the USD220 million proposed senior notes because Kaltex is no longer issuing them. KEY RATING DRIVERS Missed Principal, No Grace Period: The downgrade reflects the company's confirmation that it did not pay the USD218 million principal due on April 11 2022 of its 2022 senior notes, and the absence of a grace period. The company paid on that date the interest coupon related to the notes. Debt Restructuring: Kaltex is evaluating different alternatives to pay its notes principal. A completed restructuring of these notes would result in a rating upgrade to a level that reflects the company's post-restructuring capital structure and business risk. Conversely, a filing for bankruptcy, administration, liquidation or other formal winding-up procedure would result in a downgrade to 'D', according to Fitch's rating criteria. DERIVATION SUMMARY The 'RD' IDR reflects Kaltex's payment default on its 2022 senior notes due in April 11, 2022. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenue decrease of 19% in 2022 and an average revenue growth of 2.5% for 2023-2024; -- EBITDA margin around 13% for the forecasted period; -- Total debt to EBITDA below 4.0x from 2022 to 2024; -- Capex of approximately MXN98 million for 2022. RECOVERY ASSUMPTIONS For issuers with IDRs of 'B+' and below, Fitch performs a recovery analysis for each class of obligations. The issue rating is derived from the IDR and the relevant Recovery Rating (RR) and notching, based on the going concern (GC) enterprise value of a distressed scenario or the company's liquidation value. The recovery analysis assumes that Grupo Kaltex would be considered a GC in bankruptcy and that it would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Fitch's recovery analysis for Grupo Kaltex places a GC value under a distressed scenario of approximately MXN2.2 billion, based on GC EBITDA of MXN800 million and a 3.0x multiple. The GC EBITDA estimate reflects Fitch's view of a sustainable post-reorganization EBITDA level, upon which the agency bases the valuation of the company. The MXN800 million GC EBITDA assumption reflects an approximated 58% discount from the company's EBITDA for YE 2021, which should be sufficient to cover its interest expense. A 3.0x enterprise value multiple is used to calculate a post-reorganization valuation and reflects the Mexican operating environment and a mid-cycle multiple. Fitch calculates the recovery prospects for the senior unsecured debtholders in the 31%-50% range based on a waterfall approach. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- A restructure for its 2022 notes supporting a more sustainable liquidity profile. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Entering into bankruptcy filings, administration, liquidation or other formal winding-up procedures. 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 Tight Liquidity Position: For YE 2021 the company's available cash balance was USD15 million and short-term debt was the USD218 million senior notes maturity due April 2022. Fitch expects the company's 2022 FCF to be negative due to a weakened performance as consequence of the current raw materials price environment. Should the debt restructure materialize, Kaltex's liquidity profile should improve. As of Sept. 30, 2021, the issuer and the subsidiary guarantors collectively accounted for about 63% of Kaltex's consolidated assets, 95% of consolidated EBITDA and 68% of consolidated sales. The notes are secured by mortgages that include plants in Tepeji del Rio, Hidalgo and Altamira, Tamaulipas; a non-possessory pledge agreement that includes machinery and equipment owned by Manufacturas Kaltex, S.A. de C.V.; and a non-possessory pledge agreement covering machinery and equipment owned by Kaltex Fibers, S.A. de C.V. Based on the company information, the approximate value of the collateral at YE 2020 was MXN1,920 million (approximately USD95 million). ISSUER PROFILE Grupo Kaltex is a private, textile and apparel company with operations that go from generating energy to manufacturing threads and selling them. The company offers a variety of textile products, ranging from threads, cotton fabric, jeans and linens. ESG CONSIDERATIONS Grupo Kaltex, S.A. de C.V. has an ESG Relevance Score of '4' for Management Strategy due to challenges that the company faces to implement its strategy, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Grupo Kaltex, S.A. de C.V. has an ESG Relevance Score of '4' for Group Structure due to ownership concentration and key man risk, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Grupo Kaltex, S.A. de C.V. has an ESG Relevance Score of '4' for Financial Transparency due to the absence of clearance of intercompany operations and details in operations breakdown, which has a negative impact on the credit profile, and is relevant to the ratings 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. DEBT RATING RECOVERY PRIOR ---- ------ -------- ----- Grupo Kaltex, S.A. de C.V. LT IDR RD Downgrade CC LC LT IDR RD Downgrade CC senior secured LT C Downgrade RR4 CC senior secured LT WD Withdrawn C GRUPO KUO: Fitch Affirms 'BB' LT IDRs, Alters Outlook to Positive ----------------------------------------------------------------- Fitch Ratings has affirmed Grupo KUO, S.A.B. de C.V.