Caribbean Business – 4/14/2016 by Latin Media House, LLC

I I I I I I I

I I

Prepa Pushes Transition Rate Case

Could a Baby Superbond be in the Works?

In a New York State of Mind

The Bishop Measure Prepares for Markup

Ball in Energy Commission’s Court page 7

Commonwealth Open to Dialogue page 12

Dem & GOP Primaries Loom Large page 24

Senate to Stonewall Control Board page 26

COVER STORY

TOP STORY

Commonwealth Audited Statements Delayed Again KPMG Wants to Take a Crack at Fiscal 2015 Statements Two months ago, Alejandro García Padilla administration officials anticipated that Puerto Rico’s audited financial statements for fiscal year 2014 would finally be delivered by the beginning of April. There is yet another setback, as this will no longer be the case. As of presstime Tuesday, La Fortaleza still did not know when the long-awaited Commonwealth Annual Financial Report (CAFR) for the year ended June 30, 2014, would be released.

Drone Alone

The Changing Face of Retail in Puerto Rico In one of the biggest shopping centers in Puerto Rico, at a side hallway that serves as one of the mall’s main entryways, all the retail spaces, except for a bank’s, are closed. At various other parts of the mall, one sees even more stores shuttered. A visual inspection through the mall revealed 39 vacant spaces out of about 300. Not too far away in Río Piedras, an urban center with a once-thriving commercial segment nowadays looks more like a ghost town.

In both instances, as in many others, the store facades only feature white panels or brown paper stuck to glass fronts, with no advertisements boasting of upcoming shops or restaurants slated to take their place. Instead, they stare out blankly at passers-by, serving as reminders of not only Puerto Rico’s dismal economic climate, but also of seismic changes taking place in the retail industry worldwide. When it comes to Puerto Rico, the decade-long

recession—which economists say kicked off in May 2006 with a two-week government shutdown brought on by a budget impasse, and coincided with the phase-out of Section 936 tax incentives—has affected the retail segment to a lesser degree than other economic segments such as construction and real estate, which have seen their business slashed by about half. BY DENNIS COSTA pages 14-18

tasked with the process, said it would take the firm another eight to nine weeks to complete the audit once they receive all pending information. Weekly meetings between all sides have been held for months to discuss the matter, led by La Fortaleza Chief of Staff Grace Santana. Since early this year, administration officials have stated the government has handed in everything on their end. But they have also acknowledged that some commonwealth com-

Treasury Secretary Juan Zaragoza and La Fortaleza Chief of Staff Grace Santana lead government efforts to release the long-overdue audited financial report.

The CAFR was due nearly a year ago, in May 2015. Progress has been made since first putting together information that shows most central government entities cannot guarantee business-as-usual operations throughout the year, as they continue to struggle to honor all their obligations. KPMG, the independent auditors

ponents have yet to finish certain processes related to the external audit, including the cash-strapped Government Development Bank (GDB) and two of the commonwealth’s retirement systems. At this writing, these pending processes had yet to be completed. BY LUIS J. VALENTÍN continues on page 6

Thursday, april 14, 2016 |

THIS WEEK Editorial

By Philipe Schoene Roura EXECUTIVE EDITOR

Contents picture of the week page 26

Coming to Grips With the Stages of Grief The Puerto Rico Debt Monster took center stage once again, this time as the protagonist in a TV spot that made its debut on CNN after the airing and analysis of the results in Wisconsin’s Democratic and Republican primaries. The message in the spot, “No bailouts for Puerto Rico,” is a clear indication that there is enough money in a super PAC (political action committee) to scare the political will out of friend and foe alike. No sooner had the spot aired, than U.S. Rep. Rob Bishop (R-Utah), the chairman of the House Committee on Natural Resources, who is sponsoring the Puerto Rico Oversight, Management & Economic Stability Act, or Promesa, filed this statement: “The claims in the ads are false. The purpose of the bill is to create a board to help fix the financial house in Puerto Rico without harming taxpayers. There will be no bailout, no bankruptcy, no Chapter 9. These issues were eliminated before we started working on a draft, therefore any reference to them now is a scare tactic. The House will never vote on a bill that sends taxpayer money to Puerto Rico to cover its debts. Puerto Rico is not a state and any program dealing with it, or any territory, will not impact, nor set precedents for states or municipalities. At the end of the day, we will have a good bill that helps Puerto Rico and protects all taxpayers.” By the time this newspaper goes live on the web at the crack of dawn on April 14, the U.S. Congress will have seen Bishop file Promesa (the English acronym spells out the word “promise” in Spanish), as a perfunctory exercise in statecraft that will lead to some pro forma resolution, even if it is marked up in the House: “We tried, but it’s time to get on with an

election campaign.” All signs lead to typical gridlock. Caribbean Business sources with knowledge of negotiations see creditors coming to the realization that Congress probably will not act on Puerto Rico’s behalf. Without a miraculous solution, creditors are coming to grips with the fact that the commonwealth will not be able to pay its first big payment on May 2. The problem is that the commonwealth, despite measures—sales tax increases, income tax increases, petroleum tax increases—is broke. No more borrowing from Peter to pay Paul; se acabó. It is eye-opening to hear lobbyists on Capitol Hill admitting that one of the hardest things in the world to do today is to get legislation through both chambers of Congress on any topic. Say they: “It is a very dysfunctional place,” before closing with “they are stuck with each other. It is going to take as long as it takes.” One Caribbean Business source who has been on both sides of the restructuring game put it best when she said: “There’s this Kübler-Ross psychological model for mourning. First there’s denial, then anger, negotiation, depression and then acceptance. Every restructuring is somewhat like that. First there’s denial—‘this can’t be happening, these people are lying to me’; then they get angry, then they start negotiating with themselves and the other side over the reality that there is a loss that needs to be dealt with; then they get depressed that they are going to suffer loss; then they accept the loss. We are sort of in the negotiating phase.” Observers might concur that the commonwealth and its creditors are in the negotiation stage—others may say it is outright depression. So, we negotiate and then the big question—how do we achieve sustainable economic development?

