/raid1/www/Hosts/bankrupt/TCRLA_Public/230118.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, January 18, 2023, Vol. 24, No. 14
Headlines
A R G E N T I N A
ARGENTINA: Satellites Suggest Soy Crop Will Be Lowest Since 2018
ARGENTINA: Suffering From One of the Worst Inflation Rates
B A H A M A S
FTX GROUP: Recovers Over $5 Billion, Attorney Says
B R A Z I L
AMERICANAS SA: BTG, Bradesco Among Most Exposed to Retailer
AMERICANAS SA: Fitch Lowers LongTerm IDRs to 'CC'
AMERICANAS SA: Moody's Cuts CFR to Caa3, Placed On Further Review
AMERICANAS SA: S&P Lowers ICR to 'D' on Injunction Relief
C A Y M A N I S L A N D S
ADAMS CAPITAL: Taps Graham Robinson as Liquidator
ADAMS GLOBAL: Taps Graham Robinson as Liquidator
MUCH WOW: First Creditor Meeting Set for Jan. 30
J A M A I C A
JAMAICA: BOJ Intervenes in Forex Market Again
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A R G E N T I N A
=================
ARGENTINA: Satellites Suggest Soy Crop Will Be Lowest Since 2018
----------------------------------------------------------------
Jonathan Gilbert at Bloomberg News reports that with many crop
traders focusing on Argentina's drought, one forecaster has tapped
satellite imagery to make the bold prediction that the nation's
upcoming soybean harvest may plunge to a five-year low.
Mickael Attia, a crop analyst with EarthDaily Analytics, sees the
soy harvest in the second quarter shrinking to 36.9 million metric
tons, according to Bloomberg News. The Buenos Aires Grain Exchange
predicts that the crop could be reduced even further to 35.5
million metric tons if the drought does not ease before the
second-quarter harvest, Bloomberg News relays. The figure would
match the smallest crop the bourse has recorded since the 2009
season, also affected by a drought, Bloomberg News says. Argentina
is the biggest exporter of soy meal and soy oil.
“It's a little bit aggressive, especially if there's a change in
the weather pattern in February, but right now it makes sense given
the frighteningly low moisture levels," Attia said in an interview
with Bloomberg News.
His Vancouver-based firm is part of a mushrooming
satellite-analytics industry that is increasingly being drawn into
crop forecasting, usually in conjunction with on-the-field accounts
since images and algorithms alone can't tell the whole story,
Bloomberg News relays. Argentine crops are in a tough spot after
La Niña caused drought to farmlands, ravaged wheat and forced
growers to delay soy and corn planting, Bloomberg News notes.
With fieldwork still getting finished and the possibility of rain
in a few weeks, other prognosticators have yet to revise preseason
estimates, Bloomberg News notes. The US Department of Agriculture
estimated the soy harvest at 49.5 million tons, though it is set to
update its outlook, Bloomberg News relays. The Rosario Board of
Trade, whose forecasts tend to lead other institutions, is
scheduled to publish its monthly report imminently, Bloomberg News
discloses. Rosario and the Buenos Aires Grain Exchange use farmer
surveys, Bloomberg News relays.
While many soy plants are in bad shape, La Niña is fadingm, the
report notes. That should in theory make way for rainfall at the
end of January and early February - during yield-defining growth
stages - that could save the crop, the report discloses.
EarthDaily Analytics also predicts an Argentine corn crop of 45.4
million tons, compared to a 50 million estimate from the Buenos
Aires exchange and the USDA's 55 million forecast, the report
discloses. Argentina is the world's third-biggest corn exporter,
the report says.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning
the October 2019 general election. He succeeded Mauricio Macri in
the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however,
its economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
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.
S&P Global Ratings, on Jan. 9, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC+/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is
negative. The
negative outlook on the long-term ratings reflects risks
surrounding pronounced economic imbalances and policy uncertainties
before and after the 2023 national elections. Global capital
markets are closed to Argentina. Moreover, disagreement within the
government coalition, and infighting among the opposition,
constrains the sovereign's ability to implement timely changes in
economic policy, according to S&P.
