/raid1/www/Hosts/bankrupt/TCRLA_Public/220927.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, September 27, 2022, Vol. 23, No. 187
Headlines
A R G E N T I N A
ARGENTINA: 'Doing Well,' IMF Backs Course in Meeting With Fernandez
C H I L E
LATAM AIRLINES: Moody's Assigns 'B2' CFR Amid Exit Financing
LATAM AIRLINES: S&P Assigns Prelim. 'B-' Issuer Credit Rating
J A M A I C A
JAMAICA: Gas Prices Up, Other Fuel Prices Decline
JAMAICA: Makes Progress Rectifying Issues Flagged by FAT-F
P U E R T O R I C O
ACADEMIA DE DESARROLLO: Seeks to Tap Lugo Mender Group as Counsel
ELITE PRODUCTS: Taps Xavier Flores Rios as Financial Consultant
PUERTO RICO: Big Banks Drove Island Deeper Into Debt, Says Suit
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Gets Support to Boost Recovery Efforts
V E N E Z U E L A
VENEZUELA: Moody's Withdraws C Rating on Currency Country Ceilings
V I R G I N I S L A N D S
ALL YEAR HOLDINGS: Amends Remaining Unsecured Claims Pay Details
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A R G E N T I N A
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ARGENTINA: 'Doing Well,' IMF Backs Course in Meeting With Fernandez
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Rosario Averdi at Buenos Aires Times reports that a third
face-to-face meeting between head of state Alberto Fernandez and
IMF Head Kristalina Georgieva lasted 45 minutes and took place just
hours after IMF staff announced the approval of a second review of
an agreement that will allow Argentina's government to gain access
to US$3.9 billion in funds.
"Thank you very much for giving me the opportunity to share with
you that we had an excellent meeting with President Fernandez,"
Georgieva told Perfil and other Argentine media outlets who are
covering the Peronist leader's tour of the United States, the
report notes.
"We talked about the considerable progress we have made in reaching
an agreement at the technical level on the second review. And I
also expressed my appreciation for the very serious way in which
Minister Sergio Massa and his team including the Central Bank are
addressing Argentina's significant challenges," said the IMF chief,
the report relays.
This was the first time that Georgieva and Fernandez had met since
last October, when they met in Rome, the report discloses. On that
day, Argentina's economy minister was Martin Guzman. Since that
date, he has left, Silvina Batakis became head of the portfolio for
25 days and Sergio Massa has joined the Cabinet - a fact that the
head of the IMF herself celebrated, the report notes.
"Who occupies the functions of government is a sovereign decision
of each country, the important thing is to work together. Guzman's
departure was unexpected, we worked very well, but it was also very
good to be able to meet with Batakis and it was a pleasure to see
her again in Washington when she came with Massa, who also signals
continuity," Georgieva told reporters, speaking during her first
press conference with Argentine media, the report discloses.
"What we discussed with each minister is how to fight inflation -
there have been no fundamental changes", said the IMF chief, the
report relays. "What we could see is an increase in the terms of
authority and we must also highlight the strong team in pursuit of
the common goal, the goal remains the fight against inflation and
it matters to us that Argentina can be put on a solid footing for
the benefit of the people," he added.
At the end of the press conference, she stressed this line of
thought once again "Three ministers, one program," the report
relays.
Jorge Arguello, Argentina's Ambassador to the United States, said
that when the meeting began, Georgieva told the head of state:
"President, we are doing well, things are working," the report
notes.
The diplomatic envoy, asked for his view, said that "the meeting
was very positive," the report says.
Quizzed about the government's economic course, Georgieva said that
"the signs of the government's seriousness are precisely the
stabilization that the Argentine economy has experienced and also
the progress in rebuilding reserves, as well as the reconstruction
to deal with inflation, and especially to focus on the deficit and
the reduction of energy subsidies," the report discloses.
In another part of the conference, the IMF chief described
subsidies - always a hot topic in Argentina - as "harmful," the
report relays.
Underlining her conviction in the government's plan, Georgieva
assured that Argentina's plan "is a government program and Massa
proves that the government is the owner of the program and the IMF
technical team is there to support it," the report discloses.
No Revision
On the possibility of revising the goals of the initial agreement,
Arguello was blunt, saying simply "a revision is not on the
agenda," the report notes.
For her part, Georgieva said: "This is a global context of high
uncertainty and it is something that must be taken into account,
but certainly the implementation of the program has very important
aspects and, in fact, I expressed my appreciation for what Massa
and his team have shown," the report relays.
She continued: "As we gain a better understanding of Argentina's
performance in the global context, looking at the trajectory of
growth as well as the evolution of inflation and the elimination of
subsidies that are harmful to Argentina, these are the aspects that
we must take into account in terms of the development that the
country will show, the report notes.
Georgieva stressed that during the 45 minutes she shared with the
president, "we also talked about the world economy and the
challenges it is experiencing and the role of the IMF in promoting
macroeconomic and financial stability and helping the world," the
report says.
Moving onto a "lighter" note, the IMF's managing director also
revealed that she had enjoyed seeing "pictures of the president's
son," adding: "We want the same smile that we see on the
President's face to be seen on the faces of the Argentine people,"
the report relays.
Closing her press conference, Georgieva deployed a tango metaphor
to sum up the last few months, the report relays.
"Although there was a certain disruption with the departure [and
arrival] of Massa, we have managed to see a stabilization and
indicators of a stronger economy. I compare it to the tango, you
take one step back and two steps forward - and that's how we want
to dance it," 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.