The problem is that the commonwealth, despite measures— sales tax increases, income tax increases, petroleum tax increases—is broke. No more borrowing from Peter to pay Paul; se acabó.

this week

Editorial Reader’s Response/Retrovisor

2 4

puerto rico Top Story Lead Stories Banking/Finance Law/Courts Government Cover Story

6 6 7-8 10 11 12-13 14-18

economy Business Brief Sin Comillas Poll

19 19 20-21 22

politics

Puerto Rico Oye Como Va

23-24 24

hemisphere

Latin American Affairs Federal Affairs

25 26

weekend

Guide Advertising

45 46

Special features Green Issues Specialized Healthcare PRMA Excellence Awards

27 27-32 33-38 39-43

caribbeanbusiness.pr Volume 2, No. 14 • Thursday, April 14, 2016 • PO Box 12130, San Juan PR 00914-0130 CARIBBEAN BUSINESS ® (USPS 313150) is published weekly, except the first two weeks of January, by Latin Media House, LLC, 1700 Ave. Fernández Juncos, San Juan, P.R. 00909-2938. Subscription rates: $45 a year + $4.73 state tax +.45 municipality tax = $50.18; $58 for two years + $6.09 state tax +.87 municipality tax = $64.96; $108 a year for foreign + applicable tax and shipping & handling. Customer Service/Subscription telephone: (787)728-8280, toll free 1-844-723-2351. Fax: (787)728-0195. Circulation Department telephone: (787)728-7670. General telephone: (787)728-3000. Fax: (787)2681626. Periodicals postage paid at San Juan PR 00936-9998. Postmaster: Send address changes to CARIBBEAN BUSINESS, PO Box 12130, San Juan PR 00914-0130, (ISSN 0194-8326). Entire contents: Copyright ©2016 by Latin Media House, LLC

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THIS WEEK

From the Web

Good News Travels Fast

Readers are apparently starved for good news in the middle of this perfect economic storm. The story on El Choliseo’s rank among the Top 20 entertainment venues worldwide went viral on cb.pr. with 815 shares.

Thursday, APRIL 14, 2016

Retrovisor The Week in Hindsight By Rosario Fajardo r.fajardo@cb.pr

BUSINESS

Creditors Sue Government Development Bank

A group of creditors that together hold roughly $3.75 billion of the Government Development Bank’s (GDB) $4 billion debt sued on April 4, seeking to stop the GDB from transferring out assets, except for those that cover essential services. GDB Chairwoman Melba Acosta said that “although the allegations set forth in the lawsuit are wrong, it is clear that our creditors agree with us that the situation of Puerto Rico is critical, the debt of the island is unpayable, and that the need for a federal restructuring regime to help the commonwealth achieve its recovery is crucial.” Plaintiffs, which include Brigade Capital, Tasman Funds, Claren Road and Solus, are asking the federal district court on the island for relief over “preferential payments and transfers to [bank’s] creditors” taking place at the GDB.

Question of the Week Check out our “Question of the Week” at cb.pr

These are the results of last week’s question.

Prepa Revitalization Corp. Presents Transition Rate Case

The Puerto Rico Electric Power Authority’s (Prepa) restructuring brigades filed April 7 its rate transition case and the supporting materials before the Puerto Rico Energy Commission (PREC), in the wake of turbulence generated by the Puerto Rico Emergency Moratorium & Financial Rehabilitation Act, commonly known as the debt moratorium law. The Alejandro García Padilla administration’s most recent maneuver may be a salvo that could blow Prepa’s current restructuring support agreement (RSA) to kingdom come. The RSA struck by Prepa with a majority of its creditors hinges on successfully implementing the securitization mechanism, which is essential to achieve investment-grade rating of new bonds that would be exchanged with creditors.

POLITICS

García Padilla Signs into Law Moratorium Legislation

Puerto Rico Gov. Alejandro García Padilla signed a measure into law April 6 that would enable him to declare a moratorium on the commonwealth’s debt payments, mere hours after it cleared the Legislature amid concerns of securing enough support in the lower chamber and a full-court press by creditor lobbyists demanding changes to the bill. The Puerto Rico Emergency Moratorium & Financial Rehabilitation Act also empowers the governor to order the financially battered Government Development Bank to restrict the outflow of cash in a bid to stabilize its dwindling liquidity levels, which stood at roughly $560 million as of April 1. Initial plans called for having García Padilla signing an executive order to this effect immediately following the enactment of the moratorium legislation, sources said.

Celebrating

70 Years

of Distinction In many ways, the history of McConnell Valdés is a story interwoven with the people and places we call home: Puerto Rico. While there are many factors that have distinguished us over the past 70 years, none is more important than the pride we take in serving individuals and businesses that count on us to deliver the very best legal counsel as they pursue new opportunities that shape Puerto Rico’s future. Whether you know us as the island’s largest law firm, or simply the partner you trust for all your needs, McConnell Valdés is here for you and ready to take on your next challenge.

Puerto Rico | Washington, DC | mcvpr.com

Thursday, april 14, 2016 |

PUERTO RICO Audited Statements / On April 1, La Fortaleza told Caribbean Business that given the commonwealth’s fiscal situation, the latest setback on the statements’ delivery did not constitute a “material deviation” from the original timeline. They tentatively targeted April 11 as the final release date. When asked by Caribbean Business earlier this week about the pending items—without which KPMG cannot sign off on the document—Treasury Secretary Juan Zaragoza said assessments on the teachers and commonwealth-employees retirement systems were expected to be delivered by the end of this week. Then there is the GDB. GDB reserves A person with knowledge of negotiations told Caribbean Business there were no contentious issues, but rather too much uncertainty in figuring out the troubled bank’s loan reserve. “It’s a matter of perception—the perception of the government’s ability to pay its loans and lines of credit with the GDB,” said the source who chose to remain nameless. The commonwealth’s cash crunch has certainly taken its toll on the GDB, as the central government and its instrumentalities have failed to repay for years the money the bank has loaned to them. “Add to that uncertainty; if the government can restructure its