Fitch, on the other hand, downgraded Argentina's Long-Term
Foreign-Currency (FC) and Local-Currency (LC) Issuer Default
Ratings (IDRs) to 'CCC-' from 'CCC' in October 2022. Fitch
typically does not assign Outlooks to sovereigns with a rating of
'CCC+' or below. Fitch has removed the
Long-Term IDRs from Under Criteria Observation (UCO). The
downgrade of Argentina's FC IDR to 'CCC-' reflects deep
macroeconomic imbalances and a highly constrained external
liquidity position, which Fitch expects to increasingly undermine
repayment capacity as foreign-currency debt service ramps up in the
coming years.
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision
to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
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.
ARGENTINA: Suffering From One of the Worst Inflation Rates
----------------------------------------------------------
Buenos Aires Times reports that the latest official data from the
INDEC national statistics bureau has confirmed that Argentina is
suffering from one of the worst inflation rates in the world: in
2022, prices increased by an almost unthinkable 94 percent.
The evolution of prices is dizzying, according to Buenos Aires
Times. A litre of milk has increased by 320 percent since the end
of 2019, cooking oil has risen 456 percent over the same period,
with a kilo of sugar up 490 percent, according to a report from the
specialized Abeceb consultancy firm, the report notes.
"You stand in front of the shelves and you analyse prices as if you
were choosing jewellery. It's nonsense. At the bakery, it's
nonsense. I hardly eat grated cheese any more, it's gone through
the roof, almost 3,500 pesos [about US$20] a kilo, when a year ago
it was less than 1,000 pesos," less than a third of the current
price, said Julian Rattano, a 66-year-old retired chemist as he
shopped in a supermarket in Parque Chacabuco, Buenos Aires, the
report relays.
Thirty-four-year-old Roxana Prado laments: "The price of milk,
cheese, eggs, has nothing to do with anything. Last year I bought
a maple [30 eggs] for 150 or 200 pesos [around US$1 at the official
exchange rate]; today it's 700 pesos [US$3.88], the report notes.
A mother of two children, aged six and nine, she explained that the
family will not be able to go on holiday this year, the report
says.
"My husband and I both work, but just thinking about the start of
school and the expenses in March makes us shudder," she said, the
report discloses.
Multi-Causal
Argentina has recorded double-digit annual inflation rates for a
decade, but prices have accelerated sharply since 2018, when hikes
totaled 47.6 percent across the year, the report relays. This was
followed by 53.8 percent in 2019, with a drop to 36.1 percent in
the midst of the pandemic in 2020, before rising again in 2021
(50.9 percent) and this year (94.8 percent), the report notes.
The causes of inflation are multiple and vary in importance, the
report says. Over the years, there has been a combination of
expansionary policies based on fiscal deficits, partly financed by
money-printing, classic demand-pull inflation and strong
devaluations that have had a knock-on effect on prices, the report
discloses. Recently, external factors have been added into the
mix, such as the war in Ukraine, which put pressure on domestic
energy and food prices, the report relays.
In Argentina, inflation "also has very important sociological
roots," economist Ricardo Aronskind, a professor at the
universities of General Sarmiento and Buenos Aires, told AFP, the
report relays.
"From a certain level of inflation onwards, society begins to
incorporate a systematic action of remarking prices, tariffs,
salaries, rents into its behavioural patterns . . . . according to
expectations that are not always solid," he explained, the report
relays. “Sometimes they are simply fantasies or rumors about
what future inflation will be," he added.
In this context, some highly concentrated sectors of the economy
can play with prices and "take home high profits," said Aronskind,
while "wage earners and informal workers are systematically left
behind by inflation," the report notes.
Summer: Hangover Or Respite?
Three consecutive months of relatively moderate inflation rates
(6.3 percent in October, 4.9 percent in November and 5.1 percent in
December), a summer with full beaches and a World Cup win has
brought some recent calm to Argentines, the report discloses. But
the storms of July, when two economy ministers quit their post and
inflation hit 7.4 percent, remain fresh in the memory, the report
notes.
Economy Minister Sergio Massa says his goal is for Argentina's
monthly inflation rate to "start at three" percent in April, the
report relays.
Massa, at the head of a 'super-ministry' that the International
Monetary Fund recently celebrated as having "actions that are
beginning to bear fruit," is confident of a growth rate of "above
five percent" last year (the forecast, delivered in October, was
4.5 percent year-on-year), the report discloses. And, in an
election year, he hopes to be able to "fight inflation and organize
spending without cooling the economy or making painful
adjustments," the report notes.