Last March 25, 2022, Argentina finalized agreement with the IMF
for a new USD44 billion Extended Funding Facility (EFF) intended
to fund USD40 billion in looming repayments of the defunct
Stand-By Arrangement (SBA), with an extra USD4 billion in up-front
net financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
As reported by The Troubled Company Reporter - Latin America on
Aug. 12, 2022, S&P Global Ratings affirmed its foreign and
local-currency sovereign credit ratings of 'CCC+/C' on the
Republic of Argentina. The outlook remains stable. S&P also
affirmed its national scale 'raBBB-' rating and its 'CCC+' transfer
and convertibility assessment. S&P said the stable outlook reflects
the challenges in managing pronounced economic imbalances ahead of
the 2023 national elections given disagreement on policy within the
government coalition and financing pressures in the local market.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'CCC'.
Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
On July 19, 2022, Fitch Ratings placed Argentina's Long-Term
Foreign Currency Issuer Default Rating (IDR) and Long-Term Local
Currency IDR Under Criteria Observation (UCO) following the
conversion of the agency's Exposure Draft: Sovereign Rating
Criteria to final criteria. The UCO assignment indicates that
ratings may change as a direct result of the final criteria. It
does not indicate a change in the underlying credit profile, nor
does it affect existing Rating Outlooks.
Moody's credit rating for Argentina was last set at Ca on
Sept. 28, 2020.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
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C H I L E
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LATAM AIRLINES: Moody's Assigns 'B2' CFR Amid Exit Financing
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Moody's Investors Service has assigned a B2 corporate family rating
to LATAM Airlines Group S.A (LATAM) in connection with its
post-bankruptcy exit financing. At the same time, Moody's assigned
a B2 rating to the proposed $2.25 billion senior secured notes and
term loan to be co-issued by LATAM and Professional Airline
Services Inc., a Florida corporation and a wholly owned subsidiary
of LATAM, due in 5 and 7 years. The outlook for the ratings is
stable.
The rating assignment follows the confirmation order of LATAM
debtor's joint plan of reorganization under the Chapter 11 of the
US bankruptcy code issued on June 18, 2022 by the United States
Bankruptcy Court of the Southern District of New York, which will
allow the company to emerge from bankruptcy in the second half of
2022.
The rating of the proposed notes and term loan assumes that the
final transaction documents will not be materially different from
draft legal documentation reviewed by Moody's to date and assume
that these agreements are legally valid, binding and enforceable.
Ratings Assigned:
Issuer: LATAM Airlines Group S.A
Corporate Family Rating: B2
$2.25 billion in senior secured notes and term loan B
due in 5 and 7 years: B2 (co-issued by Professional
Airline Services Inc.)
Outlook:
Issuer: LATAM Airlines Group S.A
Outlook Assigned: Stable
RATINGS RATIONALE
LATAM's B2 rating reflects the company's scale and superior network
connectivity that translates into leadership position in 4 out of
the 5 domestic markets in which it operates and in intraregional
flights in Latin America as of December 2021, along with its
well-diversified business portfolio of air transportation services
and strategic alliances. The rating is also supported by LATAM's
improved post-bankruptcy capital and cost structures and adequate
liquidity, which will allow the company to weather the volatile
recovery of the industry.
The rating is constrained by LATAM's still weak credit metrics and
by the still fragile situation of the airlines industry after the
coronavirus outbreak and rising macroeconomic risks and increasing
costs. LATAM will have to contend with higher costs derived from
labor (denominated in local currencies), fuel, and other US dollar
denominated inputs through 2022, which can limit profitability
despite firm demand and capacity discipline in its key markets.
As part of its reorganization plan, LATAM has pursued structural
changes to its cost and capital structure that will allow it to
post fast recovery in credit metrics through 2023. The company
restructured its cost base, simplifying its fleet (reducing its
operating fleet, withdrawing the A350 aircrafts and consolidating
the Brazilian wide body operations in the B777 and B787 aircrafts),
increasing the share of variable costs (to about 80% of total
through 2023), outsourcing non-core activities and renegotiating
over 1,000 contracts. Such initiatives led to a total reduction of
about $1 billion in LATAM's annual operating costs and will allow
for faster responses to volatility in demand and cash preservation.
LATAM's unit CASK ex-fuel excluding its cargo operations of $4.2
cents in 2019 already compared favorably to regional and
international low-cost and network carriers, and further cost
cutting initiatives such as revisions to lease payments will result
in greater flexibility.
With the coronavirus pandemic, LATAM has also exited non-profitable
markets such as domestic Argentina and is focusing on developing a
new domestic hub in Fortaleza, Brazil, while expanding its presence
in previously established hubs such as Sao Paulo, Santiago and
Lima. The company also intends to (1) maintain its capacity
discipline, preserving profitability while defending its
competitive position, and (2) continue to increase its cargo
operations efficiently.