TOP STORY

Continued from cover

“There’s a bunch of uncertainty and assumptions tied to the central government that are tough to nail down.” —Government source

debt, then there would be more money on hand; if the government isn’t able to restructure, then there is less money. There’s a bunch of uncertainty and assumptions tied to the central government that are tough to nail down,” the source added, while insisting that completing the work has taken more time because of this. Indeed, the island’s quickly changing fiscal developments, socalled “subsequent events” in the auditing jargon, have ultimately affected the CAFR’s final delivery. But there needs to be a cutoff at some point, if the report is ever to be released. Two Caribbean Business sources believe a final decision will soon be made, but it is impossible to say for certain because any changes require final certification from KPMG’s headquarters. For the past few weeks, both sides have been discussing the island’s

most recent fiscal developments and how these could affect the workplan that had been drawn up. Most recently, the administration enacted legislation authorizing the governor to suspend debt-service payments across commonwealth entities, followed by an executive order placing restrictions on cash outflows at the financially battered bank, aiming to stabilize dwindling liquidity levels. A long-awaited document While originally due May 2015, government officials have pointed to a number of reasons that have delayed the statements’ release, chief among them the island’s fiscal crisis, which has prompted KPMG to ask for additional projections and disclosures. A host of different sectors, including Republicans in Congress, have persistently called for the

audited statements for a complete, independent picture of the island’s financials. For instance, as part of draft legislation aimed at tackling Puerto Rico’s fiscal woes, House GOP members have conditioned access to debt-restructuring tools to first completing the independent audit process. “[The fiscal 2014 CAFR] must be ready before the bill is approved,” Gov. García Padilla said last month. In mid-February, the P.R. Treasury Department released a draft of the commonwealth’s financial statements for fiscal 2014—a 370page document of unaudited and preliminary financial information showing bleak fiscal prospects across commonwealth entities. “We are not hiding anything. The situation is as bad as we are explaining,” GDB Chairwoman & President Melba Acosta told congressional staff in February. “Trust me, they are not going to be beautiful financial statements. They haven’t been for I don’t know how many years.” Next audited statements The García Padilla administration is currently evaluating a KPMG proposal to handle the fiscal 2015 audited reports, essentially extending its contract. The company has taken care of the reports for both fiscal years 2013 and 2014, and during the past three years,

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KPMG has been paid roughly $20 million in professional-services contracts, according to government records. The commonwealth is quickly approaching the May 2016 deadline to deliver its fiscal 2015 CAFR, and with only a few weeks to go, there is a high probability that this report will also not be delivered on time. How late will the commonwealth be for its fiscal 2015 report? Zaragoza noted that although people may think the process is doomed to follow the same rocky road as for fiscal 2014, it could be quite a different case. According to his argument, much of the information that is dragging the process right now would be used for the fiscal 2015 audited statements, which could help complete the process more quickly than the last one. Still, there is no timetable yet for the release of these reports. During the past decade, and without taking into consideration the fiscal 2014 report that is now almost a year late, Puerto Rico has been late in delivering the CAFR an average 70 days, or a little over two months, according to municipal market records. Since 2007, the commonwealth has only met the market’s May 1 deadline twice, in fiscal years 2009 and 2010. —Executive Editor Philipe Schoene Roura contributed to this story.

PUERTO RICO

| Thursday, APRIL 14, 2016

LEAD STORY

Prepa filed content of restructuring request with Energy Commission

Transition Charge, Adjustment Mechanism may Bring Prepa’s Rates up BY EVA LLORÉNS VÉLEZ e.llorens@cb.pr

The Puerto Rico Electric Power Authority’s (Prepa) restructuring request consists of various purposes and amounts for at least seven types of bonds that will be exchanged for current Prepa bonds and will be financed through a “Transition Charge” paid by customers that will be adjusted at least twice a year to ensure there is sufficient revenue for the bonds’ timely payment. The restructuring petition submitted April 7 to the Energy Commission (PREC) must be evaluated quickly, as stated in the recently

enacted Revitalization Act. PREC declined to comment on the proposal. “As this is an adjudicative process, PREC’s commissioners are ethically bound to abstain from making public expressions about the case-evaluation process. In due time, resolutions will be made about the procedural instructions related to public participation for said process,” Energy Commission Chairman Agustín F. Carbó said in a statement. Prepa’s petition to PREC The petition obtained by Caribbean Business places

before the commission a proposed Restructuring Resolution that provides for financing of approved restructuring costs through the issuance of bonds; imposes and provides for the collection of transition charges to fund upfront financing costs and ongoing financing costs; and describes how the transition charges will be calculated and adjusted through an “Adjustment Mechanism.” The “Transition Charges” are defined in the document as “those rates and charges that are separate from rates and charges of Prepa” while the “Adjustment Mechanism” is a complicated formula that will

“PREC’s commissioners are ethically bound to abstain from making public expressions about the caseevaluation process.” —P.R. Energy Commission Chairman Agustín F. Carbó

be applied periodically, but not less than twice a year, to ensure enough revenues for bond payments and financing. For years, Prepa has issued substantial debt to fund capital expenditures and, in the case of fuelrelated credit facilities, operating expenses. In total, Prepa has debt

obligations of about $9 billion, including nearly $735 million currently due under its revolving fuel lines of credit and about $420 million in principal and interest that will be due on or before July 1, 2016, under its outstanding bonds. Continues on page 8