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and unsecured senior notes at 'BB'. In addition, Fitch has affirmed KUO's National Scale Long-Term rating at 'A(mex)'. The Rating Outlook is revised to Positive from Stable. The Positive Outlook reflects Fitch's expectations that KUO will maintain a solid operating performance and a strong financial position in the next 12 to 18 months despite the headwinds associated to higher commodities costs, supply chain disruptions, and semiconductor's shortages. Fitch projects KUO's pro forma net leverage will remain at or below 2.0x combined with an ample liquidity position. The ratings reflect KUO's diversified business portfolio, leading market positions across the industries where it participates, and its joint ventures (JVs) with recognized companies. The ratings are limited by the company's exposure to volatility in product demand and input costs across its business units. For analytical purposes, Fitch incorporates financial information for KUO under the proportional consolidation of its JVs (pro forma). In addition, Fitch considers reported consolidated figures, which account for the JVs under the equity method (consolidated). KEY RATING DRIVERS Diversified Business Portfolio: KUO has a diversified business portfolio in the consumer, automotive and chemical industries, which allows the company to mitigate the volatility from economic and industry cycles. The company's most significant businesses, pork meat and the Herdez Del Fuerte JV (JV with Grupo Herdez, S.A.B. de C.V.), are oriented to the more stable consumer segment and represented around 45% of revenues and EBITDA in 2021. The chemical and automotive businesses are more volatile, with higher exposure to demand cycles. The chemical businesses (synthetic rubber JV with Repsol Quimica S.A. and polystyrene) and the automotive businesses (transmission and aftermarket) contributed around 34% and 21%, respectively, of KUO's EBITDA in 2021. Fitch estimates that the contribution of the consumer division will remain around 50% of EBITDA in the next two years. Strong EBITDA Generation: The chemicals and automotive sectors had outstanding results during 2021 in terms of EBITDA generation and profitability margins. Despite, Fitch forecasts a modest decrease in KUO's consolidated EBITDA (pre IFRS 16) and profitability in 2022, due to a challenging environment of raw material costs and continued supply chain disruptions, the operating performance of its consumer and automotive business is projected to remain positive in 2022. These is expected to mitigate a lower performance from its chemical businesses as feedstock prices and margins normalize from high levels in 2021. Net Leverage to Remain Low: KUO's leverage metrics on a pro forma basis are projected to be similar to 2021 levels. Fitch's base case projections incorporates that KUO's pro forma total debt to EBITDA and net debt to EBITDA, including non-recourse factoring and debt from its JVs, will be around 2.9x and 1.9x, respectively, at YE 2022. The company's total debt on a pro forma basis at YE 2021, was around MXN17 billion, while its net debt was about MXN11 billion. A gradual reduction of gross leverage should come mainly from higher EBITDA. On a consolidated basis, Fitch projects KUO's gross and net leverage at around 3.1x and 2.3x, respectively, at YE 2022, that compares with 3.3x and 2.4x at YE 2021. Neutral to Negative FCF: In 2021, KUO's FCF on a pro forma basis, as calculated by Fitch, was slightly positive, while on a consolidated basis, accounting for JVs under the equity method, was negative MXN195 million. For 2022, KUO's forecasted cash flow from operations (before capex and dividends) on a pro forma basis will be around USD126 million that combined with a capex of approximately USD137 million and dividends around USD23 million will result in a negative FCF. On a consolidated basis, Fitch projects KUO's FCF to be positive in 2022 and going forward. Solid Business Positions: KUO's ratings benefits by the important market positions of its business units. The company's Pork Meat business is the largest producer in Mexico with vertically integrated operations that serves the domestic market and exports products to Japan and Korea. Under its Herdez Del Fuerte