Among other tools, Massa intends to extend his 'Precios Justos'
price control scheme until July. Under the programme, the prices on
2,000 basic products have been frozen with a monthly increase of
four percent allowed for 30,000 others, 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.
S&P Global Ratings, on Jan. 9, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC+/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is
negative. The
negative outlook on the long-term ratings reflects risks
surrounding pronounced economic imbalances and policy uncertainties
before and after the 2023 national elections. Global capital
markets are closed to Argentina. Moreover, disagreement within the
government coalition, and infighting among the opposition,
constrains the sovereign's ability to implement timely changes in
economic policy, according to S&P.
Fitch, on the other hand, downgraded Argentina's Long-Term
Foreign-Currency (FC) and Local-Currency (LC) Issuer Default
Ratings (IDRs) to 'CCC-' from 'CCC' in October 2022. Fitch
typically does not assign Outlooks to sovereigns with a rating of
'CCC+' or below. Fitch has removed the
Long-Term IDRs from Under Criteria Observation (UCO). The
downgrade of Argentina's FC IDR to 'CCC-' reflects deep
macroeconomic imbalances and a highly constrained external
liquidity position, which Fitch expects to increasingly undermine
repayment capacity as foreign-currency debt service ramps up in the
coming years.
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision
to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
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.
=============
B A H A M A S
=============
FTX GROUP: Recovers Over $5 Billion, Attorney Says
--------------------------------------------------
Dietrich Knauth and Tom Hals at Reuters report that crypto exchange
FTX has recovered more than $5 billion in liquid assets but the
extent of customer losses in the collapse of the company founded by
Sam Bankman-Fried is still unknown, an attorney for the company
told a U.S. bankruptcy court.
The company, which was valued a year ago at $32 billion, filed for
bankruptcy protection in November and U.S. prosecutors accused
Bankman-Fried of orchestrating an "epic" fraud that may have cost
investors, customers and lenders billions of dollars, according to
Reuters.
"We have located over $5 billion of cash, liquid cryptocurrency and
liquid investment securities," Andy Dietderich, an attorney for
FTX, told U.S. Bankruptcy Judge John Dorsey in Delaware at the
start of the hearing, the report notes.
Dietderich also said the company plans to sell nonstrategic
investments that had a book value of $4.6 billion, the report
relays.
However, Dietderich said the legal team is still working to create
accurate internal records and the actual customer shortfall remains
unknown, the report discloses. The U.S. Commodities Futures
Trading Commission has estimated missing customer funds at more
than $8 billion, the report says.
Dietderich said the $5 billion recovered does not include assets
seized by the Securities Commission of the Bahamas, where the
company was headquartered and Bankman-Fried resided, the report
notes.
FTX's attorney estimated the seized assets were worth as little as
$170 million while Bahamian authorities put the figure as high as
$3.5 billion, the report relays. The seized assets are largely
comprised of FTX's proprietary and illiquid FTT token, which is
highly volatile in price, Dietderich said, the report discloses.
Asset Sales
FTX could raise additional funds in the coming months for the
benefit of customers after Dorsey approved FTX's request for
procedures to explore sales of affiliates at the hearing, the
report relays.
The affiliates -- LedgerX, Embed, FTX Japan and FTX Europe -- are
relatively independent from the broader FTX group, and each has its
own segregated customer accounts and separate management teams,
according to FTX court filings.
The crypto exchange has said it is not committed to selling any of
the companies, but that it received dozens of unsolicited offers
and plans to hold auctions beginning next month, the report notes.
The U.S. Trustee, a government bankruptcy watchdog, opposed selling
the affiliates before the extent of the alleged FTX fraud is fully
investigated, the report relays.
In part to preserve the value of its businesses, FTX also sought
Dorsey's approval to keep secret 9 million FTX customer names, the
report discloses. The company has said that privacy is needed to
prevent rivals from poaching users but also to prevent identity
theft and to comply with privacy laws, the report says.
Dorsey allowed the names to remain under wraps for only three
months, not six months as FTX wanted, the report says.