PUERTO RICO

Thursday, APRIL 14, 2016 |

LEAD STORY Continued from page 7

Restructuring Support Agreement Prepa cannot meet these financial obligations absent a financial restructuring and transformative change. In light of its financial situation, Prepa negotiated a Restructuring Support Agreement (RSA) with creditors holding or insuring about 70% of the face amount of Prepa’s outstanding debt, including beneficial owners and insurers of existing Prepa bonds, banks (and their transferees) that previously provided revolving lines of credit, the Government Development Bank and others. The RSA provides for the creation of a Prepa Revitalization Corp. through which the new bonds will be issued. For the existing uninsured Prepa bondholders that participate, the RSA provides for an 85% exchange

rate—or a 15% discount to the principal owed under existing uninsured Prepa bonds—as well as a five-year principal holiday and an agreed-upon weighted-average interest rate pursuant to a pricing grid included in the RSA that is projected to be lower than the weighted-average interest rates on Prepa’s existing bonds. In return for a commitment to defease certain insured Prepa bonds with Mirror Bonds, the Monoline Insurers will provide an additional capital commitment in the form of one or more debt-service reservefund surety policies to provide credit support for the bonds. The bonds The different bonds included are: a) Exchange Offer Bonds in an initial aggregate principal amount not to exceed $4.97 billion, to be issued to the beneficial owners of Prepa Bonds that are not insured Prepa Bonds. b) Mirror Bonds that include

bonds, in an initial aggregate principal amount not to exceed $2.086 billion, to be deposited in an irrevocable escrow to solely, legally or economically defease the Prepa Bonds insured by the monoline bond insurers that have signed the RSA. c) Bonds, in a principal amount not in excess of the sum of 6.25% for certain payments that include debt service and the Internal Revenue Service. d) Bonds, in an initial aggregate principal amount not in excess of $50 million, to fund a deposit to the Prepa Self-Insurance Fund of the Restructuring Resolution. e) “Cash Offer Bonds,” in an initial aggregate principal amount not exceeding $2.6 billion for the purpose of funding the costs to refund, redeem or purchase, directly or indirectly, uninsured Prepa Bonds with the goal of increasing the exchange-offer participation levels. f ) “Lender Bonds,” in an initial aggregate principal amount not exceeding $625 million, issued to the

Supporting Creditors in exchange for the extinguishment of the obligations due and owing under certain Credit Agreements. g) “Closing Date Syncora Bonds,” in a principal amount not exceeding $240 million, to be issued to restructure, refund, redeem, defease or purchase Prepa Bonds insured by Syncora Guarantee Inc. The petition provides for issuing additional bonds after the initial issuance that include: one or more series of Bonds, in an initial aggregate principal amount not to exceed $750 million to one or more holders of 2016 Prepa Bonds, at an exchange ratio of 100% in voluntary exchange for such 2016 Prepa Bonds, and bonds that shall not exceed $240 million to purchase Prepa bonds issued by Syncora. Despite facing the crosswinds of the newly created moratorium law, Lisa Donahue, Prepa’s chief restructuring officer, remained optimistic. “I think we are all trying to obtain clarifications to understand what it

means to have a moratorium, what it means to Prepa with the RSA and what it means to Prepa without the RSA,” she said. “It means understanding the law and seeing if we could obtain some clarification and the creditors would want some clarifications—so we are both going through that process.” A report last week from Moody’s Investors Services said the moratorium law does not include the Prepa Revitalization Corp., the special purpose vehicle (SPV) that is expected to issue securitization bonds to complete Prepa’s debt restructuring. “I am glad that Moody’s put that out; that the SPV is not part of this and that, from a credit perspective, is important. That our creditors understand that they are exchanging into an instrument that would not be part of any sort of Moratorium Act,” Donahue explained. —Executive Edtor Philipe Schoene Roura contributed to this story.

José Domingo Pérez , Presidente, CARIBE TECNO, Inc.

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PUERTO RICO

Thursday, APRIL 14, 2016 |

BANKING/FINANCE

Recovering Puerto Rico economy represents a huge profit potential

Hedge Funds on the Prowl for Possible Bank Acquisitions

caribbeanbusiness.pr

Volume 2, No. 14 Thursday, April 14, 2016

Waiting for Congressional Action to Jumpstart Local Economy BY JOSÉ L. CARMONA

j.carmona@cb.pr

Several sophisticated stateside hedge-fund groups are assessing what measures the U.S. Congress will eventually take to revive Puerto Rico’s beleaguered economy before jumping at the opportunity to acquire one or several local financial institutions. According to a stateside expert with knowledge of the matter, these sophisticated hedge-fund groups are on the prowl for acquisition opportunities, as they believe a recovering Puerto Rico economy would represent a huge profit potential. “There’s always an interest. When you consolidate banks, there’s significant savings through greater efficiency. When you reduce costs, you can make a profit practically overnight,” the stateside expert commented to Caribbean Business. “These hedge funds are interested in Puerto Rico, not only because of Acts 20 and 22, but also because they have identified Puerto Rico as a substantial ‘reversal to build’ opportunity, economically speaking,” said the stateside expert. “If congressional action ultimately involves a wage credit or some type of Section 936 [incentive], the potential is enormous.” A similar type of action from Congress to deal with Puerto Rico’s lagging economy would boost Puerto Rico’s five local commercial

banks, practically doubling their stocks’ value in a matter of months, the stateside expert said, adding that hedge funds believe local banks will be extremely profitable in a growing economy—as happened with Section 936 during the 1980s and 1990s. “However, if the hedge funds see the Puerto Rico bank situation deteriorating more rapidly, they could move real fast, as they are experts at buying in a fire sale-type situation,” the stateside expert said. These stateside hedgefund groups have a lot of capital invested in the petroleum industry, which has taken a beating lately as a result of the dramatic drop in oil prices, and are looking to invest elsewhere, as they still have plenty of capital, the expert said. “The hedge-fund groups know this opportunity won’t last forever and things can change overnight. However, they have made very clear through their lobbyists in Washington, D.C., that a solution must come first from Congress to improve the island’s economy, and then they would be willing to come here and buy what they want,” the stateside expert said. For Rafael Blanco, Puerto Rico commissioner of financial institutions, these types of rumors are not unusual in the industry and they come and go, although he admitted not having heard anything recently. However, he indicated the

idea of hedge funds looking for possible bank acquisitions on the island is not a bad one, as local bank stocks are depressed. “I wouldn’t be surprised if hedge funds are looking at acquiring local banks. These usually invest shortterm, and if they see a quick turnaround, it’s not a bad logic. However, I don’t see Puerto Rico’s situation turning around quickly in two or three years,” Blanco commented.

‘I don’t see Puerto Rico’s situation turning around quickly in two or three years.’ — Rafael Blanco, Puerto Rico commissioner of financial institutions

Blanco, as well as other bank industry players, have reiterated Puerto Rico will have the number of banks the local market can sustain, hinting at future bank consolidations following the three-bank closures in 2010 and the closing of Doral Bank last year.