LATAM's post-exit capital structure will also improve, with total
debt declining to approximately $7 billion from $11.6 billion at
the end of June 2022 (plus $225 million in related parties
transactions), and mainly reflecting the conversion of debt into
equity. Upon bankruptcy emergence, LATAM's total debt will comprise
(i) $4.0 billion in fleet debt, (ii) $2.25 billion in new debt
through a combination of term loans and notes; and (iii) about $500
million in other debt instruments. The company will also raise $800
million through a new equity offering, $4.6 billion of new funds
from the issuance of convertible notes and will have $1.1 billion
in revolving credit facilities (RCFs) fully undrawn. Except to the
new $131 million local bonds which are unsecured and subordinated
to the rest of the financial debt, the company's debt will be
entirely secured by aircrafts in the case of leases and fleet debt,
engines, components and aircrafts in the case of the RCFs, and
intangible assets such as intellectual properties, brand, routes
and slots, cargo business, and other assets in the case of the new
term loans and notes. All debt, except the local bonds, rank pari
passu and there is no notching of debt instruments relative to the
corporate family rating.
The reopening of all domestic markets and of international markets
such as Argentina, the Caribbean and the US will support a
substantial increase in forward bookings for LATAM and will
translate into more passenger revenue and number of flights through
2023 even as rising macroeconomic risks in the region threaten
disposable income and consumer confidence. So far air travel demand
has remained robust in the region even with stagnant economic
growth and declining disposable income. LATAM's total RPK recovered
to 78% of 2019 level in July 2022, with Brazil and Spanish speaking
countries RPKs at 102% and 81% of pre-pandemic levels,
respectively, and international RPKs still lagging behind at 65%.
Moody's believes that LATAM pursued significant cost savings during
its reorganization plan, which will support future profitability
and cash generation even with volatility in passenger demand.
With the ongoing demand recovery and after the implementation of
all initiatives and the downsizing of financial and operating
costs, Moody's expects LATAM's EBIT margin to recover to 4%-5% in
2023 from -10.7% in the twelve months ended June 2022, and adjusted
leverage to around 4x-4.5x in 2023 from 29.4x, already slightly
below pre-pandemic levels. Interest coverage (measured by (FFO +
interest expense) / interest expense) will also recover, reaching
around 2-3x in 2023.
LIQUIDITY
LATAM will have adequate liquidity upon bankruptcy emergence. The
company's estimated cash balance of about $1.1 billion will be
sufficient to cover short term financial debt maturities of $314
million by 3.4x times. The company's debt amortization schedule
will also be comfortable, with only $531 million in financial debt
coming due until 2024, and most of upcoming maturities represented
by the new exit financing, namely the term loans and notes, due
beyond 2026. The company will also have two secured revolving
credit facilities amounting to $1.1 billion and expects to generate
positive cash flow from operations after investments already in
2023 (not considering aircraft deliveries financed through
operating leases). The company's cash generation will benefit from
a reduction of about 40% in annual fleet cash costs from 2019
levels following the implementation of its reorganization plan, and
the company continues to have flexibility in terms of fleet capex.
Moody's expects that the company's cash flow from operations will
gradually improve throughout 2022, and that CFO coverage of debt
will return to pre pandemic levels in 2023. Moody's also expects a
neutral to positive free cash flow from 2023 onwards, reflecting
flexibility in maintenance capex and costs. The company also has
other potential liquidity sources, including unencumbered assets
such as engines and aircraft that could be used in potential
secured financing transactions.
ESG CONSIDERATIONS
LATAM faces high environmental risk due to carbon transition. This
will primarily depend on evolving global decarbonization policies
and regulations which may increase operating costs for airlines.
Further, the desire to reduce carbon emissions may lead to reduced
travel, in particular for business purposes, much of which can
effectively be done virtually, as demonstrated during the pandemic.
LATAM also faces high industry-wide social risks related to
demographic and societal policies moving to reduce carbon
emissions.
LATAM's governance risks are incorporated in the rating and mainly
relate to the recent bankruptcy process, the existence of dual
class of shares within the corporate structure and somewhat complex
organizational structure, balanced by its board independence and
track record of adequate financial management. LATAM will continue
to be a publicly-held company after exiting Chapter 11, with shares
traded in the Santiago stock exchange. About 66% of the company's
shares will be held by creditors and the remaining 34% will be held
by existing shareholders supporting the restructure plan, including
the Cueto Group, Delta Airlines and Qatar Airways. The creditors
group will appoint 5 out of 9 board members, and the remaining 4
will be appointed by the remaining shareholders. The company's
pre-existing governance practices will remain unchanged following
the Chapter 11, but board approval requirements for certain matters
will temporarily increase.
RATING OUTLOOK
The stable outlook reflects Moody's expectations that LATAM will
experience a recovery in demand going forward while keeping its
conservative financial practices towards liquidity, costs and
capacity management.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of LATAM's rating would require longer term visibility
over the industry's post-pandemic recovery or strengthened credit
metrics that provide cushion to credit quality under various stress
scenarios. Quantitatively an upgrade would require adjusted
leverage (measured by total debt/EBITDA) below 5x and interest
coverage (measured by (FFO + interest expense)/interest expense)
above 4x, all on a sustained basis. The maintenance of an adequate
liquidity profile would also be required for an upgrade.
The rating could be downgraded if credit metrics' recovery falls
behind Moody's expectations, with adjusted leverage remaining above
6.5x and interest coverage below 1x through 2023. A deterioration
in the company's liquidity profile or additional shocks to demand
or profitability that lead to cash burn could also result in a
downgrade of the rating.
The principal methodology used in these ratings was Passenger
Airlines published in August 2021.
