/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220506.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, May 6, 2022, Vol. 23, No. 85 Headlines C A Y M A N I S L A N D S NAUTICAL CORP: Final Meeting of Creditors Set for May 18 C H I L E LATAM AIRLINES: Wins $1.3 Billion Intercompany Claim Dispute D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Local Beef Heads to the U.S. Again After 20 Yrs DOMINICAN REPUBLIC: Telecom Shutters 52 Illegal Radio Stations H O N D U R A S HONDURAS: Economic Growth Reached 12.5% in 2021, IMF Says P E R U PERU: IMF Says Economic Activity Rebounded Strongly in 2021 P U E R T O R I C O EDUCATIONAL TECHNICAL: Sale of Interest in Personal Property Okayed T R I N I D A D A N D T O B A G O HERITAGE PETROLEUM: S&P Assigns Prelim 'BB' ICR, Outlook Negative X X X X X X X X LATAM: IDB Reports Fall in Tax Revenues for Region - - - - - =========================== C A Y M A N I S L A N D S =========================== NAUTICAL CORP: Final Meeting of Creditors Set for May 18 -------------------------------------------------------- Nautical Corp, which is in liquidation, will hold a final meeting of creditors on May 18, 2022 at 10:00 a.m. via teleconference. If you wish to attend, please submit a proxy form and forward it via email to James Parkinson before 12:00 p.m. on May 17, 2022. The company's liquidator can be reached at: Graham Robinson Crowe Cayman Ltd PO Box 30851 94 Solaris Avenue, Cayman Bay Grand Cayman, Cayman Islands, KYI-1204 ========= C H I L E ========= LATAM AIRLINES: Wins $1.3 Billion Intercompany Claim Dispute ------------------------------------------------------------ Jeremy Hill of Bloomberg News reports that Latam Airlines Group SA prevailed in a dispute with some of its low-ranking creditors over a $1.3 billion intercompany claim after its bankruptcy judge said the sum is a valid debt. The Chilean airline's official unsecured creditor group had asked U.S. Bankruptcy Judge James Garrity to block one unit of Latam from collecting $1.3 billion from another unit, arguing the claim is not a real debt and allowing it would lead to unfair recoveries for some creditors. Latam has said it is obligated to honor the claim. 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: Local Beef Heads to the U.S. Again After 20 Yrs ------------------------------------------------------------------- Dominican Today reports that after approximately 20 years, the Dominican Republic has been authorized again to export raw, intact beef products derived from slaughtered cattle to the United States. The provision is in effect from April 29, according to the notification sent to the General Directorate of Medicines, Food and Health Products (Digemaps) of the Ministry of Public Health (MSP) by the US Department of Agriculture on the 2nd last month, according to Dominican Today. The US government made this decision after an audit carried out in the country from September 13 to 23, 2021, the document specifies, the report notes. To start exports, the Dominican Republic must meet a series of requirements of the US market related to imports, labeling, individual sanitary measures and the self-report tool (SRT), the report relays. Next Steps The next steps that the country must follow to export are to certify the meat establishments that meet the requirements of the United States and send a list of them to the International Coordination Office, which will later be reviewed by the Food Safety and Inspection Service. (FSIS), the report discloses. "The Dominican Republic may only export products from certified establishments on this list," 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: Telecom Shutters 52 Illegal Radio Stations -------------------------------------------------------------- Dominican Today reports that the President of the Dominican Telecom Institute (Indotel), Nelson Arroyo, reported that this entity has closed 52 illegal radio stations during his administration. "We have been trying to organize the radio spectrum, which was a total mess . . . we have closed some 52 illegal stations. In the previous 10 years, eight stations were closed and in one year and so we have closed 52 stations," he indicated, according to Dominican Today. The official said the issue of interference by Haitian radio stations on Dominican soil in the border area has been his concern since he took office, 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. =============== H O N D U R A S =============== HONDURAS: Economic Growth Reached 12.5% in 2021, IMF Says --------------------------------------------------------- An