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| Thursday, APRIL 14, 2016

LAW/COURTS

PUERTO RICO

Nominee’s experience questioned by some

Ángel Colón Pérez’s designation as P.R. Associate Justice Gets Mixed Reviews BY EVA LLORÉNS VÉLEZ e.llorens@cb.pr

The designation of La Fortaleza adviser Ángel Colón Pérez as associate justice to the commonwealth Supreme Court has been received with mixed reviews in part because of questions about whether he is the ideal candidate. Puerto Rico Bar Association President Mark A. Bimbela told Caribbean Business that he does not know Colón Pérez and chided the governor for failing to use Bar Association mechanisms to search for a candidate. The Bar has a committee that evaluates candidates. Bimbela said that while the current administration approved laws that allow the organization to evaluate candidates, “the governor does not use them.” “I cannot give an opinion about the nominee,” he said. What is known is that since 2013, Colón Pérez has worked as legal and legislative adviser to Gov. Alejandro García Padilla. Before that, he worked for a decade in the Supreme Court. In 2002, he was legal clerk to former chief justices Miriam Naveira Merly and Federico Hernández Denton. In 2005, the Supreme Court appointed him to head the Bar Examining Board for Aspiring Candidates to Law & Public Notary, where he managed

and corrected bar exams. In 2006, former Gov. Aníbal Acevedo Vilá named him Superior Court judge and that year he was detailed to the Supreme Court where he worked until 2012 as a special aide to Hernández Denton. From 2006 to 2012, he was a part-time law professor at the Law School of Inter American University of Puerto Rico. He graduated from Inter American Law School in 2000, having received his undergraduate degree in business administration from the same university. Hernández Denton said Colón Pérez was his aide, a position that is the equivalent of chief of staff. “I think it is an excellent nomination,” he said on the day of the nomination. He said he was sure Colón Pérez will recuse himself from any issue he had worked with as adviser. “This is a person who has a lot of integrity,” he said. Political analyst Carlos Díaz Olivo said he found it strange that García Padilla did not appoint someone to the position who is wellknown and with more experience, who can influence the other justices at times when the governing party does not control the judicial branch. “The force that brings such a person can impact the court ideologically and is not a person who can be absorbed by the court majority,” he said. In the United

Ángel Colón Pérez nominated as P.R. associate justice

States, for instance, former Supreme Court Justice Antonin Scalia was considered a dissident judge and became a strong force in the court for conservatives. The governor opted to select a young person to ensure the position stays under the Popular Democratic Party’s (PDP) control, Díaz Olivo said. Right now, six of the nine Supreme Court justices were appointed by New Progressive Party administrations. With the new designation, the PDP will continue to have three of the nine justices. However, when Associate Justice Anabelle Rodríguez retires next year, there is a high chance the NPP will solidify its control of the court unless she opts to leave before the session is over in June, assuming the NPP wins La Fortaleza.

PUERTO RICO

Thursday, APRIL 14, 2016 |

GOVERNMENT

Targets $49 billion of tax-supported debt

Here we go Again: Puerto Rico Gov’t Proposes New Deal for Creditors BY LUIS VALENTÍN l.valentin@cb.pr

Higher recovery rates and a debt instrument tailored for local bondholders are among the changes to the Puerto Rico government’s recently revised debt-restructuring proposal, which was presented to creditors on March 23 and released publicly April 11. Negotiations between the commonwealth and its creditors are slated to continue this week. Targeting roughly $49 billion of Puerto Rico’s tax-supported debt, the commonwealth first proposed to creditors in January an exchange

offer with two types of instruments: a mandatorily payable base bond and a growth bond to be paid only if the island achieved economic recovery. Cuts to principal, or haircuts, hovered around 45%, and only $1.75 billion of government revenue would be available each year for debt service. This amount now increases to $1.85 billion, allowing the U.S. territory to offer more base bonds— and higher recovery rates—under the revised proposal. The larger margin is a result of using projected government revenue for fiscal year 2021, instead of fiscal 2016, as the basis for the restructuring team’s

15% debt-service target as a percentage of annual revenue. Growth bonds have been replaced with capital appreciation bonds (CABs), which are repaid in full upon maturity as they grow in value—at 5% annually over a 49year period under the commonwealth’s most recent offer. CABs would ensure creditors fully recover initial losses, but only if they hold on to these until maturity. Commonwealth advisers believe this instrument will eventually become highly tradable as the island recovers its creditworthiness along the way. As for Puerto Rico residents, who

Government Development Bank (GDB) President Melba Acosta and Jim Millstein, founder of Millstein & Co.

mostly own the island’s less-secured debt, they could now choose a parfor-par exchange, instead of taking discounted base bonds. These par bonds would mean a longer maturity for local bondholders, while receiving 2% interest payments for more than 50 years beginning in January 2017.

“Feedback from mainland creditors is that they are OK with that,” said Jim Millstein, founder of Millstein & Co., the lead restructuring advisers for the Puerto Rico government. He discussed the new offer with local press during a recent Continues on page 13

PUERTO RICO 13

| Thursday, APRIL 14, 2016

GOVERNMENT

roundtable that also featured the Alejandro García Padilla administration’s entire fiscal team. “Our proposal is fair to the extent we could do so, and tries to equitably give something to everyone within constitutional limits,” said Government Development Bank (GDB) President Melba Acosta. Under the new offer, the amount of base bonds could reach as much as $27.8 billion, depending on the participation of Puerto Rico residents in the local instrument, while roughly $1.75 billion in CABs and up to $8 billion in local holder bonds would also be issued. The commonwealth’s most recent offer would translate into a longer debtrepayment calendar. No principal payments until fiscal 2021 are still contemplated, but interest payments would now be paid current, scaling up until reaching 5% annually by fiscal 2021. The local bond option would always be paid a 2% annual interest during its life. “Future administrations wouldn’t be facing a new wall of maturities like we are facing today, which we can’t pay. If you can handle [debt service] this year, you will be able to handle it next year because it is leveled,” Millstein said. Proposed haircuts include about 16% for commonwealth-guaranteed debt, including general obligations (GOs), and 43% for Sales Tax Financing Corp. (Cofina by its Spanish acronym) bonds. Less-secured paper, such as those of the Highways & Transportation Authority and the GDB, could see cuts to principal of 44% and 64%, respectively, while other credits would be up in the 50% range.

