/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/230214.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, February 14, 2023, Vol. 24, No. 33 Headlines A R G E N T I N A ARGENTINA: Construction Drops 3.5% in December IRSA: S&P Affirms 'CCC+' ICR & Alters Outlook to Stable B R A Z I L AMERICANAS SA: $4B Accounting Scandal Puts More Scrutiny on PwC BRAZIL: Weighs Early Policy Review to Tolerate More Inflation OI SA: Chapter 15 Case Summary G U A T E M A L A INGENIO MAGDALENA: Fitch Affirms BB- LongTerm IDRs, Outlook Stable P E R U MINAS BUENAVENTURA: Fitch Lowers IDRs to 'BB-', Outlook Stable P U E R T O R I C O NEW SECURITY: Seeks to Hire Landrau Rivera & Assoc. as Counsel UNLIMITED DEVELOPMENT: Seeks to Hire Luna Law Offices as Counsel T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Public Must Know Cost of State Healthcare V I R G I N I S L A N D S LIMETREE BAY: $465M Bank Debt Trades at 26% Discount X X X X X X X X LATAM: Global Food Prices Fall Further in January - - - - - ================= A R G E N T I N A ================= ARGENTINA: Construction Drops 3.5% in December ---------------------------------------------- The Rio Times reports that Economy Minister Sergio Massa's team can no longer contain the recession in Argentina, and the main indicators of economic activity had severe drops in the last month of last year. The program Sergio Massa launched is exhausted and fails to stabilize prices, according to the report. One by one, all high-frequency economic indicators show that the Argentine economy is heading toward a recession that seems unstoppable, the report relays. Among other things, the construction sector dropped 3.5% and industry fell 1.2%, according to the report. 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. 20, 2023, affirmed its 'CCC+/C' foreign currency and 'CCC-/C' local currency sovereign credit ratings on Argentina. The outlook on the long-term ratings remains negative. S&P's 'CCC+' transfer and convertibility assessment is unchanged. 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. Fitch Ratings, on the other hand, downgraded in October 2022 Argentina's Long-Term Foreign-Currency (FC) and Local-Currency (LC) Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrade 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 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. IRSA: S&P Affirms 'CCC+' ICR & Alters Outlook to Stable ------------------------------------------------------- S&P Global Ratings, on Feb. 8, 2023, revised the outlook on Argentina-based real estate company, IRSA Inversiones y Representaciones S.A. (IRSA) to stable from negative and affirmed its 'CCC+' issuer credit and issue-level ratings, capped by its assessment of Argentina's transfer and convertivility (T&C) risk. At the same time, S&P revised upward IRSA's stand-alone credit profile (SACP) to 'b-' from 'ccc+'. The stable outlook reflects the company's managable debt maturity profile, improved capital structure with no outstanding debt subject to the BCRA's foreign-exchange restrictions. In addition, the stable outlook reflects the company's improved operating performance. S&P expects debt to EBITDA of 3.5x-4.0x, interest coverage of 2.5x-3.0x, and debt to debt-plus-equity of 35%-40% in the next 12 months. In order to preserve international reserves, the BCRA continues restricting the domestic companies' access to the foreign exchange market to obtain U.S. dollars to pay debt maturities. Companies must refinance 60% of the principal amount and can only access the foreign exchange market for the remaining 40%, 45 days prior to the debt maturity date. At the end of January 2023, IRSA successfully issued two hard-dollar bonds in the domestic market for $90 million. Given this issuance and the liquidation of those funds, the BCRA granted IRSA access to the MULC to refinance the total outstanding amount of series II notes, easing refinancing risk. As a result, on Feb. 3, 2023, IRSA announced the early redemption of these notes. This will extend IRSA's debt maturity profile and improve its overall capital structure. Moreover, the company won't have any other debt subject to the BCRA's foreign-exchange restrictions. IRSA's liquidity position has strengthened since the pandemic's worst phase, mainly due to significant office sales (about $425 million since June 2020), debt refinancing, and robust operating performance. The company generated EBITDA of $115 million in fiscal 2022 and $134 million in the 12 months ended Sept. 30, 2022, mainly due to the recovery of its rental business, higher consumption at its shopping malls, and satisfactory results in the hotel segment. As of Sept. 30, 2022, IRSA's adjusted gross debt was $487 million (about 47% lower than in June 2020), cash position was $155 million, gross debt to annualized EBITDA was 3.1x, and debt to debt-plus-equity was 29.2%. For fiscal 2023, S&P expects adjusted EBITDA of about $125 million and adjusted gross debt to EBITDA of 3.5x-4.0x. However, operating conditions remain challenging in Argentina, given significant economic volatility, high inflation, the domestic currency's depreciation, T&C restrictions, capital controls, and limited access to credit for private entities in the country. ESG credit indicators: E-2, S-2, G-3 =========== B R A Z I L =========== AMERICANAS SA: $4B Accounting Scandal Puts More Scrutiny on PwC --------------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that a $4 billion accounting shortfall would typically raise alarm bells