"The difficulty here is that I don't know who's a customer and
who's not," Dorsey said, the report relays. He set a hearing for
Jan. 20 to discuss how FTX will distinguish between customers and
said he wants FTX to return in three months to give more
explanation on the risk of identity theft if customer names are
made public, the report discloses.
Media companies and the U.S. Trustee had argued that U.S.
bankruptcy law requires disclosure of creditor details to ensure
transparency and fairness, the report notes.
In addition to selling affiliates, a company lawyer said FTX will
end its 19-year $135 million sponsorship deal with the NBA's Miami
Heat and a 7-year about $89 million deal with the League of Legends
video game, the report relays.
FTX's founder, Bankman-Fried, 30, was indicted on two counts of
wire fraud and six conspiracy counts last month in Manhattan
federal court for allegedly stealing customer deposits to pay debts
from his hedge fund, Alameda Research, and lying to equity
investors about FTX's financial condition. He has pleaded not
guilty, the report notes.
Bankman-Fried has acknowledged shortcomings in FTX's risk
management practices, but the one-time billionaire has said he does
not believe he is criminally liable, the report discloses.
In addition to customer funds lost, the collapse of the company has
also likely wiped out equity investors, the report relays.
Some of those investors were disclosed in a court filing, including
American football star Tom Brady, Brady's former wife supermodel
Gisele Bundchen and New England Patriots owner Robert Kraft, the
report adds.
About FTX Group
FTX is the world's second-largest cryptocurrency firm.  FTX
is a
cryptocurrency exchange built by traders, for traders.  FTX
offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from
the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.  According to Reuters,
SBF
shared a document with investors on Nov. 10 showing FTX had $13.86
billion in liabilities and $14.6 billion in
assets.  However,
only
$900 million of those assets were liquid, leading to the cash
crunch that ended with the company filing for bankruptcy. Â
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
Lawyers at Paul Weiss represented SBF but later renounced
representing the entrepreneur due to a conflict of interest.
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel.
===========
B R A Z I L
===========
AMERICANAS SA: BTG, Bradesco Among Most Exposed to Retailer
-----------------------------------------------------------
Tatiana Bautzer and Gabriel Araujo at Reuters report that Brazilian
lenders BTG Pactual, Bradesco and Santander Brasil are among those
most exposed to debt of Americanas SA (AMER3.SA), analysts'
estimates showed, after the retailer obtained an injunction
protecting it from creditors.
Analysts at JPMorgan and Citi said in research notes that Banco
Bradesco SA (BBDC4.SA) had the largest nominal exposure to the
firm, while Banco BTG Pactual SA topped exposure as a proportion of
loans, according to Reuters.
Americanas revealed almost $4 billion in "accounting
inconsistencies." Its chief executive and chief financial officer
resigned, the report notes. Shares of the retailer have plunged
nearly 80% so far this year, the report discloses.
Americanas could be liable to repay up to 40 billion reais ($7.81
billion) in debt earlier than planned, and a judge set a 30-day
deadline for it to file for a potential bankruptcy protection, the
report relays.
Brazilian Judge Leila Santos Lopes denied BTG's appeal against an
injunction that protected Americanas from creditors, the report
discloses. BTG's appeal attacked the retailer's shareholders, a
trio of Brazilian billionaires and founders of 3G Capital, accusing
the company and its controlling shareholders of fraud, the report
relays.
Bank of America (BAC.N) and Banco Votorantim (VOTORT.UL) also
appealed the decision, according to a columnist from newspaper O
Globo. Neither bank immediately responded to a request for
comment.
Considering JPMorgan's and Citi's estimates, BTG had a 1.9
billion-real exposure to Americanas, which was seen accounting for
roughly 1.5% of its loans, while Bradesco had exposure of 4.7
billion reais, or 0.5% of loans, the report notes.
Banco Santander Brasil SA , the local unit of Spain's Banco
Santander (SAN.MC), had 3.7 billion reais in exposure, or about
0.6% of loans, the report relays.
"We find that the impact of our coverage could range from 1% to 7%
in net income and from 0.1% to 1% in terms of equity," Citi said,
noting that Santander Brasil, BTG and Bradesco would be the most
affected in both accounts, the report discloses.