International Monetary Fund (IMF) team led by Joyce Wong visited Tegucigalpa from April 27 to 29 to discuss recent economic developments, the impact on the Honduran economy of the COVID-19 pandemic and the war in Ukraine, and the authorities' reform plans. At the conclusion of the visit, Ms. Wong issued the following statement: "The authorities shared their diagnostic of the economic situation in Honduras and their reform priorities. They expressed their commitment to protecting the vulnerable, combating poverty and migration, improving the management of public finances and investment execution, and enhancing institutions and transparency. The team held meetings with the authorities on the 2022 budget, public investment plans, debt management, electricity sector reforms, and monetary and financial policy. The discussions laid important groundwork for further engagement with the Fund and continuing capacity development. "Economic growth in Honduras reached 12.5 percent in 2021, led by strong remittances, which supported private consumption, and robust external demand boosted by the U.S. recovery. After remaining within the central bank's reference range of 3 to 5 percent for most of 2021, inflation breached the upper band in December and neared 7 percent y/y at end-March, largely reflecting supply side factors, together with some demand pressures from strong remittances and higher government spending. "Given the domestic context and heightened global risks with continuing shocks, including the COVID-19 pandemic, tropical storms Eta and Iota, and the war in Ukraine, it will be essential for the authorities to remain vigilant. Protecting the most vulnerable people, preserving macroeconomic stability, and fiscal discipline, must remain essential tenets of policymaking in the face of strong inflationary pressures. "The IMF mission thanks the authorities and other stakeholders for their kind hospitality and fruitful discussions and stands ready to support the government of Honduras in the implementation of its social and economic program." ======= P E R U ======= PERU: IMF Says Economic Activity Rebounded Strongly in 2021 ----------------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Peru on April 29, 2022. According to the IMF, economic activity in Peru rebounded strongly in 2021 from its deepest downturn in decades. The strong policy response in 2020 help mitigate the impact of the pandemic and created the conditions for a rapid recovery. Progress in the vaccination campaign allowed a gradual lifting of Covid-19 mobility restrictions. Real GDP rose 13.3 percent in 2021, supported by robust external demand, favorable terms of trade, and pent-up domestic demand. Real GDP surpassed its pre-pandemic level but remains below its pre-pandemic trend. Labor force participation and total employment haven't fully recovered. Poverty increased significantly in 2020 and is still above pre-pandemic levels despite some improvement in 2021. Volatility in financial markets has increased amid heightened political uncertainty. Uncertainty around the outlook is high and the balance of risks is tilted to the downside. Growth is expected to slow to 3 percent in 2022 as external conditions tighten and the policy stimulus is withdrawn. External risks from ongoing geopolitical tensions, a sharp tightening of global financial conditions, extended global supply chain disruptions, and an abrupt growth slowdown in China, Peru's main trade partner could weigh on growth. Domestically, new Covid outbreaks could prompt the reintroduction of containment measures, while political uncertainty and social unrest could weigh on private investment. Inflationary pressures could be more persistent, requiring faster tightening of monetary policy. More rapid progress on containing the pandemic, both globally and domestically, and reduced political uncertainty could result in positive surprises. Peru's very strong policy frameworks and macroeconomic buffers, further complemented by an FCL arrangement expiring on May 27, will help shield the economy from downside risks. Strong external and fiscal accounts, adequate reserve coverage, access to international capital markets, low public debt, and a resilient financial sector provide Peru with ample buffers to face adverse shocks. Executive Board Assessment Executive Directors agreed with the thrust of the staff appraisal. They commended the Peruvian authorities for a decisive macroeconomic policy response, sustained by very strong policy frameworks and buffers, that helped mitigate the impact of the Covid-19 pandemic and support a strong