LATAM Airlines Group S.A (LATAM) is a Chile-based airline holding
company formed by the business combination of LAN Airlines S.A. of
Chile and TAM S.A. (TAM) of Brazil in June 2012. LATAM is the
largest airline group in South America, with a local presence for
domestic passenger services in five countries (Brazil, Chile, Peru,
Ecuador and Colombia). The company also provides intraregional and
international passenger services, has a cargo operation that is
carried out using belly space on passenger flights and a dedicated
freighter service and has LATAM Pass, the largest frequent flyer
program in the region and 7th largest in the world in terms of
members. In the last twelve months ended June 2022, LATAM generated
$7.3 billion in net revenue. In 2019, LATAM served passengers in
around 142 destinations in 25 different countries; provided cargo
services to 149 destinations in 29 countries; and as of June 30,
2022, had a fleet of 301 aircraft and a set of bilateral alliances.
LATAM AIRLINES: S&P Assigns Prelim. 'B-' Issuer Credit Rating
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S&P Global Ratings, on Sept. 22, 2022, assigned its 'B-'
preliminary issuer credit rating to Latam Airline Group S.A. At the
same time, S&P assigned a 'B+' preliminary rating to the proposed
$1.5 billion new senior secured notes and to the proposed $750
million term-loan B, with a recovery rating of '1', which indicates
a recovery of 90%-100% (rounded estimate: 95%) in the event of
default.
S&P said, "The stable outlook reflects that we expect Latam's
operations to continue recovering in the next two years. We
forecast its debt-to-EBITDA ratio will be about 5.0x and funds from
operations (FFO) to debt around 10% by the end of 2023, and that it
will emerge from bankruptcy with a comfortable liquidity
position."
The U.S. Bankruptcy Court confirmed Latam Airline Group S.A.'s
reorganization plan in June 2022. Following registration of new
shares and convertible bonds with the CMF (Chile's capital markets
regulator) to execute the new capital structure, S&P expects the
company to emerge from bankruptcy by November 2022.
S&P said, "Considering the milestones achieved in Latam's
restructuring process and public guidance given by the company, our
analysis assumes the company will exit Chapter 11 no later than
November 2022, when it executes the proposed capital structure.
During the restructuring process, Latam took several actions to
reduce cost structure that we believe will allow Latam to reach
cost per available seat kilometer excluding fuel (CASK ex-fuel) of
about 4.7 cents by 2023 (compared to 4.53 cents in 2019) despite
inflationary pressures. Latam has reduced its fleet by about 13%
since March 2020, renegotiated fleet agreements including
power-by-the hour contracts for wide-body aircraft through 2023 and
narrow-body through 2022, signed lower operating leases across the
board, and somewhat simplified its fleet by retiring A-350s from
its wide-body aircraft. Additionally, it has considerably reduced
its workforce by 12,000 full-time employees (27% since March 2020)
and renegotiated supplier contracts, while its digitalization and
automation initiatives have matured."
The reorganization plan includes an exit capital structure with
$10.3 billion in additional equity, with $800 million coming from
the equity rights offering and the remainder from convertible
notes. From the total equity increase, $5.4 billion will be
underwritten by new money while the rest will be underwritten with
general unsecured claims. As a result, S&P expects a lighter
balance sheet with reduced debt and other liabilities, a less
complex capital structure, and a stronger cash position. Upon
emergence, it estimates total gross adjusted debt (including
operating leases) will amount to about $6.8 billion, down from
$10.8 billion in March 2020. Latam's debt upon emergence will
comprise $1.5 billion in new senior secured notes, $750 million of
a new term-loan B, $275 million in a spare engine facility, $130
million (denominated in indexed units) in senior unsecured local
notes, about $1.8 billion in fleet financial debt, and about $2.3
billion in operating leases. Additionally, Latam will repay and
renew the existing revolving credit facility for $600 million and
obtain a new one for additional $500 million, which coupled with
stronger cash flow and minimum debt amortizations for the next two
years, should result in a comfortable liquidity position.
Latam has unique strengths in the region such as its extensive
network and much larger scale compared to other regional airlines.
With S&P's forecast of about 107,000 ASK by year-end 2022 and
138,000 in 2023, it's the largest airline in the region and the
leader in domestic markets in Chile, Peru and Brazil. Its network
also connects South America to North America, Europe, and Oceania,
and has largest cargo operation in Latin America.
S&P said, "We view the airline industry as a high-risk sector
reflecting high cyclicality, capital intensity, and climate
transition risks, and we believe that operations in Latin America
pose additional risks because local currencies are subject to
foreign exchange swings. Because ticket prices in local markets are
in domestic currencies, it pressures the airlines' ability to pass
through cost increases to average fares. Nevertheless, we believe
Latam mitigates these risks to a greater degree than regional peers
because of the company's larger size, meaningful market share, more
diversified operations, and its international and cargo segments
that generate cash flow in hard currency. On the other hand, with
domestic flights recovering much faster than international ones,
the company will take longer to recover its pre-pandemic capacity
and profitability compared with some regional peers that
predominantly operate domestic routes. Latam has been on a solid
recovery path since mid- 2021, after a second wave of COVID-19
infections in Latin America. The impact on its operations from the
third wave in early 2022 was moderate and short-lived. Flight
frequency has been increasing, more rapidly for domestic travel,
and has already surpassed pre-pandemic capacity in Brazil,
Colombia, and Ecuador. However, we don't expect international
travel to fully recover to pre-pandemic levels until the end of
2023, considering slower recovery in corporate travel, changes in
traveling patterns, and sluggish economic conditions in the main
countries where Latam operates. In line with these factors, we
expect significant capacity and demand growth in 2023, with ASK
expanding 28%-30%.