JV, KUO has highly recognized brands with leading market shares in Mexico with different products as guacamole, tomato paste and mole, among others. This JV also has relevant operations in the U.S. as a producer and distributor of Hispanic brands. Its transmissions business is a leading producer of rear wheel transmissions in North America for the high-performance segment. In the Aftermarket business, KUO is a leader in engine components with recognized proprietary brands and third-party products in Mexico. Also, the company is the largest producer of synthetic rubber in Mexico through its JV with Dynasol, as well as the main producer of polystyrene in the country. DERIVATION SUMMARY KUO's ratings are supported by its diversified business portfolio, solid business position of its main brands and products in different industries, geographic diversification, and stable financial position. Its credit profile is comparable with other diversified groups as Alfa, S.A.B. de C.V. (BBB-/Stable) and Votorantim, S.A. (BBB-/Stable). KUO has lower size and scale and geographic diversification and a relatively weaker competitive position in its main businesses when compared with peers such as Alfa and Votorantim. While KUO's leverage metrics are slightly stronger than Alfa, these companies have higher profitability levels and more consistent positive FCF generation that provide more flexibility to deleverage. KUO's current leverage is considered strong for its 'BB' rating, but its negative FCF across the business cycle, mainly associated with its higher capex requirements, limits the ratings. Other comparable company in the 'BB' category is Cydsa, S.A.B. de C.V. (BB+/Stable). KEY ASSUMPTIONS Fitch's Key Assumptions on a Pro Forma Basis, Including Proportional Consolidation of JVs: -- Revenue growth of 9% 2022 and -5% in 2023; -- EBITDA margin of around 10% in 2022-2023; -- Capex around MXN2.9 billion in 2022 and MXN2.4 billion in 2023; -- Dividends around MXN450 million in 2022-2023; -- Total debt/EBITDA and net debt/EBITDA close to 2.9x and to 1.9x, respectively, by YE 2022. Fitch's Key Assumptions on a Consolidated Basis, Excluding Proportional Consolidation of JVs: -- Revenue growth of around 10% in 2022 and -4% in 2023; -- EBITDA margin of around 9% in 2022-2023; -- Average capex around MXN2.2 billion in 2022-2023; -- Dividends around MXN450 million in 2022-2023; -- Total debt/EBITDA and net debt/EBITDA of around 3.1x and 2.3x, respectively, by YE 2022. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Neutral to positive FCF through the economic cycle; -- Maintaining a strong liquidity position; -- Sustaining lower leverage ratios for pro forma total debt to EBITDA and net debt to EBITDA of around 2.5x and 2.0x, respectively. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Higher than expected negative FCF over the next two years; -- A weak liquidity position; -- Sustained deterioration in operating performance across the company's businesses, leading to pro forma total debt to EBITDA and net debt to EBITDA consistently above 3.0x and 2.5x, respectively. 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: KUO's readily available cash of MXN6.0 billion on a pro forma basis, at YE 2021, is sufficient to cover its debt amortization in the short term of MXN1.4 billion, which includes MXN669million of nonrecourse factoring and MXN185 million of debt in its JVs. The company's liquidity is also supported by available committed credit lines of USD300 million. On a consolidated basis, KUO's cash balance was MXN4.4 billion and a short-term debt including factoring of MXN1.2 billion. Fitch considers KUO's debt maturity profile after its refinancing in January 2022 is manageable with MXN1.3 billion (USD64 million) due in 2023, MXN560 million (USD28 million) due in 2024, MXN640 million (USD32 million) due in 2025, and MXN12.5 billion (USD625 million) due afterwards. Fitch believes KUO has good access to capital markets and bank loans and will refinance a portion of these maturities before they are due. KUO's total debt, including nonrecourse factoring, at YE 2021 was MXN16.8 billion (USD814 million) on a pro forma basis, and MXN15.7 billion (USD764 million) consolidated. ISSUER PROFILE KUO is a Mexican conglomerate with a diversified portfolio of six strategic business units that participates in the consumer, automotive and chemical industries. The company's products are well positioned in the markets where they participate and have a relevant presence in the international markets through exports and operations located outside Mexico. Its products are exported to more than 70 countries and contribute with around 57% of its total revenues. 