for an auditor. Somehow, a PricewaterhouseCoopers LLP affiliate didn't catch it at Americanas SA, Bloomberg News cited, the report notes. Investor and consumer groups are calling for closer scrutiny of the accounting firm after the unveiling of balance-sheet irregularities that led 93-year-old Brazilian retailer Americanas to seek protection from creditors last month, according to globalinsolvency.com. The gap came in part from supplier financing that wasn't reflected the right way in the company's financial statements, which have been audited by PwC since 2019, the report recalls. Consumer and corporate activism associations Abradecont and Ibrasg both filed lawsuits against PwC in the past few days, with the former requesting a freeze on the auditor's assets, the report notes. Investor association Abradin is asking local securities regulator CVM to look into PwC's responsibilities in the case, the report notes. Both PwC's global arm and its local affiliate declined to comment. The key to understanding the firm's exposure will be figuring out whether there was any way it could have spotted irregularities, according to Luciana Dias, a professor at Brazilian think tank FGV and former CVM director, the report discloses. "If there's lack of controls or problems with the accounting policy, auditors do have some responsibility," Dias said. "But it's hard to detect a fraud that's committed with some coordination from the company," the report relays. If lawsuits are successful, they could damage PwC's Brazil business. PwC's global network may not be willing to bail out the independently run South American affiliate, said Jim Peterson, former in-house attorney for defunct accounting firm Arthur Andersen, once the top player in the industry before it collapsed in the wake of accounting scandals involving clients WorldCom Inc. and Enron Corp, the report adds. About Americanas SA Americanas was 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 billionaire Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles. The retailer nosedived in January 2023 after becoming mired in an accounting scandal. The firm filed for bankruptcy at a court in Rio de Janeiro on Jan. 19, 2023. Americanas sought protection under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White & Case LLP, led by John K. Cunningham, is the U.S. counsel. BRAZIL: Weighs Early Policy Review to Tolerate More Inflation ------------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Brazil's economic team is considering an early review of the country's inflation targets in an attempt to defuse tensions between the central bank and President Luiz Inacio Lula da Silva, who has been publicly pushing for higher goals and lower interest rates. Local assets tumbled on the report, with the real leading losses among emerging markets, as investors didn't count on the possibility of an imminent change to inflation targets, according to globalinsolvency.com. The national monetary council, the government body responsible for setting them, traditionally holds a discussion about the subject in June, when it was expected to define a goal for 2026, the report notes. But Lula's growing complaints that 13.75% interest rates are choking the economy have some members of the economic team trying to bring forward a discussion to possibly increase the goals, currently set at 3.25% for 2023 and 3% for the next two years, the report says. Central bank chief Roberto Campos Neto would be in favor of a higher target, the officials said. He has a seat at the council, together with the finance and planning ministers, the report relays. The council's next meeting is scheduled for Feb. 16. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. As recently reported in the Troubled Company Reporter-Latin America, Fitch Ratings, in December 2022, affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. The ratings are constrained by high government indebtedness, a rigid fiscal structure, weak economic growth potential, and a record of governability challenges that have hampered efforts to address these fiscal and economic issues and clouded policy predictability. The Stable Outlook reflects Fitch's expectation that growth will slow in the coming year and that recent fiscal improvement will erode under a new government, but within a margin consistent with the current rating, and from a better starting point than previously expected. Uncertainty is elevated regarding the plans of the incoming government and the extent to which these could ease or aggravate fiscal and economic challenges. However, Fitch does not expect policies that jeopardize broad economic stability. Standard & Poor's affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil, and the outlook remains stable (June 2022). The stable outlook reflects S&P's base-case assumption that Brazil will maintain its fiscal anchors over the next two years despite an increasing interest burden, preventing significant fiscal slippage and limiting the rise in its already high debt burden. Moody's credit rating for Brazil was last set at Ba2 in 2018 with stable outlook. Moody's affirmed the Ba2 issuer ratings and senior unsecured bond ratings in April 2022. DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). OI SA: Chapter 15 Case Summary ------------------------------ Three affiliates that concurrently filed voluntary petitions for relief under Chapter 15 of the Bankruptcy Code: Debtor Case No. ------ -------- Oi S.A. (Lead Debtor) 23-10193 Rua do Lavradio, No. 71, 2nd