"As mentioned above, the airline's operations won't reach
pre-pandemic levels this year, which, coupled with general high
inflation and very high fuel prices, will result in depressed
EBITDA in 2022. Amid a sharp increase in crude oil prices and with
jet-fuel crack spreads at historic highs, Latam experienced an 87%
year-over-year increase in jet fuel prices in the first half of
2022, and we estimate average fuel price per gallon for the full
year to be 55%-60% higher than in 2021. On the positive side, the
company has been able to pass through large portions of the higher
costs into ticket prices. Yield jumped by 33% in the first six
months of 2022 year-over-year, but this will only partially offset
the higher costs. As a result, we expect EBITDA of $750
million-$800 million this year compared to $2.2 billion in 2019. We
also estimate leverage will remain high, with gross debt to EBITDA
of 8.5x-9.0x and FFO to debt below 5% by year-end. Still, we
forecast considerable recovery to between 5.0x and 5.5x in 2023,
and FFO to debt to improve to between 10% and 12% in 2023. This
sharp improvement in credit metrics will result from a significant
rebound in cash flow generation in 2023 under our assumption of
continued demand recovery, with sustained solid domestic air
traffic and strong recovery of international flights, combined with
a more efficient cost structure and lighter capital structure.
Still, we believe the recovery path will be volatile in the next
several quarters, so we view the company's financial risk profile
as highly leveraged. As of July 2022, Latam has hedged only about
16% of its expected fuel consumption for the next 12 months, which
could create further volatility in 2023.
"For our preliminary rating, we assume that Latam will complete the
Chapter 11 process by November 2022. Additionally, we assume that
the company will be able to place the new financing instruments
(senior secured notes and term loan B) and that it will increase
revolving credit facilities to $1.1 billion. Additionally, our
scenario contemplates that all convertible notes will be rapidly
converted into equity upon emergence."
ESG credit indicators: E-3, S-5, G-2
S&P said, "Social factors are a very negative consideration in our
credit rating analysis of Latam because of the pandemic-related
financial hit. Its EBITDA and cash flows deteriorated
significantly, and as a result, the company filed for bankruptcy to
protect liquidity and reshape operations. Additionally, a
significant portion of Latam's capacity and revenue come from
international travel, which will think will take longer to recover
to pre-pandemic levels than domestic traffic. We expect LATAM to
reach domestic pre-pandemic traffic levels by the end of 2022, but
international traffic only by 2023. Environmental factors are a
moderately negative consideration in our credit rating analysis of
Latam. All airlines face long-term risk from potentially tighter
greenhouse gas (GHG) emissions regulation. The company's average
fleet age is in line with the global average of 10-12 years. During
bankruptcy, Latam rejected several lease contracts and signed new
ones to accelerate its fleet renewal plan, which will reduce fuel
consumption, GHG emissions, and the average fleet age."
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J A M A I C A
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JAMAICA: Gas Prices Up, Other Fuel Prices Decline
-------------------------------------------------
RJR News reports that gas prices in Jamaica inched up slightly on
Sept. 22, while all other categories of fuel will see declines.
A litre of 87 and 90 gasoline will sell for $0.25 more, according
to RJR News.
However, diesel and ultra low sulphur diesel will see their third
week of consecutive declines, selling for $4.50 less, the report
relays.
Kerosene will also decline by $4.50, the report discloses.
The price of propane will decline by $0.93, while butane will sell
for $1.17 less, the report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
JAMAICA: Makes Progress Rectifying Issues Flagged by FAT-F
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RJR News reports that Finance Minister Dr. Nigel Clarke says
Jamaica has made progress in rectifying a number of the issues
flagged by the Financial Action Task Force (FAT-F).
The FAT-F recommendations are aimed at making Jamaica compliant
with international standards on combating money laundering and the
financing of terrorism and proliferation, according to RJR News.
According to Dr Clarke, of the more than 40 recommendations made by
the international regulatory agency, only a few remain to be fixed,
the report notes.
One of those is the demand that members of the legal profession be
made subject to the Proceeds of Crime Act, the report relays. That
measure has been the challenged by the Jamaican legal fraternity
and is to be heard shortly by the judicial committee of the UK
based Privy Council, the report says.
Another important change, he said, is to amend the Companies Act,
"to bring the beneficial ownership regime up to par with FAT-F
standards," the report discloses.
He said the Jamaican government had given it pledge to bring the
relevant legislative amendment to Parliament by March next year,
the report notes.
There will also be statutory amendments in relation to "charties
and charitable organizations" by March, he said, the report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
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P U E R T O R I C O
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ACADEMIA DE DESARROLLO: Seeks to Tap Lugo Mender Group as Counsel
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Academia de Desarrollo Integral Cristiano Inc. seeks approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to employ
Lugo Mender Group, LLC as its legal counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its duties, powers and
responsibilities in the continued management of its
business operations;
(b) advise the Debtor in connection with its reorganization
endeavors;
(c) assist the Debtor with respect to negotiations with
creditors for the purpose of arranging a feasible Plan
of Reorganization;
(d) prepare legal papers;
(e) appear before the bankruptcy court, or any other court in
which the Debtor asserts a claim or defense directly or
indirectly related to this bankruptcy case; and
(f) perform such other legal services for the Debtor as may
be required in these proceedings.
The hourly rates of the firm's counsel and staff are as follows:
Wigberto Lugo Mender, Esq. $300
Associate Staff Attorney $175
Legal and Financial Assistants $125
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the firm received a retainer in the
amount of $4,500 for the legal services to be rendered in
connection with this case.