Sergio Rial, the outgoing Americanas chief executive who uncovered
the accounting inconsistencies, is a former head of Santander
Brasil, where he still serves as chairman of the board, the report
says.
"Based on past corporate cases in Brazil, we believe banks should
start provisioning for about 30% of it, which may eventually
increase depending on Chapter 11 outcome," JPMorgan said, the
report relays.
Shares in BTG were down more than 4%, while Santander Brasil and
Bradesco dropped more than 3% each, compared with a 1.5% fall in
Brazil's benchmark stock index Bovespa (.BVSP), the report notes.
Americanas (AMER3.SA) shares plummeted by 38.4% to 1.94 reais,
following a 77.33% drop, the report relays.
Moody's cut the retailer's rating to "Caa3," placing it under
review for a further downgrade, and a second industry group filed a
lawsuit against the firm in Rio de Janeiro, the report discloses.
The Instituto da Cidadania, which represents citizens and
consumers, said in an initial affidavit that the company acted in
bad faith, "given the defendant's attitude of filing false
financial statements," the report relays.
Americanas declined to comment.
An industry group representing investors is also suing the
retailer, the report relays.
"The scenario remains adverse for the company and we continue to
recommend exiting its assets," Guide Investimentos analyst Gabriel
Araujo Gracia said in a research note, citing the high level of
uncertainty surrounding the case, the report notes. "The story
seems far from over," the report adds.
As reported Troubled Company Reporter-Latin America on Dec 21,
2022, Moody's Investors Service has downgraded to Ba2 from Ba1
Americanas S.A.'s Corporate Family Rating and the ratings of senior
unsecured notes issued by JSM Global S.a r.l. and B2W Digital Lux
S.a r.l., both guaranteed by Americanas S.A. The outlook was
changed to negative from stable.
AMERICANAS SA: Fitch Lowers LongTerm IDRs to 'CC'
-------------------------------------------------
Fitch Ratings has downgraded Americanas S.A.'s (Americana)
Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer
Default Ratings (IDRs) to 'CC' from 'BB', and its Long-Term
National Scale Rating to 'CC(bra)' from 'AA+(bra)'. Fitch has also
downgraded the rating of the senior unsecured global notes issued
by its wholly owned subsidiaries JSM Global S.a.r.l. and B2W
Digital Lux S.a.r.l. to 'CC'/RR4 from 'BB', and the rating of
Americanas' unsecured debentures to 'CC(bra)' from 'AA+(bra)'.
The downgrade to 'CC' follows Americanas' disclosure that
inconsistencies were detected in accounting entries that reduced
the balance of its suppliers' accounts over several years by an
estimated BRL20 billion. These accounting inconsistencies relate to
reverse factoring. These additional liabilities on a pro-forma
basis would increase Fitch's net adjusted debt/EBITDAR ratio for
Americanas to 11.9x for the LTM ended Sept. 30, 2022 from the
previously calculated ratio of 5.5x.
Fitch believes it is likely that Americanas will enter a standstill
agreement with its creditors given the unsustainable capital
structure that now exists and the reputational damage that has
occurred. The company's ratings would be downgraded to 'C' if this
should transpire.
KEY RATING DRIVERS
Unsustainable Capital Structure: Americanas' capital structure is
deemed to be unsustainable with an addition of an estimated BRL20
billion of new liabilities. This figure compares with BRL3.2
billion of LTM EBITDAR and BRL15.4 billion of shareholder equity at
the end of September 2022. The new liabilities nearly double
Fitch's calculation of the company's lease adjusted net debt to
BRL46 billion, from BRL26 billion.
Limited Financial Flexibility: Americanas' unsustainable capital
structure and damaged reputation severely impairs its financial
flexibility and ability to cope with operational and financial
obligations. Support from creditors will be critical to improving
its flexibility. This could come in some combination of waivers of
potential covenants breaches, the non-acceleration of financial
obligations, and the rolling over of financial facilities.
Operationally, the company may struggle to maintain some of its
existing suppliers. A material capital injection in a timely manner
to avoid default is highly uncertain.