Floor Rio de Janeiro RJ 20230-070 Brazil Oi Brasil Holdings Cooperatief U.A. 23-10194 Delflandlaan 1 (Queens Tower), Office 705 Amsterdam The Netherlands Portugal Telecom International Finance B.V. 23-10195 Business Description: The Debtors and their non-debtor affiliates comprise one of the world's largest telecommunications enterprises and play a critical role in Brazil's modern telecom infrastructure. The Oi Group provides services such as fixed-line data transmission and network usage for phones, internet, and cable, Wi-Fi hot-spots in public areas, and data and IT services. Foreign Proceeding: Duly appointed by the Debtor's Board of Officers as foreign representative of the Debtor in connection with the foreign proceeding (case number 0809863- 36.2023.8.19.0001) pending before the 7th Business Court of Rio de Janeiro. Chapter 15 Petition Date: February 8, 2023 Court: United States Bankruptcy Court Southern District of New York Judge: Hon. John P. Mastando III Foreign Representative: Antonio Reinaldo Rabelo Filho Rua Barao da Torre, 550, Apt. 201, Ipanema Rio de Janeiro RJ 22411-002 Brazil Foreign Representative's Counsel: Philip M. Abelson, Esq. Ricardo M. Pasianotto, Esq. Lilian M. Marques, Esq. WHITE & CASE LLP 1221 Avenue of the Americas New York, New York 10020 Tel: (212) 819-8200 Email: philip.abelson@whitecase.com ricardo.pasianotto@whitecase.com lilian.marques@whitecase.com - and - Richard S. Kebrdle, Esq. Amanda Parra Criste, Esq. 200 South Biscayne Boulevard, Suite 4900 Miami, Florida 33131 Tel: (305) 371-2700 Email: rkebrdle@whitecase.com aparracriste@whitecase.com - and - Jason N. Zakia, Esq. 111 South Wacker Drive, Suite 5100 Chicago, IL 60606 Tel: (312) 881-5400 jzakia@whitecase.com Estimated Assets: Unknown Estimated Debt: Unknown Full-text copies of two of the Debtors' Chapter 15 petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/XUQZTPY/Oi_SA_and_Antonio_Reinaldo_Rabelo__nysbke-23-10193__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/Z6RYI7Y/Oi_Brasil_Holdings_Cooperatief__nysbke-23-10194__0001.0.pdf?mcid=tGE4TAMA ================= G U A T E M A L A ================= INGENIO MAGDALENA: Fitch Affirms BB- LongTerm IDRs, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Ingenio Magdalena, S.A.'s (IMSA) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-'. The Rating Outlook is Stable. The rating affirmation reflects Fitch's expectation that IMSA's credit profile will continue to improve over the next 18 months as the company repays existing bank debt. The ratings also reflect the company's leading position in the sugar and biomass power generation in Guatemala in a generally stable operating environment. The ratings are limited by the company's small scale, tight liquidity position, and by the relative cyclicality and volatility of its commodities offering. KEY RATING DRIVERS Solid Market Position: The company is Guatemala's leading domestic producer and exporter of refined sugar with an approximate domestic market share of 25% in sugarcane crushing. IMSA crushes on average 6.5 million tons of sugarcane per year. The remaining sugarcane bagasse, and coal, is used to generate approximately 6% of Guatemala's total electricity consumption. Liquidity profile is improving: IMSA has historically managed a fairly tight liquidity profile. Fitch expects that with the current debt maturity profile, IMSA should be able to improve its liquidity with projected FCF of above USD40 million in 2023. In Fitch's view, the volatile nature of sugar prices makes it imperative for the company to maintain this positive trend into the future. The export market is a material source of cash flow for IMSA, representing between 55%-60% of its sugar revenues and about a third of its EBITDA. The company manages price volatility through a hedging program that typically aims to fix its export prices for 80% or more of its production. The company also purchases coal and energy from the grid to generate power outside of sugar harvest season which can generate cost volatility in its energy business. Predictable EBITDA Generation from Domestic Sugar and Energy Sales: Over 50% of IMSA's revenues derive from its stable local sugar sales quotas and its power generation business. Sugar consumption in Guatemala, where IMSA sells in excess of 200,000 tons, should continue to perform in line with demographics and economic activity in the country. The Guatemalan sugar market is heavily regulated with pricing set by the regulatory authority with reference to regional Central American markets and has historically been fairly stable and higher than international prices. The company fulfils a fixed quota established by the local regulator based on operating efficiency which provides IMSA with a predictable EBITDA source. IMSA currently serves approximately 23% of the local market demand. Additionally, IMSA generates between 25% and 30% of its EBITDA from its electricity business. The company has an installed capacity of 324MW of which 246 MW is available for contracting. IMSA has purchase power agreements with cost pass-through provisions and an average life of eight years. Revenues from capacity availability represent on average a third of IMSAs electricity business and provide predictable cash flow visibility. Expectation of Gradual Reduction of Leverage: IMSA refinanced its bank debt with an amortizing syndicated loan in March 2022 and has total debt of USD525 million. Fitch estimates EBITDA of USD142 million and net leverage of 3.7x as of YE 2022. The