Alexis Betancourt Vincenty, Esq., an attorney at Lugo Mender Group,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Alexis A. Betancourt Vincenty, Esq.
Lugo Mender Group, LLC
100 Carr. 165, Suite 501
Guaynabo, PR 00968-8052
Telephone: (787) 707-0404
Facsimile: (787) 707-0412
Email: a_betancourt@lugomender.com
About Academia de Desarrollo Integral Cristiano
Academia de Desarrollo Integral Cristiano Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 22-02689) on Sept. 9, 2022, with up to $1 million
in both assets and liabilities. Alexis A. Betancourt Vincenty,
Esq., at Lugo Mender Group, LLC serves as the Debtor's counsel.
ELITE PRODUCTS: Taps Xavier Flores Rios as Financial Consultant
---------------------------------------------------------------
Elite Products, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Puerto Rico to employ Xavier Flores Rios, an
accountant practicing in Puerto Rico, as financial consultant.
The services of Mr. Flores include strategic counseling and advice,
pro forma modeling preparation, financial/business assistance, and
preparation of documentation as requested for and during Debtor's
Chapter 11.
Mr. Flores will be billed at an hourly rate of $85, plus expenses.
Mr. Flores disclosed in a court filing that he is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The accountant can be reached at:
Xavier Flores Rios
Villa Ana A-42
Calle Simplicio
Cordero Juncos, PR 00777
Telephone: (787) 237-0797
Email: floresaccounting@gmail.com
About Elite Products
Elite Products Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No. 22-02142) on July 22, 2022,
listing under $1 million in both assets and liabilities.
Judge Mildred Caban Flores oversees the case.
The Debtor tapped Jesus E. Batista Sanchez, Esq., at The Batista
Law Group as counsel and Xavier Flores Rios as financial
consultant.
PUERTO RICO: Big Banks Drove Island Deeper Into Debt, Says Suit
---------------------------------------------------------------
A trust for the Commonwealth of Puerto Rico's creditors said in
court papers that 13 of the world's largest banking institutions
knowingly drove Puerto Rico billions deeper into debt when the
island was already insolvent.
Plaintiff Drivetrain, LLC, solely in its capacity as Trustee of the
Avoidance Actions Trust, on Sept. 15, 2022, filed an amended
complaint against these entities:
* Barclays Capital, Inc.;
* BMO Capital Markets Corp.;
* BofA Securities, Inc., a/k/a Banc of America Securities LLC,
a/k/a BofA Merrill Lynch; Citigroup Global Markets Inc.;
* Citibank, N.A., New York;
* Goldman Sachs & Co. LLC;
* Goldman Sachs Bank USA f/k/a Goldman Sachs Capital Markets,
L.P.;
* Goldman Sachs Mitsui Marine Derivative Products, L.P.;
* Jefferies Group LLC;
* J.P. Morgan Securities, LLC;
* Merrill, Lynch, Pierce, Fenner & Smith Inc.;
* Merrill Lynch Capital Services, Inc.;
* Morgan Stanley & Co. LLC;
* Morgan Stanley Capital Services, LLC f/k/a Morgan Stanley
Capital Services Inc.;
* RBC Capital Markets, LLC;
* Royal Bank of Canada;
* Samuel A. Ramirez & Co., Inc.;
* Santander Securities LLC;
* UBS Financial Services, Inc. of Puerto Rico;
* UBS AG; and
* John Does 1-10.
The complaint, updated with new allegations since it was initially
filed in May 2019, seeks to recover about $500 million in bond
underwriting fees and swap payments.
"The thirteen major banks named as Defendants in this action
inflicted a financial tragedy of epic proportion on the
Commonwealth of Puerto Rico and its citizens. By 2008, the
Commonwealth was irredeemably insolvent. The Defendants -- who
underwrote the municipal bonds issued by Puerto Rico and/or entered
into interest rate swap agreements with Puerto Rico -- knew it.
Instead of helping Puerto Rico climb out of its financial hole, the
Defendants handed the Commonwealth and its agencies bigger and
bigger shovels, urging them to issue a slew of expensive bonds so
that Puerto Rico could pay down existing obligations to the banks.
These bonds were issued without statutory authority or in violation
of Puerto Rico's constitutional debt limit. This "scoop and toss"
scheme plunged the Commonwealth and its agencies deeper and deeper
into debt, making their unavoidable default inevitably worse,"
according to the amended complaint.
"This lawsuit seeks to hold Defendants accountable for their role
in Puerto Rico's financial crisis. Each of Defendants UBS PR,
Santander, BofA, Merrill Lynch, Barclays, Ramirez, RBC Capital,
BMO, Goldman, Morgan Stanley, JP Morgan, Citigroup, and Jefferies
(collectively, the "Underwriter Defendants"), was a lead
underwriter for one or more bond issuances from 2008 to 2014 (the
"Bonds") for the Commonwealth, the Puerto Rico Public Buildings
Authority (the "PBA"), or the Employees Retirement System of the
Government of the Commonwealth of Puerto Rico (the "ERS" and, with
the Commonwealth and the PBA, the "Issuers") and, as such, received
substantial fees and payments from the Issuers. Each of Defendants
Morgan Stanley Capital, Citibank, UBS AG, Goldman
USA, Goldman Mitsui, RBC, Merrill Lynch Capital, and John Does 1-10
(collectively, the "Swap Defendants") entered one or more interest
rate swap agreements with the Commonwealth, the Puerto Rico
Highways and Transportation Authority (the "HTA"), or the PBA (the
"Swap Agreements"), and received substantial payments and swap
termination fees in connection therewith."