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. DEBT RATING PRIOR ---- ------ ----- Grupo KUO, S.A.B. de C.V. LT IDR BB Affirmed BB LC LT IDR BB Affirmed BB Natl LT A(mex) Affirmed A(mex) senior unsecured LT BB Affirmed BB ======= P E R U ======= CORPORACION AZUCARERA: S&P Withdraws 'B' LT Issuer Credit Rating ---------------------------------------------------------------- S&P Global Ratings withdrew its 'B' long-term issuer credit rating on Peruvian sugar producer Corporacion Azucarera del Peru S.A. (Coazucar) at the issuer's request. The outlook was stable at the time of withdrawal. ===================== P U E R T O R I C O ===================== BLD REALTY: Seeks to Hire C. Conde & Assoc. as Legal Counsel ------------------------------------------------------------ BLD Realty, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire C. Conde & Assoc. to serve as its legal counsel in its Chapter 11 case. The firm's services include: a. advising the Debtor with respect to its duties, powers and responsibilities in the bankruptcy case under the laws of the U.S. and Puerto Rico; b. advising the Debtor to determine whether a reorganization is feasible and, if not, helping the Debtor in the orderly liquidation of its assets; c. assisting the Debtor in negotiations with creditors for the purpose of arranging the orderly liquidation of assets and proposing a viable plan of reorganization; d. preparing legal papers; e. appearing before the bankruptcy court or any court in which the Debtor asserts a claim interest or defense directly or indirectly related to the bankruptcy case; f. provide all notary services; and g. performing other necessary legal services. The firm's hourly rates are as follows: Carmen Conde Torres, Esq. $350 per hour Associates $300 per hour Junior Attorney $275 per hour Clerical Services $150 per hour The firm will also seek reimbursement for out-of-pocket expenses. The retainer fee is $15,000. Carmen Conde Torres, Esq., a partner at C. Conde & Assoc., disclosed in a court filing that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. C. Conde & Assoc. can be reached at: Carmen D. Conde Torres, Esq. C. Conde & Assoc. 254 San Jose Street, 5th Floor Old San Juan, PR 00901-1523 Tel: (787) 729-2900 Fax: (787) 729-2203 Email: condecarmen@condelaw.com About BLD Realty BLD Realty, Inc. is the fee simple owner of two real properties located at Barrio Espinosa in Vega Alta, P.R., having an aggregate value of $1.34 million. The company is based in Guaynabo, P.R. BLD Realty filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No. 22-00802) on March 24, 2022, listing $1,900,571 in assets and $3,834,736 in liabilities. Roberto Santos Ramos serves as Subchapter V trustee. Carmen D. Conde Torres, Esq., at C. Conde & Assoc. serves as the Debtor's legal counsel. SEARS HOLDINGS: Judge Orders Creditors, Ex-Chairman to Mediation ---------------------------------------------------------------- Soma Biswas of The Wall Street Journal reports that the judge overseeing the bankruptcy case of Sears Holdings Corp. appointed mediators to help resolve a $2 billion lawsuit against former chairman Eddie Lampert and other former shareholders filed by the retailer's creditors three years ago. Judge Robert Drain appointed Shelley Chapman, a fellow bankruptcy judge in the U.S. Bankruptcy Court in New York, along with James Peck and Jed Melnick, as mediators in the lawsuit, which alleges that Mr. Lampert and his hedge fund stripped key assets like Lands' End and the Sears Hometown. About Sears Holdings Corp. Sears Holdings Corporation (OTCMKTS: SHLDQ) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. At that time, the Company employed 68,000 individuals, of whom 32,000 were full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as investment banker; DLA Piper LLP as real estate advisor; and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors, including the Pension Benefit Guaranty Corp., and landlord Simon Property Group, L.P., to serve on the official committee of unsecured creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel; FTI Consulting as financial advisor; and Houlihan Lokey Capital, Inc. as investment banker. The U.S. Trustee for Region 2 on July 9, 2019, appointed five retirees to serve on the committee representing retirees with life insurance benefits in the Chapter 11 cases. * * * In February 2019, Bankruptcy Judge Robert Drain authorized Sears Holdings approval to sell the business to majority shareholder and CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL Investments, Inc., won an auction to acquire substantially all of Sears' assets, including the "Go Forward Stores" on a going-concern basis. The proposal would allow 425 stores to remain open and provide ongoing employment to 45,000 employees. ********* 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 * * *