/raid1/www/Hosts/bankrupt/TCRLA_Public/250312.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, March 12, 2025, Vol. 26, No. 51
Headlines
A R G E N T I N A
ARGENTINA: 'Devaluation Not The Solution,' Says Caputo on IMF deal
ARGENTINA: Trump Changes Tack on Some Tariffs
B E R M U D A
BERMUDA: Price of Eggs in the U.S. Affects Price in the Country
B R A Z I L
MONTESANTO TAVARES: File for Bankruptcy Protection
P U E R T O R I C O
GOLDEN TRIANGLE: Hires Jose L. Pacheco Carrasquillo as Appraiser
LIBERTY COMMUNICATIONS: Fitch Lowers IDR to 'B', Outlook Stable
LIBERTY COMMUNICATIONS: S&P Cuts ICR to 'B', Outlook Negative
V E N E Z U E L A
GR MINING: Files for Arbitration in Mining Dispute
- - - - -
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A R G E N T I N A
=================
ARGENTINA: 'Devaluation Not The Solution,' Says Caputo on IMF deal
------------------------------------------------------------------
Buenos Aires Times reports that Economy Minister Luis Caputo denied
that the International Monetary Fund (IMF) has demanded Argentina
devalue its currency in order to secure a new financing deal.
Speaking during a radio interview, Caputo denied reports that
Argentina would have to suffer an inflationary bounce as part of a
fresh financing deal with the multilateral lender, according to
Buenos Aires Times.
"It is true that there are high prices in dollars [in Argentina],
but devaluation is not the solution," said the minister, the report
notes. "The solution is for them to go down and they will go down
with less taxes and more competition," he added.
President Javier Milei's government says it is targeting a new loan
agreement with the International Monetary Fund within the next two
months, the report relays..
At press time, Milei's office said in a statement that it would
send a decree to Congress to obtain legislative support for a new
agreement.
The deal will "imply a public credit operation through which the
National Treasury will cancel existing debt with the Central Bank,"
the report notes.
The deal, on top of the record US$44-billion loan awarded in 2018,
"should be completed in the first four months of the year,"
Presidential Spokesperson Manuel Adorni told reporters, the report
discloses.
"When there are details we will give them to you. If we don't give
them to you it is because it [the deal] is not yet closed," he
added.
Reiterating the government's hopes of a deal in "the first four
months" of the year, Caputo said that most of the details of
Argentina's economic program had already been agreed with IMF
officials, the report says.
Any delay to the deal would only be a result of a failure to win
congressional approval for a new deal or bureaucracy on the part of
the multilateral lender, he implied, the report relays.
Adorni said that any possible agreement would "imply the
recapitalisation of the Central Bank" and affirmed that "it would
not lead to an increase in debt," the report notes.
He added Congress would be consulted about the "viability" of the
deal but did not say at what point in the negotiations lawmakers
would be given a say, the report relays.
Cabinet Chief Guillermo Francos warned that the deal would need
congressional approval, the report notes.
"The possibility of it being approved by decree is not real,
because the Fund would not allow it, as legal certainty is
required," said the official in an interview with Radio Rivadavia,
the report discloses.
Fresh Funds
The IMF and Argentina confirmed in December that they were
negotiating a new financing program, the report relays. Milei's
government has not said how much it is seeking in new funds, the
report discloses.
Argentina's previous program, originally worth US$57 billion, was
agreed in 2018 by former president Mauricio Macri, the report
notes. It was renegotiated in March 2022 by Milei's predecessor in
office, Alberto Fernández (2019-2023), but relations with the IMF
soured and it collapsed at the end of 2024, the report says.
A new deal would refinance Argentina's remaining debt from the
US$44.5 billion received by the country over the last six years,
the report relays.
Asked to comment on President Javier Milei's statement in a key
speech that the government would ask for Congress to back a new
deal "in the coming days," IMF officials remained tight-lipped, the
report discloses.
An IMF spokesperson said that talks were continuing "in a
constructive matter," adding that support from Congress for any
future agreement would be welcomed, the report notes.
"Broad political and social support can improve the implementation
of the program," said IMF spokeswoman Julie Kozack, though she
stressed it wasn't a condition for the multilateral lender, the
report relates.
"I want to emphasise that . . . securing the support of Congress is
a decision of the authorities as established in Argentina's
domestic legislation," she added.
"Negotiations continue in a constructive manner," but are still
"under discussion," said Kozack, the report notes.