company should be able to refinance short-term maturities into the future and repay loans with cash flow generation. Fitch estimates gross leverage to trend to below 3.5x over the ratings horizon. Production Site Concentration: The company derives essentially all of its EBITDA from a single location where all sugar crushing and refining, and power generation occurs. Any disruption to this site could impair IMSA's ability to process, generate or distribute its products, which could cause it to incur revenue losses and reduced cash flow. The ratings do not contemplate a catastrophic event but acknowledge the company's production concentration in a single industrial complex. DERIVATION SUMMARY IMSA's ratings reflect its leading domestic position in sugar and biomass generation, both of which have been stable cash flow generators. The company's large export base should allow it to boost its cash flow materially during periods of high international sugar prices. Compared with corn-based ethanol producer FS Agrisolutions Industria de Biocombustiveis Ltda.'s (BB-/Stable), which is more exposed to commodity price fluctuations in both raw material and product price, IMSA has a more stable cash flow profile due to the cash generated by its electricity business as well domestic sugar sales, which have a lower price correlation with international sugar prices. The stability of IMSA's highly contracted electricity business and predictable domestic sugar sales allows it to carry higher net leverage of 3.3x as compared with FS' 1.4x. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer Include - Productivity yields of 110 per ton/hectares in 2023 and thereafter; - Domestic sugar prices rise to 28c/lbs in 2023 and are sustained for the forecast period; - Export sugar prices in USD increase in marginally 2023 but retreat later in the year due to lower demand; - Coal prices projected to decline over 2023-2026; - The company can renew electricity contracts at a rate of 90%; - Dividends policy remains at 30% of net income 2023-2026; - Capex of around USD20 million per year. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - A significant increase in the scale together with; - A combination of debt reduction or higher EBITDA generation throughout sugar industry cycles with a record of positive FCF generation leading to continued organic debt reduction and improved liquidity would be viewed as positive to credit quality; - Expectations of midcycle debt to EBITDA below 2.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Expectations of sustained weakness in local sugar prices or in the contractual position of the company's electricity business; - Expectations of midcycle debt to EBITDA above 3.5x; - Weakening liquidity that could be signalled as cash declining below USD25 million. LIQUIDITY AND DEBT STRUCTURE IMSA's liquidity is tight, but improving thanks to solid cash flow generation from operations, which Fitch expects it to reach above USD70 million in 2023. The company refinanced its debt in March 2022 with a multi-tranche syndicated loan that includes a revolving line of credit and amortizing debt. As of YE 2022, the company's debt stood at USD525 million and cash on hand was USD27 million. Leverage is trending down towards 3x over the ratings horizon. ISSUER PROFILE Ingenio Magdalena, S.A. (IMSA) is a sugar mill company located in Guatemala with a market leading position in the production of sugar and byproducts for domestic consumption and export. The company is also the largest biomass power generator from sugar cane bagasse in the country. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Ingenio Magdalena S.A. LT IDR BB- Affirmed BB- LC LT IDR BB- Affirmed BB- ======= P E R U ======= MINAS BUENAVENTURA: Fitch Lowers IDRs to 'BB-', Outlook Stable -------------------------------------------------------------- Fitch Ratings has downgraded Compania de Minas Buenaventura S.A.A.'s local currency (LC) and foreign currency (FC) Issuer Default Ratings (IDRs) to 'BB-' from 'BB'. Fitch has also downgraded the rating on the company's USD550 million senior unsecured notes due 2026 to 'BB-' from 'BB'. The Rating Outlook is Stable. The downgrade reflects weaker than expected production of its operating assets, higher than anticipated costs following revised mine plans and elevated leverage metrics as the company increases indebtedness to fund capex. Buenaventura's ratings are supported by the dividends the company receives from its stake in Cerro Verde, a prolific copper mine in Peru, with which Fitch estimates will comfortably cover its debt services through the rating horizon by more than 1.0x on average. KEY RATING DRIVERS Cerro Verde Stake Supports Debt Service: Buenaventura' s minority stake (19.58%) in high quality copper asset Cerro Verde supports its cash flow profile. Over the rated horizon, Fitch estimates that dividends received per annum will average USD100 million per year, which will cover consolidated debt service (interest expense and debt amortization) over the rated horizon by 1.4x in 2023 and 1.3x in 2024. Without Cerro Verde's dividends, Buenaventura's gross and net leverage would be 6.0x and 5.0x, respectively, over the rated horizon, which is consistent with the 'B' category. Cerro Verde is an open pit mine with 30+ years of life that produces more than 400,000 MT of copper annually at the third quartile of All-in Sustaining Cost (AISC) curve, according to CRU Group, with EBITDA margins above 45%, which is Peru's second largest copper mine