If the commonwealth fails to obtain a legal mechanism by which to bind holdouts or if the federal government significantly reduces financial support to the island, the terms of the exchange offer would have to be revised, which could mean larger haircuts for creditors. “We need a way to achieve finality. If we are going to start a restructuring procedure, we have to make sure that we have an ability to get to the end,” Millstein said, noting the importance of achieving mechanisms that could bind all creditors, thus avoiding a holdout problem. Creditor talks While some creditor groups have suggested that the commonwealth government has dragged its feet in restructuring talks, Millstein said this is far from the truth. “There are many lawyers and bankers with whom we have been talking about the original proposal…both individually and collectively,” he stressed. “This is a negotiation. We have elicited from them counterproposals.” At least three different creditor groups have countered with their own offers, including those representing GOs and Cofina, as well as a group of local cooperatives and credit unions that mostly own less-secured paper. For the administration, the creditors’ proposed fixes fell short, often solving only part of the problem and placing an unfair burden on lessprotected credits. None of the counteroffers deal with the GDB’s debt woes or contemplate cuts to principal. The island’s recent fiscal developments, including the moratorium legislation and the executive order that followed to address the GDB’s fiscal woes, have prompted various creditors to sit down at the negotiating table, Acosta said. Nondisclosure agreements

have been signed by advisers for all sides, and the commonwealth will now be

looking to engage holders directly, explained Richard Cooper, a partner at Cleary

Gottlieb, lead legal advisers for the island. If progress is made, creditors would

be asked to enter into short-term confidentiality agreements.

PUERTO RICO

Thursday, april 14, 2016 |

Retail Sector in Puerto Rico Under Assault

Puerto Rico’s Lost Decade Part iv in a Series

The confluence of double-digit economic contraction, massive population loss over the past decade and the rise of e-commerce have kept retail flat. BY DENNIS COSTA d.costa@cb.pr

In one of the biggest shopping centers in Puerto Rico, at a side hallway that serves as one of the mall’s main entryways, all the retail spaces, except for a bank’s, are closed. At various other parts

of the mall, one sees even more stores shuttered. A visual inspection through the mall revealed 39 vacant spaces out of about 300. Not too far away in Río Piedras, an urban center with a once-thriving commercial segment nowadays looks more like a ghost town. In both instances, as in many

others, the store facades only feature white panels or brown paper stuck to glass fronts, with no advertisements boasting of upcoming shops or restaurants slated to take their place. Instead, they stare out blankly at passers-by, serving as reminders of not only Puerto Rico’s dismal economic

climate, but also of seismic changes taking place in the retail industry worldwide. When it comes to Puerto Rico, the decade-long recession—which economists say kicked off in May 2006 with a two-week government shutdown brought on by a budget impasse, and coincided

with the phase-out of Section 936 tax incentives—has affected the retail segment to a lesser degree than other economic segments such as construction and real estate, which have seen their business slashed by about half. Continues on next page

PUERTO RICO 15

| Thursday, april 14, 2016

“A lot of retailers have had to make adjustments to cope with sales and profit losses, as well as increases in operational expenditures. Whoever has not adapted by this point will most likely not survive.” —Arnaldo Oliveras, founder & president of Space Mart Retail & Real Estate Solutions has improved gradually, with annual totals reaching $38.39 billion in 2014. A look at several retail sub-segments reveal patterns of consumer behavior on the island, with average buyers trying to stretch their dollar as much as possible and focusing on necessity goods such as groceries and clothing. Accordingly, the aforementioned areas experienced sales growth on par or higher than the industry-wide average. Meanwhile, other sub-segments such as electronics, toys and, perhaps unsurprisingly, construction materials, fared far worse, according to the CCE reports. Another, more recent look at consumer behavior—this time through a May 2015 report by the Puerto Rico Marketing, Industry & Food Distribution Chamber (MIDA by its Spanish acronym) dubbed Consumer X-Ray— shows that Puerto Rican consumers have reduced monthly grocery expenditures by 14%, to $425 from $492. In another telling finding, the report also found that 38% of respondents have reduced their entertainment outside the home and 47% have cut back on eating out.

Continues from previous page

Economic figures by the Puerto Rico Trade & Export Company (CCE by its Spanish acronym), specifically its monthly Retail Sales Report, also known as Infoventas, tell the story of a mostly flat rate of growth for the retail

segment. In 2005, retail sales on the island totaled $35.38 billion; with the onset of the recession, that total went down to $34.81 billion for 2006. The following years saw slight deviations in year-end figures that did not go beyond $35.4 billion in sales until 2011. Since 2012, the situation

Burden on the industry In all, the retail sector has been able to more or less withstand the economic storm better than most, but this may soon change, as a myriad of factors, among them a steep population decline coupled with an aging population, and a slew of new taxes, are placing a heavy burden on stores and restaurants throughout the island. In mid-February, the CCE revealed that retail sales reported by local commercial establishments dropped 1.42% year-over-year in 2015. In monetary terms, sales went down by $544.7 million to

settle at $37.8 billion. CEE Executive Director Francisco Chévere mostly attributed the drop to the exodus of Puerto Rico residents from the island. “Some 65,000 Puerto Ricans migrated in 2015, an 18.1% increase from the 55,092 who left in 2014,” he said. Such numbers may be a conservative assessment, compared with other figures. According to a Pew Research Center analysis of U.S. Census Bureau data, 84,000 people left Puerto Rico for the U.S. mainland last year, a 38% increase from 2010, “The island’s population was an estimated 3.47 million in 2015, down 334,000 from 2000—a 9% decline,” the report stated. With regard to 2015 retail sales, Adolfo González, president & CEO of Caparra Center Associates (CCA)—which owns and operates San Patricio Plaza and Galería San Patricio shopping centers in Guaynabo, among other retail establishments—gave a more indepth picture of sales last year, at least concerning the properties that CCA oversees. Along the way, he revealed the growing role that increased government taxation has had on retailers’ bottom line. “The first half of 2015 was good, with figures showing improvement over the previous year,” González noted. However, in July 1, a hammer blow struck the sector in the form of a hike in the sales & use (IVU by its Spanish acronym) tax to 11.5% from 7%. “We noticed the effects immediately and sales were hit hard,” the CCA exec noted. “The rest of the year was essentially a recovery period, and we ended the year with slightly lower total sales.” The holiday shopping season, long considered a saving grace for embattled retailers, underwhelmed in 2015, said Arnaldo Oliveras, founder & president of Space Mart Retail & Real Estate