Caputo reiterated that the programme will include fresh funds to
recapitalise the BCRA's assets but said that this "does not imply
an increase in gross debt," the report relays.
"It goes to the Treasury and then repurchases debt that the BCRA
has from the Treasury," he explained, the report discloses.
Several domestic media outlets have reported Argentina is looking
for a fresh US$10 billion in funding, though reports on Wall Street
midweek suggested as much as US$20 billion may be on the table, the
report says.
Swiss bank UBS speculated in an article that the package would
include US$8 billion in fresh funds, while the rest would be used
to cover principal and interest payments Argentina is due to make
during Milei's current term in office, the report notes.
Analysts forecast that at least 30 percent of this new package
would be available in 2025, the report discloses.
Milei, who has earned scorn and praise in equal measure for
implementing drastic austerity measures to drive down perennially
high inflation and turn a budget surplus, wants the cash to boost
the Central Bank's dollar reserves, the report relays.
The government has not yet indicated when it would remove strict
currency and capital controls, known locally as the 'cepo,' though
Milei has vowed that they will not be in place by the start of next
year, the report says.
Adorni said that the controls would be lifted "when the conditions
are right," the report relays.
Last month, Economy Minister Luis Caputo also hinted that a deal
would be agreed in the first four months of the year, indicating in
an interview that only "the fine print is missing," the report
relays.
IMF officials again offered praise for Milei's government.
"The authorities' stabilisation and growth plan is yielding
significant results,'" said Kozack, highlighting "noticeable
progress in reducing inflation, stabilizing the economy and
encouraging a return to growth," the report notes.
"Poverty is finally starting to decline" in Argentina, she added.
Argentina's economy contracted 1.8 percent in 2024, a smaller drop
than the minus 2.8 percent projected by the IMF), according to
government data, the report relays.
Annual inflation has fallen from 211 percent in 2024 to 117 percent
in 2024. Last month, consumer prices increased by just over two
percent – the lowest rate in years, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authorities an immediate disbursement of an equivalent
of US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
In June 2024, the IMF Board completed an eighth review of the
Extended Arrangement under the Extended Fund Facility for
Argentina. The IMF Board's decision enabled a disbursement of
around US$800 million to support the authorities' efforts to
entrench the disinflation process, rebuild fiscal and external
buffers, and underpin the recovery.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
ARGENTINA: Trump Changes Tack on Some Tariffs
---------------------------------------------
Buenos Aires Times reports that U.S. President Donald Trump has
unveiled a temporary rollback to steep tariffs targeting Canada and
Mexico, providing some reprieve to companies and consumers after
sustained blowback on global markets.
After Trump's sweeping tariffs of up to 25 percent on the two US
neighbors took effect, stock markets tumbled, as economists warned
that blanket tariffs could weigh on US economic growth and raise
inflation in the near-term, according to Buenos Aires Times.
Though the US president dismissed suggestions that his trade
decisions were linked to market turmoil, he decided to pause the
levies for trade with Canada and Mexico that falls under a regional
pact, the report notes.
The halt will last until April 2, when Trump has promised updates
for "reciprocal tariffs" to remedy practices Washington deems
unfair, the report relays.
However, the Republican leader insisted that steel and aluminium
tariffs – which are sure to affect trade with Argentina – would
not be modified and would kick in as planned on March 12, the
report discloses.
Asked by reporters whether tariffs on these metals would be
postponed, the president replied that "No, they will not be
modified," adding that "they will come into effect soon," th report
relays.
That will be a blow to Argentina and its President Javier Milei,
who has formed a strong relationship with Trump and has repeatedly
voiced his desire for a free-trade deal, the report discloses.
Argentina's steel and aluminium exports to the United States
represent some US$600 million in annual trade, the report says.
According to data from the INDEC national statistics bureau,
bilateral trade with the United States produced a surplus of US$228
million last year, mainly due to a 27.9-percent drop in imports
from the United States, as a result of Argentina's ongoing
recession, the report adds.
Headache
Trump's decision to impose tariffs on imports in order to boost
local production threatens to become a developing headache for
Argentina, potentially damaging its growth projects for the year,
the report relays.
Though Milei and Trump have both voiced support for the idea of a
free-trade deal between the two nations, the reality is that any
such accord is unlikely in the short term, the report discloses.
Agreeing a FTA with Washington would mean Argentina would likely
have to leave the Mercosur regional trade bloc, the report notes.
Argentina has some 20 free-trade agreements, 13 of which are
Mercosur agreements, the report says.