economic recovery. Directors noted, however, that the macroeconomic outlook remains uncertain, and external and domestic risks are still elevated. Against this background, they concurred that the policy mix should strike a balance between responding to rising inflation and managing downside risks to growth, as the impact of the pandemic on employment and poverty continues to be reversed. Directors also underscored the importance of maintaining and further strengthening policy institutional frameworks. Directors agreed that fiscal policy should remain broadly neutral in the short term but a gradual consolidation, encompassing revenue mobilization and expenditure rationalization, including pension reforms, will be necessary to address emerging spending needs while preserving fiscal sustainability. They welcomed the authorities' steps to clarify policy intentions by aligning the fiscal rules and the medium-term budgeting framework, as well as their commitment to strengthen the Fiscal Council with technical assistance from the Fund. Directors agreed that further tightening of monetary policy is warranted to bring inflation and inflation expectations back to the target range and help adjust to tighter global financial conditions. While foreign exchange intervention is warranted to contain excess volatility, Directors underscored that reducing its frequency would facilitate market development and de-dollarization. Directors supported the gradual unwinding of pandemic-era prudential policies in a context of limited financial system vulnerabilities. They concurred that closing remaining regulatory and supervisory gaps and further enhancing systemic risk assessment will be important to strengthen financial resilience. Directors noted that exploring the introduction of a central-bank digital currency will require a thorough assessment of risks and costs. Directors agreed that a renewed structural reform agenda in the context of the OECD accession process will be critical to mitigate scarring from the pandemic and support a green and inclusive recovery. They stressed the importance of addressing informality in the labor market, especially among women. More effective public services and greater transparency, including through civil service reform and anti-corruption measures, as well as a stable and predictable legal and regulatory environment, will be key to these efforts. Steps will also be needed to reduce risks from climate change, ease the transition to a low-emission economy, and contribute to global mitigation efforts. ===================== P U E R T O R I C O ===================== EDUCATIONAL TECHNICAL: Sale of Interest in Personal Property Okayed ------------------------------------------------------------------- Judge Edward Godoy of the U.S. Bankruptcy Court for the District of Puerto Rico approved Educational Technical College Inc.'s sale of its interest in the personal property listed in Exhibit 1. The sale is free and clear of liens under Section 363(f). A copy of the Exhibit 1 is available at https://tinyurl.com/3s7n38tt from PacerMonitor.com free of charge. About Educational Technical College Bayamon, P.R.-based Educational Technical College, Inc. filed a voluntary petition for Chapter 11 protection (Bankr. D.P.R. Case No. 21-02392) on Aug. 9, 2021, listing $1,969,503 in assets and $1,407,201 in liabilities. Emilio E. Huyke, president of Educational Technical College, signed the petition. Judge Edward A. Godoy oversees the case. Carmen D. Conde Torres, Esq., at C. Conde & Assoc., and Dage Consulting CPA's, PSC serve as the Debtor's legal counsel and accountant, respectively. ===================================== T R I N I D A D A N D T O B A G O ===================================== HERITAGE PETROLEUM: S&P Assigns Prelim 'BB' ICR, Outlook Negative ----------------------------------------------------------------- S&P Global Ratings assigned a preliminary 'BB' issuer credit rating to Trinidad and Tobago (T&T)-based oil and gas producer Heritage Petroleum Company Limited (Heritage). S&P also assigned a preliminary 'BB' issue-level rating to the company's proposed bond. S&P said, "The negative outlook on Heritage mirrors that on T&T (BBB-/Negative/A-3) and our expectations that if Heritage successfully refinances its parent company's debt, we would most likely raise our rating on TPHL to 'BB' and assign a negative outlook. If we were to lower our sovereign long-term local currency rating on T&T, it will lead to a downgrade on TPHL as well as Heritage. Moreover, we could downgrade Heritage if we conclude that TPHL's liquidity position weakens