Solutions, a shopping-center service provider. According to a survey by the International Council of Shopping Centers, a global shopping center trade association, sales in Puerto Rico during the most recent holiday season went down by around 9%, with the restaurant segment experiencing a slightly smaller decrease. “Retailers expected just a moderate drop from the previous year, despite the economic situation, but such a drop took plenty by surprise,” Oliveras said. Closing time Moreover, a bevy of national retail chains and local stores have closed their Puerto Rico establishments in the past year-anda-half, resulting in hundreds of jobs being lost. While in the case of national chains, the moves have been partly prompted by changing dynamics in the sector worldwide, a recurring theme among practically all closings has been Puerto Rico’s dismal state of affairs, economy-wise. Among the most noteworthy in recent months has been that of video game and electronics retailer GameStop. The chain, which boasts more than 6,400 stores throughout the U.S., Canada, Australia, New Zealand and Europe, closed its 40-plus Puerto Rico stores in March. When the company announced its exit last January, its director of public relations, Joy Mooring, said it was due to “increasing business challenges and growing government restrictions in Puerto Rico.” About 400 employees lost their jobs as a result. “Puerto Rico is one of the highest selling regions for Gamestop,” a manager of a Gamestop store in San Juan’s Hato Rey district told online publication Paste Continues on page 16

PUERTO RICO

Thursday, april 14, 2016 |

COVER STORY South wing of Plaza Las Américas shopping center, in San Juan’s Hato Rey district

“Nobody knows what will happen, and stores cannot make projections because the rules are changing from month to month, so to speak.” —Miguel González, vice president of operations at CCA

Continues from page 15

Magazine on condition of anonymity. “The new taxes that the government put in place to manage the financial crisis have practically tripled what it costs to bring in new merchandise.” As a result, a person close to the matter told Caribbean Business that the chain was barely breaking even on the island. “There are no national merchants willing to tolerate such a dynamic, especially since in GameStop’s case, they usually had two or even three locations in the same shopping mall,” said the source. Oddly enough, Puerto Rico Treasury Secretary Juan Zaragoza said shortly after the Gamestop announcement that the chain boasted about $500 million in sales throughout its last seven years of operations on the island, a rate of around $90 million annually. Video-game industry observers also pointed out at the time that the model for distributing and selling games has changed radically in recent years due to the onset of downloadable content, for one thing, which has exerted pressure on GameStop’s business model worldwide. In the realm of local chains,

Chiquitín stands out. The kids’ shoe store chain closed its remaining stores in Puerto Rico, one in Plaza Las Américas shopping center and another in Las Catalinas Mall, in Caguas, last January, after 40 years of operation. When it comes to local retail operations, most of those that have closed recently have been restaurants. These include several Pizzeria UNO, Quiznos and Fuddruckers locales throughout the island; Old Harbor Brewery in Old San Juan; Greenhouse in San Juan’s Condado district; and Pan Comido and Star Cream, both in Guaynabo. Another high-profile closing in Puerto Rico has been that of Sports Authority. The sporting goods chain, based in Englewood, Colo., entered the Puerto Rico market a little more than two years ago, opening its first store in Ponce in October 2013 and going on to open two more stores in Carolina and in Plaza Las Américas shopping center, in San Juan’s Hato Rey district, respectively. In the latter case, Empresas Fonalledas, owners and operators of Plaza, invested several million dollars in expanding the mall to accommodate the 45,000 square-foot Sports Authority outlet, as well as more parking spaces.

Then last March, the company announced it intended to close or sell around 140 of its 463 nationwide locations, including all of its Puerto Rico stores. The decision was made in light of the increasing amount of shopping that is occurring online, Michael E. Foss, CEO of Sports Authority, indicated. “As a result of the changes in

consumer buying patterns, Sports Authority determined it needs fewer stores as part of its longterm business model,” he added. However, according to a local industry player who asked that his name be withheld, it is no coincidence that the chain chose to completely phase-out its presence on the island. “[The company’s upper management] took advantage of the situation,” the source said. “They weren’t generating enough business here and realized the island’s situation was not going to improve in the near future.” When it comes to the travails the sector is going through, perhaps no chain has been more in the limelight than retail giant Walmart, which operates 48 stores on the island, including Walmart Supercenters, Walmart Discount Stores, Supermercados Amigo, Sam’s Clubs and, until earlier this year, Super Ahorros. As part of a plan to shut down 269 stores worldwide,