ESG Affected: Weak Corporate Governance negatively affects
Americanas' ratings. The accounting inconsistencies announcement
highlights several years of material weakness in the quality of the
company's financial statements, as well as the lack of transparency
in its financial reporting, as reverse factoring information has
not been adequately disclosed in its financial statement notes. The
event raises questions about the financial controls of the company,
and pressures the company's ability to raise additional debt with
banks, capital market and other third parties, including
suppliers.
DERIVATION SUMMARY
The current IDRs derive from the relevant fact announced and the
very likely process standstill in the near future.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- A positive rating action is unlikely and depends upon the
company's ability to raise a substantial amount of equity and the
company's ability to maintain credit lines.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Entering into a standstill agreement;
- The formal announcement of a distressed debt exchange or
bankruptcy protection process.
LIQUIDITY AND DEBT STRUCTURE
Challenges to Protect Liquidity: The ability of Americanas'
shareholders to inject a material amount of capital into the
company is crucial to support working capital needs and to avoid
defaulting on financial obligations, but remains highly uncertain.
Cash and equivalents were BRL8.8 billion as of Sept. 30, 2022. This
figure compares with total adjusted debt of BRL26.4 billion, not
considering the potential impact from reverse factoring, but
including approximately BRL5.4 billion in rental obligations, as
per Fitch's methodology. The majority of the BRL2.0 billion of
short-term debt relates to account receivable factoring.
ISSUER PROFILE
Americanas is one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by Jorge Paulo Lemann,
Carlos Alberto Sicupira and Marcel Telles.
SUMMARY OF FINANCIAL ADJUSTMENTS
- Fitch uses a multiple of 5x to capitalize Brazilian companies
leasing adjusted debt;
- Fitch includes the factoring of account receivables on debt.
Fitch adjusts short-term and long-term marketable securities back
to cash and equivalents. Fitch considers the financing to the
marketplace sellers as finance activity. Applying methodology, the
finance service activity has a debt/equity leverage ratio of 2.0x.
The asset of the financial service activity corresponds to the
receivables related to the marketplace business, so, half of this
asset is financed by debt, which is deconsolidated from total
debt.
ESG CONSIDERATIONS
Americanas S.A. has an ESG Relevance Score of '5' for Financial
Transparency due to the inconsistencies of reporting reverse
factoring in its financial statements., which has a negative impact
on the credit profile, and is highly relevant to the rating.
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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
B2W Digital Lux
S.a.r.l.
senior
unsecured LT CC Downgrade RR4 BB
Americanas S.A. LT IDR CC Downgrade BB
LC LT IDR CC Downgrade BB
Natl LT CC(bra)Downgrade AA+(bra)
senior
unsecured Natl LT CC(bra)Downgrade AA+(bra)
JSM Global
S.a r.l.
senior
unsecured LT CC Downgrade RR4 BB
AMERICANAS SA: Moody's Cuts CFR to Caa3, Placed On Further Review
-----------------------------------------------------------------
Moody's Investors Service has downgraded to Caa3 from Ba2
Americanas S.A.'s Corporate Family Rating and the ratings of the
backed senior unsecured notes issued by JSM Global S.a r.l. and B2W
Digital Lux S.a r.l., both guaranteed by Americanas S.A. Moody's
has also placed all ratings under review for further downgrade.
Rating Actions:
Issuer: Americanas S.A.
LT Corporate Family Rating, Downgraded to Caa3 from Ba2; Placed
Under Review for further Downgrade
Issuer: B2W Digital Lux S.a r.l.
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3
from Ba2; Placed Under Review for further Downgrade
Issuer: JSM Global S.a r.l.
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3
from Ba2; Placed Under Review for further Downgrade
Outlook Actions:
Issuer: Americanas S.A.
Outlook, Changed To Rating Under Review From Negative
Issuer: B2W Digital Lux S.a r.l.
Outlook, Changed To Rating Under Review From Negative
Issuer: JSM Global S.a r.l.
Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE
The rating actions follow Americanas' announcement, on 13th, that
it was granted a provisional injunction to suspend the effects of
all contractual imposition of debt acceleration or obligations
regarding the financial instruments of the group. Moody's believes
that absent of a deal with creditors to safeguard liquidity the
company is likely to enter judicial recovery within 30 days from
the announcement. During the injunction period, Moody's believes
the company will also present alternatives to improve its capital
structure including the negotiation of a possible capital injection
from its reference shareholders. The rating actions also reflect
the heightened governance risks, in particular lack of adequate
controls and transparency, which substantially undermines
management credibility.