In contrast, neighbouring Chile (which is not part of Mercosur) has
more than 700 agreements with other countries, the report relays.
Trump confirmed that tariffs on imports of agricultural goods would
kick in next month, the report notes. He did not specify which
products will be subject to these tariffs or whether there will be
exceptions, the report discloses.
Argentina's agro-industrial exports to the United States amount to
around US$2 billion a year and are highly diversified. Many of the
products sent to North America play a key role in regional
economies, such as citrus fruits, especially lemons, the report
says.
The trade war could complicate the already modest economic growth
outlook for Argentina's economy, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authorities an immediate disbursement of an equivalent
of US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
In June 2024, the IMF Board completed an eighth review of the
Extended Arrangement under the Extended Fund Facility for
Argentina. The IMF Board's decision enabled a disbursement of
around US$800 million to support the authorities' efforts to
entrench the disinflation process, rebuild fiscal and external
buffers, and underpin the recovery.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
=============
B E R M U D A
=============
BERMUDA: Price of Eggs in the U.S. Affects Price in the Country
---------------------------------------------------------------
Jessie Moniz Hardy at The Royal Gazette reports that with demand
high, the cost of one dozen grade A eggs in the U.S. has grown a
staggering 65 per cent since the beginning of 2024, also pushing up
the cost of imported eggs in Bermuda.
In the same month, the average US price of a dozen eggs was a
record high $4.95, according to the US Bureau of Labor Statistics,
more than double the price in August 2023, the report relays.
The average cost of a dozen Grade A eggs in Florida is about $6.36,
and this month one location listed at $9.99, according to The Royal
Gazette.
===========
B R A Z I L
===========
MONTESANTO TAVARES: File for Bankruptcy Protection
--------------------------------------------------
globalinsolvency.com, citing Reuters, report that Brazilian coffee
traders Atlantica and Cafebras, and its controlling holding company
Montesanto Tavares Group, have filed a court request for bankruptcy
protection, looking to restructure a total debt of 2.12 billion
reais (US$368.54 million).
According to a statement dated February 28, the first day of
carnival celebrations in Brazil that only ended, the companies said
failure by Brazilian coffee farmers to comply with contracts to
deliver coffee to them made their financial situation
unsustainable, according to globalinsolvency.com.
=====================
P U E R T O R I C O
=====================
GOLDEN TRIANGLE: Hires Jose L. Pacheco Carrasquillo as Appraiser
----------------------------------------------------------------
Golden Triangle Realty, S.E. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to employ
Jose L. Pacheco Carrasquillo as appraiser.
The firm will appraise the Debtor's project known as Vistas de San
Juan Project.
The firm will be paid a flat fee of $8,000, payable when approved
by the Court, and 50 percent upon completion of the appraisal.
The firm will be paid at $200 per hour for any court appearance.
Jose L. Pacheco Carrasquillo, disclosed in a court filing that the
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code.
The firm can be reached at:
Jose L. Pacheco Carrasquillo
Suite 1001, Bldng. 18, Metro Office Park,
Guaynabo, PR 00968
Telephone: (787) 460-7474
About Golden Triangle Realty, S.E.
Golden Triangle Realty S.E. is engaged in activities related to
real estate.
Golden Triangle Realty, S.E. filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No.
24-04514) on Oct. 21, 2024. In the petition signed by David
Santiago Martinez, president, the Debtor disclosed $19,811,659 in
assets and $47,255,382 in liabilities.
Judge Maria De Los Angeles Gonzalez oversees the case.
Alexis Fuentes-Hernandez, Esq., represents the Debtor as counsel.
LIBERTY COMMUNICATIONS: Fitch Lowers IDR to 'B', Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Liberty Communications of Puerto Rico
LLC's (LCPR) Long-Term Issuer Default Rating (IDR) to 'B' from
'BB-'. Fitch has also downgraded LCPR's RCF, LCPR Loan Financing
LLC's 2028 term loan and LCPR Senior Secured Financing Designated
Activity Company's 2027 and 2029 senior secured notes to 'B+' with
a Recovery Rating of 'RR3' from 'BB+'/'RR2'. The Rating Outlook is
Stable.
The downgrade reflects lower-than-expected revenues and
profitability. This was caused by a reduction in postpaid mobile
subscribers, disruptions from migrating customers to its mobile
network, and lower equipment sales. These changes resulted in
higher leverage in 2024 and will slow future deleveraging.