As to Barclays, Citibank, Morgan Stanley, and Morgan Stanley
Capital, the Trust claims that the underwriting fees relating to
the 2014 GO Bonds bear many "badges of fraud":
a. Debtor's Insolvency: The Commonwealth was insolvent as early
as 2008 and knew this when it paid swap termination fees to
Citibank and issued the 2014 GO Bonds, but still paid Barclays and
Morgan Stanley to secure additional financing even though it was
bound to default and hinder its other creditors' ability to recover
once the Commonwealth inevitably defaulted.
b. The transfers sought to be avoided were made pursuant to
illegal contracts. The 2014 GO Bonds were illegal because they
violated the Constitutional Debt Limit and because they constituted
a reckless use of public funds, to the benefit of the banks rather
than the public and were contrary to public order.
c. Barclays and Morgan Stanley Violated Federal Securities Law.
Barclays' and Morgan Stanley's failure to comply with federal
securities law and reasonably determine that the Commonwealth would
submit its financial statements further underscores the illegal
nature of the 2014 GO Bonds and the fact that Barclays and Morgan
Stanley did not believe that the Commonwealth would be able to pay
the debt service on those bonds as it came due.
d. Barclays and Morgan Stanley knew Debtors were bound to
default. As the underwriters of Puerto Rico's debt, Barclays and
Morgan Stanley obtained highly detailed information from Puerto
Rico and its agencies that were issuing bonds and/or using their
proceeds, and therefore had a very clear picture of Puerto Rico's
financial state. These Defendants pushed the Commonwealth to issue
additional debt, which they used to benefit themselves, knowing the
Commonwealth was bound to default and the remaining creditors would
not be paid.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
* * *
The two Title III plans of adjustment have been confirmed to date,
for the Commonwealth and COFINA debtors.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Gets Support to Boost Recovery Efforts
---------------------------------------------------------
Trinidad Express reports that technical assistance has been being
provided to assist in Tobago's economic recovery efforts.
Assistance came via a recent workshop held by the Inter-American
Development Bank (IDB), the United Kingdom's Foreign and
Commonwealth Development Office, the Caribbean Development Bank,
and the Government of Canada, according to Trinidad Express.
The Tobago House of Assembly (THA) Information Division in a media
release said a key component of providing technical assistance
which was financed by the IDB, is to stimulate private sector
economic activity, the report notes.
The release said on June 1, the Tobago Blue Economy Ideas
Competition Workshop was launched to support Tobago-based
entrepreneurs such as start-ups and non-profit organizations, to
develop and implement ideas for projects in blue economy sectors.
Fifteen submissions were received, five of which have been selected
for further consideration, the report relays. To prepare the
selected participants to optimize resources, a workshop was held on
September 19, which provided participants with an opportunity to
showcase their project proposals and receive expert feedback, the
release stated, the report adds.
=================
V E N E Z U E L A
=================
VENEZUELA: Moody's Withdraws C Rating on Currency Country Ceilings
------------------------------------------------------------------
Moody's Investors Service has withdrawn Venezuela's C local
currency and foreign currency ceilings.
Moody's local currency country ceilings reflect the general
country-level risks that affect all local currency issues of
locally domiciled obligors or structured transactions whose cash
flows are primarily generated from domestic assets or residents.
Moody's foreign currency country ceilings incorporate the transfer
and convertibility (T&C) risks that are incremental to the general
country-level risks reflected in local currency country ceilings.
Moody's characterizes T&C risks broadly as the risks that
government restrictions will interfere with the ability of a
domiciled borrower to repay its cross-border debt or the ability of
foreign currency depositors in a deposit-taking institution to
withdraw their funds.
Withdrawals:
Issuer: Venezuela
Country Ceiling (Foreign Currency), Withdrawn, previously rated C
Outlook Actions:
Issuer: Venezuela
Outlook, Withdrawn
ASSESSMENT RATIONALE
Moody's has decided to withdraw the ceilings for its own business
reasons.
===========================
V I R G I N I S L A N D S
===========================
ALL YEAR HOLDINGS: Amends Remaining Unsecured Claims Pay Details
----------------------------------------------------------------
All Year Holdings Limited submitted an Amended Chapter 11 Plan of
Reorganization dated September 15, 2022.
The Debtor shall seek confirmation of the Plan pursuant to section
1129(b) of the Bankruptcy Code with respect to any Class of Claims
or Interests that rejects or is deemed to reject the Plan. The
Debtor reserves the right to modify the Plan to the extent, if any,
that confirmation pursuant to section 1129(b) of the Bankruptcy
Code requires modification, including by modifying the treatment
applicable to a Class of Claims or Interests to render such Class
of Claims or Interests Unimpaired to the extent permitted by the
Bankruptcy Code and the Bankruptcy Rules.
Class 4 consists of Remaining Unsecured Claims against the Debtor.