The imposition of the standstill on creditors follows a sharp
confidence deterioration and the heightened credit risk with
uncertainties related to the level of debt the company has and its
ability to service this debt, in addition to the heightened risk of
covenant breach and debt acceleration absent the automatic stay
granted on January 13.
On January 11, Americanas disclosed accounting inconsistencies
which were detected in accounting entries that reduced the balance
in the suppliers account related to previous fiscal years,
including the fiscal year 2022 which, in a preliminary analysis,
the Company's accounting area estimates to be around BRL20 billion
at the end of 3Q22. As part of the inconsistencies, management
indicated an estimated BRL20 billion in supplier financing lines in
which Americanas is a debtor. The recognition of such lines as debt
and interest expense would increase the company's leverage and
reduce its interest coverage compared to its latest financial
statements, as of September 2022. The company indicated that it is
not possible yet to determine all the impacts of such
inconsistencies on its financial statements. The Board of Directors
decided to create an independent committee to investigate the
circumstances that led to the accounting inconsistencies. As a
result of these findings, the CEO and CFO, who have taken office on
January 2, 2023, decided to step out of their positions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings review will examine how successful the company will be
in negotiating agreements with creditors to maintain its ability to
finance working capital needs and to avoid an acceleration of its
debt, and on the alternatives presented to improve the capital
structure.
Additionally, Moody's will consider the outcome of the current
investigations regarding the accounting inconsistencies and any
possible wrongdoing, the measures to correction of those
inconsistencies and the magnitude of the impact on the company's
capital structure, income statement and cash generation ability.
The review will also consider the company's ability to maintain
operations with higher cost of funding. Additionally, Moody's
believes that there is an increased reputational risk and
possibility of investigations from regulators in Brazil and in the
US, leading to litigations and lawsuits.
As a consequence of the heightened governance risks incorporated
into Americanas' ratings, Moody's updated the Credit Impact Score,
which is now very highly negative (CIS-5), revised from moderately
negative (CIS-3). Americanas has exposure to governance risks that
carry very highly negative credit risks. The main risks are the
lack of adequate control and accounting transparency to prevent
inconsistencies of the magnitude disclosed January 11, 2022, and
with material effects for the company. Accordingly, the governance
issuer profile was updated to very highly negative (G-5) from
moderately negative (G-3), reflecting changes in the following
factors: Financial strategy and risk management to very highly
negative (5) from moderately negative (3), management credibility
and track record to very highly negative (5) from neutral-to-low
(2), compliance and reporting to very highly negative (5) from
highly negative (4) and Board Structure and Policies to very highly
negative (4) from moderately negative (3). The governance scores
consider the imposition of a stand-still on its creditors, weak
risk management and financial policy, with an understated leverage
as compared to the published financial statements.
Headquartered in Rio de Janeiro, Americanas S.A. is one of the
largest retailers in Brazil with a nationwide presence, largest
store footprint and own logistics footprint. The company has more
than 3,600 physical stores in different formats that are integrated
with its digital platform. The digital platform comprises both
e-commerce operations (1P) and marketplace platforms (3P), and has
reached more than BRL58.1 billion in gross merchandise value (GMV).
In the 12 months that ended September 2022, it reported net revenue
of BRL27.9 billion ($5.3 billion, converted using the average
exchange rate for the period), with an adjusted EBITDA margin of
14.2%.
The principal methodology used in these ratings was Retail
published in November 2021.
AMERICANAS SA: S&P Lowers ICR to 'D' on Injunction Relief
---------------------------------------------------------
S&P Global Ratings lowered its global and national scale issuer
credit ratings on Americanas S.A. multiple notches to 'D' (default)
from 'B' and 'brA-', respectively. At the same time, S&P lowered
its issue-level ratings on Americanas' senior unsecured debt to 'D'
from 'B' and withdrew the '4' recovery rating.
On Jan. 13, 2023, Americanas S.A. was granted injunction relief by
the 4th Commercial Court of the State of Rio de Janeiro, suspending
for 30 days the enforceability of all obligations on the company's
debt instruments, including payments of interest and principal.