The rating also reflects that the company has no significant debt
repayment obligations due until 2027. Fitch uses the financial
records of Liberty Communications of Puerto Rico Holding (LCPRH)
for its analysis, as these records encompass the performance of the
restricted group.
Key Rating Drivers
High Leverage: Fitch projects the net debt/EBITDA ratio will remain
high but decrease toward 6.0x by 2026 from a peak of about 10.7x in
2024. Fitch expects LCPR's net leverage to improve in 2025 as
EBITDA increases following the completion of its mobile network
integration in 2024.
EBITDA to Improve: Fitch forecasts profitability to recover
gradually post-migration, as the group will not have to incur
additional integration and migration costs, reduces churn, retains
ARPU retention-related discounts, and develops commercial
initiatives. Fitch projects EBITDA to reach USD360-USD370 million
by 2025, up from USD257million in 2024. 2024 performance suffered
due to lower residential mobile revenue, mainly from a reduction in
mobile post-paid subscribers. This subscriber loss was exacerbated
by disruptions from migrating customers to its mobile network and
lower equipment sales.
Strong Market Position: LCPRH, a leading telecom in broadband and
Pay-TV, ranks third in the mobile segment in Puerto Rico (second in
post-paid). Its fixed, mobile, and B2B segments contributed 39%,
41%, and 16%, respectively, to 2024 consolidated revenue. T-Mobile
US, Inc. (BBB+/Stable) is first in mobile but lacks significant
broadband or fixed-line presence. The Claro unit of Mexico's
América Móvil S.A.B. de C.V. (A-/Positive) ranks second in
broadband and mobile, although LCPRH's mobile subscribers are
largely post-paid. América Móvil focuses on pre-paid customers,
which generate lower revenue.
Standalone Credit Profile: Fitch rates LCPRH on a standalone basis
from Liberty Latin America (LLA), as each pool is an independent,
ring-fenced structure with no cross-guarantees or cross-default
clauses. Fitch estimates that LCPRH represented approximately 19%
of LLA's consolidated operating income before depreciation,
amortization before shared-based compensation and other costs
(OIBDA) and 34% of consolidated debt. The U.K.'s Cable & Wireless
Communications Limited (CWA, BB-/Stable) operates in much of the
rest of the Caribbean and in Panama. It generated about 72% of
EBITDA and holds around 60% of debt (excluding leases).
Peer Analysis
LCPRH has higher leverage and is smaller with less geographic
diversification than CWC. Compared with Chile's WOM Mobile S.A.
(D), LCPRH has a more mature growth profile, greater service
diversification and scale.
LLA group has a business profile similar to Luxembourg's Millicom
International Cellular S.A. (BB+/Stable), a holding company with
subsidiaries in leading positions in several markets. LLA's revenue
base has more U.S. dollars and subscription revenue, while
Millicom's revenue is primarily local currency-denominated.
Leverage for both companies has increased due to acquisitions, but
LLA's leverage is higher than Millicom's, which Fitch expects to
decline to below 2.5x in 2025. LCPRH's business profile and
diversified service offerings in Puerto Rico are similar to those
of Millicom's Telecomunicaciones Digitales, S.A. (BB+/Stable) in
Panama (BB+/Stable).
Key Assumptions
- Fixed Revenue Generating Units to grow by about 1% overall in
2025-2026;
- Slight increase in blended fixed average monthly revenues per
user (ARPU);
- Steady ARPU on mobile due to less promotional activity but lower
average post-paid basis in 2025 compared to 2024;
- Lower capex and spectrum payment in 2025 and 2026.
Recovery Analysis
For entities rated 'B+' and below (where default is closer and
recovery prospects are more meaningful to investors), Fitch
undertakes a tailored, or bespoke, analysis of recovery upon
default for each issuance. The resulting debt instrument rating
includes a Recovery Rating (from 'RR1' to 'RR6') and is notched
from the IDR accordingly. In this analysis, there are three steps:
(i) estimating the distressed enterprise value (EV); (ii)
estimating creditor claims; and (iii) distribution of value.
Fitch assumed Liberty would emerge from a default scenario under
the going concern approach versus liquidation. Fitch assumes a
Going Concern (GC) EBITDA of approximately USD360 million
reflecting post-integration and a distressed EV multiple of 5.5x
multiple reflecting the company's market position in mobile and
fixed in Puerto Rico and performance. These assumptions result in a
Recovery Rating of 'RR3' for the secured instrument, which is a
one-notch uplift from the 'B' IDR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A meaningful contraction of mobile or fixed revenues or increased
competition that leads to negative FCF generation;
- Subdued EBITDA margin improvement;
- Total net debt/EBITDA at LCPRH sustained above 6.0x over the next
18 months.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Fitch does not anticipate an upgrade in the near term due to the
company's elevated leverage;
- Longer-term positive actions are possible if net debt/EBITDA are
sustained below 5.0x at LCPRH
- EBITDA/ Interest coverage above >2.0x
- (CFO-Capex)/Debt ratio trending towards 7.5%;
- Progress in debt refinancing.