and the sixth largest by capacity worldwide. Cerro Verde is a joint venture among Freeport McMoRan (BBB-/Stable), Buenaventura and Sumitomo. Aside from its direct precious metals mines, Buenaventura also keeps smaller polymetallic operations El Brocal and Tantahuatay (40.1%). Challenging Operational Recovery: Buenaventura is working to grow volumes, boost reserves and build new mines by reversing past austerity in sustaining capex, in-fill drilling and exploration efforts. Due to dwindling reserves, Tambomayo (19% of gold equivalent ounces [GEO] 2022 production) will be put on care and maintenance in 2025, while further exploration is conducted. A landslide in 2022 in El Brocal's (58% of GEO 2022 production) open pit caused material delays in gold, zinc, lead, and particularly silver mining plans. A less profitable approach toward the exploitation of lower grade areas, has increased its mining unit's cost of goods sold by 12% in the 9M22. Fitch estimates that the production in GEO was 1.2 million oz in 2018 and has fallen to almost 600,000 oz in 2022. Production is expected to fall to 579,000 oz in 2023, but start to increase 5% per year until reaching 675,000 oz by 2026. The ramp up of a new Uchucchacua, integrated with Yumpag, is expected to end in 2024, and the new mine San Gabriel is forecasted to fully ramp up to 135,000 oz in 2026. Increased Costs: Fitch expects Buenaventura's attributable AISC to remain elevated in 2023, further affected by inflationary pressures on energy, labor, consumables, logistics costs amid global supply-chain problems and transportation disruptions in Peru and operational stoppages. Buenaventura currently falls firmly in the fourth quartile, which is consistent with the 'B' rating category, of the global gold cost curve, according to CRU Group, which constrains its ability to parry lower prices or operational hold ups. The AISC of Buenaventura's mines reached USD1,386/oz of gold at the end of September 2022, similar to the USD1,388/oz at the end of 2021 after a peak in 2Q22 of USD1,558/oz. The EBITDA margin from direct operations is expected to reach 18% in 2023, and remain at around 20% in the near future. Negative FCF: High investment needs amid a period of weakened operations result in negative FCF after capex and dividends till the new mines fully ramp-up in 2026, when FCF margin is forecasted at more than 12%. Total capex should grow to be around USD355 million in 2023 and USD280 million in 2024, from USD172 million in 2022. More than USD50 million would be deployed at Yumpag and about USD200 million would be used to build San Gabriel during 2023; USD175 million would be destined to San Gabriel while Yumpag integration is completed in 2024. Fitch is assuming that USD20 million of dividends will be paid annually. Exploration expenditures are kept at around USD60 million per year. Higher Leverage: Fitch projects that Buenaventura will partially finance growth capex needs and create a buffer against unexpected disruptions by adding USD200 million of debt in 2023. Buenaventura's gross debt over the rated horizon is USD870 million and net debt, USD575 million. The company's EBITDA adjusted by dividends received from affiliates and paid to minorities in partially owned consolidated mines is expected to be approximately USD250 million in 2022, USD233 million in 2023 pressured by lower prices and production, and less than USD250 million in 2024, as Uchucchacua resumes operations. Buenaventura's average forecast gross and net leverage is 3.9x and 2.6x, respectively, between 2023 and 2025. DERIVATION SUMMARY Buenaventura's 'BB-' rating reflects its position as one of Peru's largest publicly traded precious and base metals miners with a diversified portfolio of operations and quality stakes in world class assets. Buenaventura operates across a country of vast mineral resources and favorable mining regulations, despite recent social opposition to large scale greenfield projects such as Southern Copper Corporation's (BBB+/Stable) Tia Maria copper project. Buenaventura's ratings are underpinned by its diversified production of base and precious metals similar to Volcan Compania Minera S.A.A. (BB/Stable), and is more diversified than its peer Minsur S.A. (BBB-/Positive). Buenaventura's single country exposure compares with that of higher-rated Industrias Penoles (BBB/Stable) in Mexico. Buenaventura's scale of operations from its direct mines is small compared with larger gold miners such as Agnico Eagle Mines (BBB+/Stable), Kinross Gold Corporation (BBB/Stable), Yamana Gold Corporation (BBB-/Stable), or Penoles and slightly lower (in direct EBITDA and gold output) than lower-rated Eldorado Gold (B+/Stable). Buenaventura's gold output is similar to that of Aris Mining (B+/Stable) and its copper output is similar to that of Ero Copper (B/Stable), but is more diversified into other metals and has minority stakes in significant dividend producing assets. The company is less dependent upon precious metals than Agnico, Kinross, Yamana, Eldorado or Aris. Similar to the leading silver producer Penoles, or Chinese miner Zijin Mining Group (BB+/Stable), Buenaventura has base metals diversification, which mitigates its exposure to precious metals pricing volatility. Fitch estimates that Buenaventura generated 48% of its revenue during 2022 from precious metals, 47% from base metals and 4% from other sources, such as energy or manganese sulphate. Buenaventura exhibits a very low mine life of four years across its portfolio of mines, which is considered a constraint on its 'BB-' rating. Lower proven and probable ore reserves are common to underground mines in Peru, as it is typically economically inefficient to prove reserves for longer periods due to the high cost involved. Penoles, Yamana, Kinross and AngloGold Ashanti (BBB-/Negative) are also underground miners that have reserve levels of around 10 years. This is mitigated by Buenaventura's 19.58% stake in copper miner Cerro Verde, a JV with Freeport McMoRan (BBB-/Stable), which has 30+ years in reserves, and by Buenaventura's history of replacing reserves. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer: - Gold prices of USD1,600/oz in 2023, USD1,400/oz in 2024 and USD1,300/oz in 2025; - Silver prices of USD20/oz in 2023, USD17.50/oz in 2024 and USD16.25/oz in 2025; - Copper prices of USD8,000/MT in 2023, USD7,500/MT in 2024 and in 2025; - A 23% decrease in gold production to 141,500 oz, a 26% increase in silver production to 10 million oz, and a 1% increase in copper production to 47,500 MT during 2023; - A 5% fall in gold production to 134,500 oz and a 56% increase in silver production to 15.6 million oz, and an unchanged copper production at 47,500 MT during 2024; - Capex reaches USD172 million in 2022, USD355 million in 2023 and USD280 million in 2023; - Dividends paid of USD20 million in 2023 and in 2024; - Dividends received from Cerro Verde of USD78 million in 2022, and average USD105 million in 2023 and in 2024. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - A positive resolution of the tax liability paid under protest and currently under litigation, obtaining reparations of about USD530 million; - Sustained gross debt/EBITDA levels of less than 2.5x; - Increased output from mines while increasing the mine lives of the company's key operations to more than 10 years; - Decrease in the AISC of the company's gold mines to the high end of second quartile of the cost curve. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Dividends received from Cerro Verde cover less than 1.0x of debt service (interest paid and debt amortization); - Sustained gross debt/EBITDA levels of more than 3.5x with an unwillingness or inability to deleverage; - Inability to replenish reserves and resources leading to a significantly lower mine life at key operations; - Continued elevated AISC; - Consistently negative FCF, driving down the company's comfortable liquidity position; - An adverse change in the overall framework toward mining projects in Peru. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity Profile: Buenaventura ended September 2022 with USD288 million in cash and marketable securities, a 24% increase from year-end 2021. The company's USD736 million of debt comprises a USD550 million bond due on 2026, a USD98 million loan for El Brocal and a USD88 million financing lease related to the Huanza hydro power plant. Yearly amortizations of about USD31 million are not material till the maturity of the bond in 2026, which Fitch anticipates to be refinanced. Given the negative FCF profile of the company amid a high investment phase, Fitch expects the company to look for financing options for a portion of its growth capex. ISSUER PROFILE Buenaventura is Peru's largest publicly traded precious metals company and a major holder of mining rights in Peru with over 60 years of mining operations. In addition to the exploration, mining and processing of gold and silver, it also mines other metals, namely zinc, lead and copper. Criteria Variation Since Fitch Updated its Corporate Rating Criteria following the implementation of IFRS 16, lease-related debt for mining companies has been reclassified as "other liabilities" and has been excluded from leverage calculations. For Buenaventura, Fitch has treated the financing lease of Huanza, Buenaventura's hydroelectric subsidiary, as financial debt in its leverage calculations, as the company intends to refinance this debt with either a private placement, bank loan or capital markets bond. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Compania de Minas Buenaventura S.A.A. LT IDR BB- Downgrade BB LC LT IDR BB- Downgrade BB senior unsecured LT BB- Downgrade BB ===================== P U E R T O R I C O ===================== NEW SECURITY: Seeks to Hire Landrau Rivera & Assoc. as Counsel -------------------------------------------------------------- New Security Investigation and Correctional Consultant, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ the law offices of Landrau Rivera & Assoc. as its counsel. The firm will render these services: (a) advise the Debtor regarding its duties and powers in this case under the laws of the United States and Puerto Rico in which it conducts its business, or is involved in litigation; (b) advise the Debtor in determination whether a reorganization is feasible and, if not, aide the Debtor in the orderly liquidation of its assets; (c) assist the Debtor in negotiation with its creditors in the preparation of a Chapter 11 plan; (d) prepare legal documents; (e) appear before the bankruptcy court, or any court in which the Debtor asserts a claim interest or defense directly or indirectly related to this bankruptcy case; (f) employ other professional services as necessary to complete Debtor's financial reorganization; and (g) perform other legal services. The hourly rates of Landrau Rivera & Assoc.'s counsel and staff are as follows: Noemi Landrau Rivera, Esq. $200 Josue A. Landrau Rivera, Esq. $175 Legal and Financial Assistants $75 