beyond our expectations. "The company's average production rose to 41,239 barrels of oil equivalent per day (boepd) during fiscal 2021 ended September 30 from 39,182 boepd in fiscal 2020. As of the end of fiscal 2021, Heritage reported 145 million boe in proved (1P) reserves. Heritage sells all of its production on the international markets. As of the end of fiscal 2021, production mix was oil (79%) and natural gas (21%). We expect Heritage to focus on oil production and benefit from rising crude oil prices. Our updated crude oil price deck estimates $85 per barrel for the remainder of 2022 and $75 per barrel in 2023." Last year, Heritage's lifting costs rose about 17%, mainly to increase production amid rising oil prices. Lifting costs increased to $23.38 per barrel by the end of fiscal 2021 from $19.94 per barrel in fiscal 2020. Additionally, the Supplemental Petroleum Tax (SPT) waiver, which the government granted, expired in June 2021 as the low price cycle ended. During fiscal 2021, Heritage's SPT increased 15% the cost of each barrel sold. Despite SPT, the company's operating margins in 2021 were similar to those in 2020, 33% versus 30%. S&P expects government taxes and SPT to represent about 45% per barrel, a higher share than those of industry peers. Its base-case scenario for fiscal 2022 considers Heritage's EBITDA margins below 40%. S&P said, "Given the absence of debt in the past, Heritage's leverage metrics were stronger. However, given that it's the group's largest operating entity that generates 87% of total EBITDA, Heritage's cash flows were transferred to the holding company to cover its debt and interest payments. With the proposed new capital structure, we now expect TPHL's capital structure to be in line with that of the main operating subsidiary, resulting in weaker credit metrics. The company plans to refinance all of TPHL's debt through the proposed issuance of a bond for up to $700 million and a new term loan of approximately $380 million. The proposed debt structure will incorporate a more comfortable amortization schedule through which we expect Heritage will be able to allocate part of its cash generation for capex for growth and expansion. Our base-case scenario assumes that Heritage's debt to EBITDA will remain below 3x and free operating cash flow (FOCF) to debt averaging 5% for the next 12 months, compared with debt to EBITDA of 1x as of the end of fiscal 2021. "We view Heritage as a core subsidiary of TPHL because the former carries the group's strategic objectives, and is likely to receive extraordinary support, if required, under any foreseeable circumstance. After the corporate reorganization, TPHL shut down its refinery operations, leaving only the exploration and production, TPHL's subsidiary--Heritage--and the fuel trading segments operated by Paria Fuel Trading Company Limited (Paria). We believe it's highly unlikely for Heritage to be sold, given that it's a large player in T&T's economy, and the government continues to show strong interest in its success. Moreover, Heritage has contributed 1.6% to the government's budget in 2020 and this ratio is slated to reach 3.5% in 2021, and it has represented 3.3%-3.5% of T&T's GDP historically. Moreover, Heritage produces 58% of T&T's total crude oil output. Therefore, our preliminary issuer credit rating on Heritage mirrors that on its parent company under a scenario in which Heritage reduces liquidity pressures on TPHL's short-term financial obligations. In this case, our preliminary rating on Heritage will be the same as its group credit profile (GCP) of 'BB'." ESG credit indicators: E-4, S-2, G-5 =============== X X X X X X X X =============== LATAM: IDB Reports Fall in Tax Revenues for Region -------------------------------------------------- RJR News reports that the Inter-American Development Bank (IDB) says tax revenues in Latin America and the Caribbean (LAC) fell by 8% on average in nominal terms and by 0.8% as a share of gross domestic product (GDP) in 2020 because of the coronavirus pandemic. However, in a new report, the IDB said the region's economic recovery and a rebound in commodity prices supported a recovery in tax revenues in 2021, according to RJR News. The Revenue Statistics in Latin America and the Caribbean 2022, shows that the decline in tax revenues in LAC in 2020 exceeded the region's economic contraction in nominal terms, the report notes. Jamaica is among eight CARICOM countries in the report, the report relays. ********* 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. 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