Liquidity and Debt Structure
LCPRH does not face any large debt maturities until 2027, when its
USD1.2 billion of notes are due. Liquidity is mainly supported by
expectations of pre-distribution FCF and access to a USD172.5
million revolving credit facility maturing in 2027 of which one
third of this facility can be drawdown, as of quarter end, before
the springing covenant kicks in. Cash and equivalents were USD36
million as of YE 2024.
Issuer Profile
LCPRH is a telecommunications operator that offers mobile, Pay-TV,
broadband and fixed telephony services to residential customers, as
well as medium and large businesses in Puerto Rico and the U.S.
Virgin Islands.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Liberty Communications of Puerto Rico LLC has an ESG Relevance
Score of '4' for Exposure to Environmental Impacts due to its
operations in a hurricane-prone region. This has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
LCPR Senior Secured
Financing Designated
Activity Company
senior secured LT B+ Downgrade RR3 BB+
Liberty Communications
of Puerto Rico LLC LT IDR B Downgrade BB-
senior secured LT B+ Downgrade RR3 BB+
LCPR Loan Financing
LLC
senior secured LT B+ Downgrade RR3 BB+
LIBERTY COMMUNICATIONS: S&P Cuts ICR to 'B', Outlook Negative
-------------------------------------------------------------
S&P Global Ratings lowered all its ratings on cable and mobile
provider Liberty Communications of Puerto Rico LLC (LCPR) by one
notch, including the issuer credit rating (ICR), to 'B' from 'B+'.
S&P incorporates one-notch of uplift to its ICR on the company
because it believes Liberty Latin America (LLA) would support it
during periods of temporary stress.
The negative outlook reflects the execution risk related to
management's cost-reduction plans. S&P could lower its rating on
LCPR in the next 6-12 months if it is unable to significantly
improve its credit metrics.
S&P said, "We expect LCPR's liquidity will remain tight through
2025. The company ended 2024 with $23 million of balance sheet cash
but only had access to less than $7.5 million under its revolver on
Dec. 31, 2024, to prevent its senior secured net leverage covenant
from being tested. In addition, LCPR generated a roughly $50
million free operating cash flow (FOCF) deficit in 2024 due to the
sharp decline in its earnings, though it partially offset this
decline by significantly reducing its capital spending to about
$125 million, which excludes its acquisition of spectrum and
prepaid subscribers from EchoStar. In 2025, we believe the company
can generate $20 million-$40 million of FOCF on a roughly $100
million expansion in its earnings stemming from fewer one-time
expenses associated with its mobile migration, lower bad debt
expense, and moderate spending of about $140 million-$160 million.
However, if LCPR is unable to significantly improve its credit
metrics in the coming quarters, we believe it could turn to
external financing to partially fund its $72 million installment
payment to EchoStar in September 2025 to limit the borrowing under
its revolver."
The company's weak mobile segment results have pressured its
earnings. LCPR experienced a 19% decline in its residential mobile
service revenue, on an approximately 22% drop in its mobile
postpaid subscribers, due to the expiration of the Emergency
Connectivity Fund (ECF), intensified competition from T-Mobile, and
its ongoing mobile migration, which contributed to its
weaker-than-expected results. S&P said, "These factors, combined
with the organic losses in its mobile prepaid business--which we
believe accounts for roughly 10% of its total residential mobile
service revenue--caused the company's 2024 earnings to weaken
significantly relative to our previous base-case assumptions.
Therefore, LCPR's debt to EBITDA was about 10x in 2024, which is up
from about 5.7x as of Dec. 31, 2023. We believe the company can
significantly improve its earnings on the reduction of its expenses
related to the integration of its AT&T wireless assets, as well as
a full year of contributions from the prepaid subscribers it
acquired from EchoStar, such that it reduces its leverage to the 7x
area in 2025. Notably, the company is unlikely to face further
subscriber losses related to the ECF in 2025 because this was a
one-time impact However, LCPR's credit metrics could remain weak
over the long term if it faces heightened competition, given its
required installment payments to EchoStar of $45 million in 2026
and $40 million in 2027."