In addition, Landrau Rivera & Assoc. will seek reimbursement for fees and expenses. The Debtor has paid a retainer of $10,000. Noemi Landrau Rivera, Esq., an attorney at Landrau Rivera & Assoc., disclosed in court filings that the firm and its members are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Noemi Landrau Rivera, Esq. Landrau Rivera & Assoc. P.O. Box 270219 San Juan, PR 00927-0219 Telephone: (787) 774-0224 Facsimile: (787) 793-1004 Email: nlandrau@landraulaw.com About New Security Investigation and Correctional Consultant New Security Investigation and Correctional Consultant, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-00217) on Jan. 30, 2023, listing under $1 million in both assets and liabilities. Judge Maria De Los Angeles Gonzalez oversees the case. Landrau Rivera & Assoc., led by Noemi Landrau Rivera, Esq., serves as the Debtor's legal counsel. UNLIMITED DEVELOPMENT: Seeks to Hire Luna Law Offices as Counsel ---------------------------------------------------------------- Unlimited Development Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Wanda Luna-Martinez, Esq., and her firm, Luna Law Offices, to handle its Chapter 11 case. Ms. Luna-Martinez will be paid at her hourly rate of $250, plus reimbursement for expenses incurred. Ms. Luna-Martinez disclosed in a court filing that she is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Wanda Luna-Martinez, Esq. Luna Law Offices 454 Teniente Cesar Gonzales Ave. San Juan, PR PMB 389 P.O. Box 194000 San Juan, PR 00919-4000 Phone: 787-998-2356 Email: quiebra@gmail.com About Unlimited Development Corp. Unlimited Development Corp. owns a residential apartment located at Capitolio Plaza, San Juan, P.R., valued at $375,000. Unlimited Development filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-00253) on Jan 31, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Ismael Crespo, president of Unlimited Development, signed the petition. Judge Maria De Los Angeles Gonzalez oversees the case. Wanda Luna-Martinez, Esq., at Luna Law Offices represents the Debtor as counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Public Must Know Cost of State Healthcare ------------------------------------------------------------ Andrea Perez-Sobers at Trinidad Express reports that T&T Chamber and Industry Commerce president, Charles Pashley, believes health economics can play a big part in improving this country's healthcare system. Speaking at the Chamber's 'Health Technology Assessment for Healthcare Decision-making' conference at the Hyatt Regency, Pashley said the public is fully aware of the complex choices in deciding how to direct limited resources to meet the priority health needs of the population, according to Trinidad Express. He noted that is why health technology assessment (HTA) is increasingly seen as an innovative way to sustain and improve health systems, the report notes. "The global health crisis showed us the crucial contribution of science, technology and innovation in addressing the healthcare challenges brought about by Covid-19, but also in supporting the society and economy in a time of major turmoil, the report discloses. "Moreover, it showed us the value of collaboration among policymakers, health professionals, and the private sector when it comes to managing a crisis," Pashley highlighted, the report discloses. Further, he stressed that the population does not always have to wait for a crisis to lean on each other's strengths, the report says. "As a Chamber, we also know that private companies can play a role in the efficient utilisation of pharmaceuticals in line with HTA outcomes and this can be discussed at a future session," he added. Delivering the feature presentation was a lecturer at the Department of Economics, Dr Henry Bailey, who explained that health assessment technology summarises information about medical, economic, social, and ethical issues related to the use of health technology, the report discloses. Bailey said the people who visit the RHA's and general hospitals often do not know how much their surgeries or various scans cost, which he thinks it is important that they know, the report relays. This is why he believes HTA's are needed within the public health sector so that people will understand that it cost US$10,000 to do hip replacement surgery and it cost US$20,000 to put in a stent, the report notes. Dr Christine Laptiste senior researcher in Health Economics at the University of the West Indies said in the private sector you can get the costing of different medical procedures and while in the public health sector, citizens do not have to pay, they should be able to know how much their procedure cost, the report relays. "When citizens know how much different medical services cost, they will get an idea of the resources that goes into the various procedures. People will get a better appreciation by seeing the breakdown of the bill," Laptiste added. =========================== V I R G I N I S L A N D S =========================== LIMETREE BAY: $465M Bank Debt Trades at 26% Discount ---------------------------------------------------- Participations in a syndicated loan under which Limetree Bay Terminals LLC is a borrower were trading in the secondary market around 74 cents-on-the-dollar during the week ended Friday, February 10, 2023, according to Bloomberg's Evaluated Pricing service data. The $465 million facility is a Term loan that is scheduled to mature on February 15, 2024. About $439.4 million of the loan is withdrawn