S&P said, "The 'D' ratings reflect our view that the injunction
relief granted to Americanas this past Friday is similar to a
standstill, since it allows the company to not pay any of its
obligations related to debt instruments in the next 30 days.
"This injunction relief can be used in preparation for an eventual
debt judicial reorganization. If Americanas does not follow this
path, the other possibility, in our view, would be for the company
to reach an agreement with creditors to restructure its debt, which
we would consider as a de facto default given current distressed
conditions for the company.
"We withdrew our recovery ratings on the company's senior unsecured
notes. Considering the material additional debt arising from the
supplier financing lines that were not in company's financial
statements, we would now have lower recovery expectations for this
debt."
Americanas is one of the largest Brazilian retailers and operates
both physical and online businesses since the merger of B2W Digital
and Lojas Americanas S.A. The company was founded in 1929 and has a
diversified portfolio of products including technology and
electronics, household appliances, furniture, domestic utilities,
toys, clothes, and chocolates, among others, with the online
operations generating 50%-60% of total sales.
Americanas has more than 3,600 stores as of September 2022: 1,017
in the traditional format, 788 express stores, 79 Hortifruti
Natural da Terra stores, 420 Uni.Co franchises, and 1,281 Vem
Conveniencia stores (the result of a recent partnership with Vibra
Energia).
As of December 2022, 31.1% of the company's shares are owned by the
reference shareholders (a group of long-term professional
investors), followed by Capital Group (9.91%), TIAA Cref (6.05%),
and BlackRock Fund (5.05%). The remainder is free float.
Environmental, Social, And Governance
ESG credit indicators: E-2, S-2, G-5
Governance factors have a very negative impact on our credit rating
analysis of Americanas. The company announced accounting
inconsistencies of R$20 billion (compared with reported
balance-sheet financial debt of R$24 billion, including leases),
which in our view indicates severe governance deficiencies. The
company has indicated that these inconsistencies were there for
several years, indicating poor transparency levels and deficiencies
in the company's internal controls and risk management.
Environmental and social factors have no material impact on our
analysis.
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Risk management, culture and oversight
-- Transparency and reporting
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Risk management, culture, and oversight
-- Transparency and reporting
===========================
C A Y M A N I S L A N D S
===========================
ADAMS CAPITAL: Taps Graham Robinson as Liquidator
-------------------------------------------------
Adams Capital Partners Limited, which is in liquidation, filed a
petition with the Cayman Court seeking to appoint Graham Robinson
as the company's liquidator.
The proposed liquidator can be reached at:
Graham Robinson
Crowe Cayman Limited
94 Solaris Avenue, Camana Bay,
Grand Cayman, PO Box 30851, KY1-1204
ADAMS GLOBAL: Taps Graham Robinson as Liquidator
------------------------------------------------
Adams Global Alternative Investment Management Inc, which is in
liquidation, filed a petition with the Cayman Court seeking to
appoint Graham Robinson as the company's liquidator.
The proposed liquidator can be reached at:
Graham Robinson
Crowe Cayman Limited
94 Solaris Avenue, Camana Bay,
Grand Cayman, PO Box 30851, KY1-1204
MUCH WOW: First Creditor Meeting Set for Jan. 30
------------------------------------------------
Much Wow Limited, which is in liquidation, will hold its first
creditor meeting on Jan. 30, 2023 at 10:00 a.m. by teleconference.
Creditors must send a written notice of intentions to attend no
later than Jan. 27, 2023.
The liquidator can be reached at:
Andrew Childe
FFP Limited, 2nd Floor Habour Center
159 Mary Street, George Town, Grand Cayman
=============
J A M A I C A
=============
JAMAICA: BOJ Intervenes in Forex Market Again
---------------------------------------------
RJR News reports that the Bank of Jamaica has intervened in the
foreign exchange market for the second time since the start of the
year.
The flash sale operation saw the central bank offering US$30
million to authorized dealers and Cambios, according to RJR News.
Five banks and five cambios were successful in the auction, the
report notes.
The National Commercial Bank, JMMB Securities and JN Bank received
the largest share, at a settlement price of $152.36, the report
relays.
On January 6, the BOJ sold US$20 million to the foreign currency
market, 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.
*********
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 2023. 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 * * *