Except to the extent that a holder of an Allowed Remaining
Unsecured Claim against the Debtor agrees to a less favorable
treatment of such Claim, in full and final satisfaction, settlement
and release of such Allowed Remaining Unsecured Claim, each such
holder shall receive (i) on the Effective Date, from the Disbursing
Agent (on behalf of the Debtor), its Pro Rata Share of the Class 4
ED Distribution, (ii) in the event the William Vale Purchase occurs
subsequent to the Effective Date, from the Disbursing Agent (on
behalf of the Debtor), its Pro Rata Share of any additional New
Notes issued, and (iii) on such other date(s) as determined from
time to time by the Plan Administrator, from Wind-Down Co, the
amounts recovered, if any, from the Excluded Assets (including, but
without limitation, from the prosecution of Avoidance Actions and
other Causes of Action) and any remaining Wind Down Cash Funding.
The right to the foregoing distributions shall be nontransferable
except by will, intestate succession, or operation of law. Class 4
is Impaired, and the holders of Remaining Unsecured Claims against
the Debtor are entitled to vote to accept or reject the Plan.
Like in the prior iteration of the Plan, Class 3 consists of the
General Unsecured Claims against the Debtor. Except to the extent
that a holder of a General Unsecured Claim against the Debtor
agrees to less favorable treatment, the legal, equitable, and
contractual rights of the holders of an Allowed General Unsecured
Claim are unaltered by the Plan. On and after the Effective Date,
the Reorganized Debtor shall continue to satisfy, dispute, pursue,
or otherwise reconcile each General Unsecured Claim in the ordinary
course of business.
Class 6 consists of Interests in the Debtor. On or after the
Effective Date, and subject to consummation of the BVI Plan of
Arrangement and any other necessary approvals in the BVI
Proceeding, all Interests in the Debtor shall be cancelled. The
existing holders of the Interests in the Debtor shall neither
receive nor retain any property of the Debtor or interest in
property of the Debtor on account of such Interest.
On the Effective Date, in accordance with the Plan and the Plan
Investment Agreement, subject to the satisfaction or waiver of all
applicable conditions under the terms thereof, the Sponsor shall:
* provide the Sponsor Contribution; and
* be the sole shareholder of the Reorganized Debtor, and on the
Effective Date, shall hold 100% of the NewCo Shares free and clear
of all Claims and Liens.
On the Effective Date, in accordance with the Plan and the Plan
Investment Agreement, subject to the satisfaction or waiver of all
applicable conditions under the terms thereof, the Disbursing Agent
(on behalf of the Debtor) shall distribute Pro Rata the Class 4 ED
Distribution to (i) the holders of Remaining Unsecured Claims that
are Allowed as of the Effective Date, and (ii) the Disbursing
Agent, to be held in the Class 4 Disputed Claims Reserve, on behalf
of holders of Disputed Remaining Unsecured Claims.
On the Effective Date, in accordance with the Plan and the Plan
Investment Agreement, subject to the satisfaction or waiver of all
applicable conditions under the terms thereof, a single limited
liability company unit representing a non-economic 100% ownership
interest in Wind-Down Co shall be issued to the Plan
Administrator.
The Pro Rata Share of the Class 4 ED Distribution allocated to
Disputed Remaining Unsecured Claims shall be held in one or more
segregated accounts in the Class 4 Disputed Claims Reserve until
such claims are Allowed or Disallowed, at which time the applicable
portion of the Class 4 ED Distribution shall be distributed to such
holders of newly Allowed Remaining Unsecured Claims or to the
holders of Remaining Unsecured Claims that were previously Allowed,
as the case may be.
A full-text copy of the Disclosure Statement dated September 15,
2022, is available at https://bit.ly/3Uvw6E7 from PacerMonitor.com
at no charge.
Attorneys for the Debtor:
Gary T. Holtzer, Esq.
Matthew P. Goren, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
About All Year Holdings Limited
All Year Holdings Limited is a real estate development company
founded by American real estate developer Yoel Goldman. It operates
as a holding company, which, through its direct and indirect
subsidiaries, focuses on the development, construction,
acquisition, leasing and management of residential and commercial
income producing properties in Brooklyn, N.Y. The company's
portfolio includes 1,648 residential units and 69 commercial units
in Bushwick, Williamsburg, and Bedford-Stuyvesant.
All Year Holdings sought Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 21-12051) on Dec. 14, 2021. At the time of the
filing, the Debtor listed $1 billion to $10 billion in assets and
liabilities. Judge Martin Glenn oversees the case.
Weil, Gotshal & Manges LLP, led by Matthew Paul Goren, Esq., is the
Debtor's bankruptcy counsel while Koffsky Schwalb, LLC and Bartov &
Co. serve as special counsels. Donlin Recano & Company, Inc. Is the
Debtor's administrative agent.
On Dec. 16, 2021, the Debtor filed an application under the laws of
the British Virgin Islands with the Eastern Caribbean Supreme Court
in the High Court of Justice, Commercial Division Virgin Islands
(the "BVI Court") seeking the appointment of Paul Pretlove and
Charlotte Caulfield of Kalo (BVI) Limited as joint provisional
liquidators under the applicable provisions of the BVI Insolvency
Act 2003 (the "BVI Proceeding"). The BVI Court entered an order
appointing the JPLs on December 20, 2021 (the "JPL Order").
In addition, on April 14, 2022, with the consent of the JPLs and
the approval of the BVI Court, the Debtor commenced a proceeding in
the District Court of Tel Aviv Yafo for recognition of the Chapter
11 Case as a foreign main proceeding under the applicable
provisions of Chapter I, Part C of the Insolvency and
Rehabilitation Law 5778-2018. The Israeli Court entered an order
recognizing the Chapter 11 Case on May 4, 2022.
*********
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
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2022. All rights reserved. ISSN 1529-2746.
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