and outstanding. Limetree Bay Terminals operates oil terminals. The Company's country of domicile is Virgin Islands. =============== X X X X X X X X =============== LATAM: Global Food Prices Fall Further in January ------------------------------------------------- Trinidad Express reports that the benchmark index of international food commodity prices declined in January for the tenth consecutive month, the United Nations Food and Agriculture Organisation (FAO). The FAO Food Price Index averaged 131.2 points in January, 0.8 per cent lower than the previous month and 17.9 per cent below its peak reached in March 2022, according to Trinidad Express. The index tracks monthly changes in the international prices of commonly-traded food commodities, the report notes. The price indices for vegetable oils, dairy and sugar drove the January decline, while those for cereals and meat remained largely stable, the report relays. In January, the FAO Cereal Price Index was essentially unchanged (up a mere 0.1 per cent) from December and stood 4.8 per cent above its level of one year earlier, the report notes. International wheat prices declined by 2.5 per cent as production in Australia and the Russian Federation outpaced expectations, the report says. World maize prices rose marginally due to strong demand for exports from Brazil and concerns over dry conditions in Argentina, the report discloses. International rice prices, however, jumped by 6.2 per cent from December, influenced by tighter availabilities, strong local demand in some Asian exporting countries and exchange rate movements, the report says. The FAO Vegetable Oil Price Index declined by 2.9 per cent in January. World prices of palm and soy oils dropped amid subdued global import demand, while those of sunflower seed and rapeseed oils declined due to ample export availabilities, the report notes. The FAO Dairy Price Index averaged 1.4 per cent lower than in December, with prices trending down for butter and milk powders on lighter demand from leading importers and increased supplies from New Zealand, the report relays. World cheese prices rose slightly, driven by a recovery in food services and retail sales in Western Europe following the New Year holiday, as well as currency movements, the report notes. The FAO Meat Price Index moved fractionally in January (edging down just 0.1 per cent from December), as ample export availabilities weighed on poultry, pig and bovine meat prices, while ovine export prices rose due to stronger import demand, the report relays. The FAO Sugar Price Index dropped by 1.1 per cent from December. Strong harvest progress in Thailand and favourable weather conditions in Brazil outweighed the impact on prices due to concerns over lower crop yields in India, higher gasoline prices in Brazil, which support demand for ethanol, as well as the Brazilian real's appreciation against the US dollar, the report discloses. Cereal Supplies to Tighten In its new Cereal Supply and Demand Brief, also released, FAO raised its forecast for world cereal production in 2022; however, global cereal supplies are still forecast to tighten in 2022/23. Global cereal output in 2022 is now forecast at 2,765 million tonnes, or 1.7 per cent below the 2021 outturn. Upward revisions for Australia and the Russian Federation now point to a record global output for wheat in 2022, while total coarse grains production is expected to decline by 3.3 per cent from the previous year. The forecast for world rice production was revised downward as lower-than-expected output in China more than offset upward revisions for Bangladesh and several other countries. As a result, global rice output is now predicted to decline by 2.6 per cent from its all-time high in 2021. Looking ahead to 2023, early indications point to likely area expansions for winter wheat cropping in the northern hemisphere, especially in the United States of America, driven mostly by elevated wheat prices. However, high fertiliser costs may affect application rates with adverse implications for yields. Low domestic prices could result in a small cutback in wheat plantings in the Russian Federation, the world's largest exporter, while severe war-induced impacts in Ukraine are estimated to reduce winter wheat area plantings by 40 percent. Record plantings are forecast in India, spurred by high market and support prices, and relatively high plantings are projected in Pakistan as standing water from the 2022 floods is causing less hindrance than initially anticipated. In the southern hemisphere countries, most of the 2023 coarse grain crops have been sown. Brazil may post record maize plantings, while those in Argentina could decrease due to low soil moisture levels. Weather conditions augur well for maize yield prospects in South Africa. World cereal utilisation in 2022/23 is now forecast to drop by 0.7 percent from the previous year, to amount to 2 779 million tonnes, with the total utilization of maize predicted to decline, while wheat use increases and rice utilisation changes little year-on-year. The forecast for world cereal stocks is pegged at 844 million tonnes at the end of the marketing year, pushing down the world stock-to-use ratio for 2022/2 to 29.5 per cent. In its new brief, FAO predicts international trade in cereals in 2022/23 to decline by 1.7 per cent from the previous year's record level to 474 million tonnes. ********* 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. 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