S&P said, "We believe intensifying competition from T-Mobile will
continue to pressure LCPR's mobile subscriber metrics in the near
to intermediate term. Including the subscriber losses related to
the expiration of the ECF, the company's mobile postpaid subscriber
base contracted by 22% in 2024 amid heightened competition from
T-Mobile and execution missteps related to its mobile migration.
Until recently, T-Mobile held a spectrum advantage in Puerto Rico
due to its acquisition of Sprint in 2020, which we believe
translated to a better 5G customer experience and limited the
number of postpaid subscriber additions for LCPR. However, in 2025
we believe the company could narrow its mobile postpaid subscriber
losses to the 4%-6% range on a reduction in the losses related to
its mobile migration, the expiration of the ECF, and its
strengthened 5G mobile network following its recent spectrum
purchase. Longer term, the magnitude of the potential recovery in
LCPR's performance remains uncertain given the heightened
competition from T-Mobile.
"We believe LCPR will increase its residential broadband services
revenue by 1%-2% in 2025. That said, we anticipate the company will
experience a limited improvement in its average revenue per user
(ARPU) due to the increasing competition from Claro's fiber to the
home (FTTH) offering and T-Mobile fixed wireless access (FWA)
offering. Although LCPR lost 2,700 residential broadband
subscribers in 2024, we believe it can expand its subscribership
amid the absence of the headwinds stemming from the expiration of
the Affordable Connectivity Program (ACP). The company's
competitive position in broadband has been less affected by FWA and
FTTH competition over the past three years, which we believe is due
to its relatively low ARPU and position as the only quadruple-play
provider on the island (limiting customer churn).
"We incorporate one-notch of uplift to our ICR On LCPR to reflect
our belief that LLA would support LCPR during periods of temporary
stress. The company is 100% owned by LLA, which also owns Cable &
Wireless Communications Ltd. and Liberty Costa Rica. While our
group credit profile on LLA is 'bb-', we do not equalize our
ratings on the companies because LCPR only accounts for about 28%
of the group's total revenue and there are no contractual
obligations to incentivize the parent's support, such as
cross-default provisions among the different credit pools.
Furthermore, there is minimal operational overlap between the
group's members. Still, we consider the company to be moderately
strategic to its group and expect the parent would provide support
during periods of temporary stress. However, if LCPR's wireless
subscriber trends and financial performance continue to deteriorate
such that it permanently impairs its capital structure, this
support could become more uncertain, which would lead us to
reevaluate the strategic importance of the company to its group and
the related notching of our ICR.
"The negative outlook reflects that we could lower our rating on
LCPR in the next 6-12 months if it doesn't significantly improve
its credit metrics."
S&P could lower its rating on LCPR if its EBITDA underperforms its
expectations, causing debt to debt to EBITDA to remain above 8x
over the next 6-12 months. S&P could also lower its rating,
potentially by more than a notch, if the company's liquidity
profile faces further pressure and it doesn't receive support from
its parent such that:
-- There is increased uncertainty around its ability to make the
$72 million September payment to Echostar; or
-- The company draws further on its revolver such that it triggers
the springing 5.5x max senior secured net leverage maintenance
covenant without receiving a waiver from its lenders.
S&P could revise its outlook on LCPR to stable in the next 12
months if it stabilizes its operations and expands its EBITDA such
that its leverage approaches 7x on a sustained basis, its FOCF to
debt approaches 2% on a sustained basis, and it improves its
liquidity cushion.
=================
V E N E Z U E L A
=================
GR MINING: Files for Arbitration in Mining Dispute
--------------------------------------------------
Duncan Hall at The Royal Gazette reports that a wholly-owned
subsidiary of Bermudian-domiciled Gold Reserve Ltd, the exploration
stage mining company, has filed a request for arbitration against
the government of Venezuela.
GR Mining (Barbados) Inc filed the request under the Additional
Facility Rules of the International Centre for the Settlement of
Investment Disputes of the World Bank in Washington, according to
The Royal Gazette.
Gold Reserve said: "The arbitration arises from Venezuela's
arbitrary and unlawful measures that deprived GR Mining of its
rights to, and materially damaged its investment in, the
multi-billion-dollar Siembra Minera mining project located in
Venezuela, the report notes.
"The precise amount of GR Mining's loss is subject to
quantification in the arbitration but, at present, is estimated to
exceed $7 billion," the report adds.
*********
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