Main entrance to Plaza del Caribe mall, in Ponce

the company shuttered seven of its Puerto Rico stores in January: three Súper Ahorros supermarkets in Coamo, Villalba and Utuado; and four Amigo supermarkets in Salinas, Río Grande, Carolina and Toa Alta. The retail chain then found itself engaged in outright war with the local government, specifically after Act 72 was signed last May. The controversial law established an increase in the transfer pricing tax, namely the rate at which corporate property arriving from out of Puerto Rico is taxed, from 2% to 6.5% on entities doing more than $2.75 billion in business on the island. Walmart rapidly took issue with the move, alleging the new tax rate would amount to more than 91% of its net income in Puerto Rico. The company sued the government in December over Act 72, and a public war of words followed, Continues on next page

| Thursday, april 14, 2016

PUERTO RICO 17

COVER STORY Continues from previous page

with Iván Báez, corporate affairs director at Walmart, even saying the company would leave the island if the tax hike were to take effect. Wal-Mart Puerto Rico is the largest private employer on the island, employing some 14,300 residents. During the trial, it was revealed that Act 72 specifically targeted Walmart, as confirmed by Treasury’s Zaragoza during court testimony. U.S. District Court Judge José A. Fusté ultimately ruled in favor of Walmart in late March, deeming that Act 72 violated the U.S. Constitution. Ongoing challenges Government taxes have frequently been mentioned as one of the main factors placing a strain on local retail, alongside electricity costs. While the IVU hike to 11.5% last year proved nefarious for countless establishments, the imposition of a 4% business-tobusiness (B2B) tax has been just as tough. No wonder, then, that hackles were raised when the government announced it would carry out another tax reform, this time by changing the IVU tax model to a value-added tax system (VAT, or IVA by its Spanish acronym) designed to provide transparency across the board, achieve higher tax compliance, and secure additional revenue to government coffers. Moreover, the change would have also implemented a 10.5% B2B tax. Originally slated to begin April 1, the VAT implementation was postponed for June 1, with a second phase scheduled Aug. 1. “This just bought two to three months’ time to many retailers,” Oliveras said. “The thing is, this affects small retailers more than anyone else. A lot of them have had to make adjustments to cope with sales and profit losses, as well as increases in operational expenditures. Many have had to change their modus operandi, from reducing their workforce to changing suppliers. Whoever has not adapted by this point will most likely not survive.” Some local chains have even begun looking beyond the island, a dynamic that prompted Space

Mart to open new offices in Brickell, Fla. “It is simply not profitable having a national retail operation on the island, at least not for now,” Oliveras noted. “Look at what happened to Walmart; to draft a law specifically targeting one company, a lot of the retail segment paid close attention to that development, and many are scared to invest further until they see some changes.” As to the ways in which retail hubs such as shopping centers have been able to adjust, many have had to be creative in terms of giving more leeway to tenants and preventing high vacancies. These are not limited to providing lower rental rates, but extend to lower profit shares and even providing a sort of “test period” for small stores hesitant to try out the waters, various industry players said. On the other hand, not everything is dire news in the sector. For example, luxury shopping options such as Taubman Centers’ Mall of San Juan and the upcoming retail offerings at Paseo Caribe, in San Juan’s Puerta de Tierra area, show signs of a burgeoning and potentially very profitable subsegment. Moreover, a handful of high-profile stores are scheduled to make their debut on the island soon, chief among them Swedish retail giant H&M. The multinational clothing chain is slated to open a store in the Mall of San Juan and another in Plaza del Sol in Bayamón later this year. Yet despite the few shining lights on the horizon, the overall feeling industry-wide could best be described as uncertain. “Nobody knows what will happen, and stores cannot make projections because the rules are changing from month to month, so to speak,” said Miguel González, vice president of operations at CCA. “Attracting investment from national retailers has become extremely complicated because most see the central government’s fiscal situation as a mirror of the island’s whole economy,” added CCA’s Adolfo González. “Granted, the economy’s weak, but it’s not as bad as the government crisis. The challenge is how to sell Puerto Rico better.”

From top to bottom: Mall of San Juan, Plaza Carolina, and Plaza del Sol in Bayamón

PUERTO RICO

Thursday, april 14, 2016 |

COVER STORY

Puerto Rican consumers increasingly shop online, to the detriment of brick-and-mortar stores.

The Amazon Effect

E-Commerce Outlets are Transforming the Local Retail Landscape BY DENNIS COSTA d.costa@cb.pr

When it comes to the retail sector, and specifically brick-andmortar stores, e-commerce has become the elephant in the room, a trend that has rapidly changed the global dynamics of the industry and whose effects are being particularly felt in Puerto Rico. For local consumers eager to stretch their dollars, the appeal of online shopping platforms is readily apparent: a wide variety of products shown in an engaging manner, very low prices and in the case of Amazon Prime, free shipping on most goods. This partly explains some of the findings made by the Puerto Rico Sales & Marketing Executives Association’s 2014 Digital Study. According to the report, about 612,000 local consumers carry out online purchases and transactions on a regular basis, a number that has only grown in recent years. As a result, the advent of ecommerce has transformed the shopping landscape in just a few short years, to the point that it has led to the exit of several major chains from the local market. For instance, when sporting goods retailer Sports Authority announced its impending closing of 140 stores, including all those in Puerto Rico, CEO Michael E. Foss mostly attributed the decision to “the increasing amount of shopping that is occurring online.” By the same token, Gamestop’s recent exit from local shopping malls partly corresponds to the rise of online sale and distribution channels for video games through services such as Sony’s Playstation Network and Microsoft’s Xbox Live, as well as the rise of downloadable extra content for popular games. According to Arnaldo Oliveras

—who is the founder & president of Space Mart Retail & Real Estate Solutions, a shopping-center service provider, and heads the local chapter of the International Council of Shopping Centers (ICSC), a global shopping center trade association—sales in brick-and-mortar stores this past holiday season went down by around 9%, while those of the e-commerce sector went up by 17%. “This means orders from Puerto Rico to sites such as Amazon, Bloomingdales, you name it,” he said. Such numbers should not surprise anyone, Oliveras noted. “We foretold what was going to happen years ago,” he said. “Statistics reveal that there are more packages being delivered than letters [by the U.S. Post Office].” In keeping with their technological

knowhow, e-commerce giants such as Amazon are even experimenting with using drones as delivery channels, which could render the post office irrelevant in the coming years as far as online retail goes. While Amazon has arguably taken the limelight on the ecommerce front, other sites are proving just as impactful. There are old mainstays such as eBay, of course, but several relative upstarts are quickly rising in this segment. One example is Alibaba. The Chinese company, founded in 1999, has since become a retail juggernaut in the Eastern Hemisphere and is rapidly making waves in the U.S., with one of its subsidiaries, Taobao, recently turning into the second biggest retailer on the globe, only surpassed by Walmart. Another rising player is Wish, which specializes in mobile shopping, with customers carrying out purchases through a robust smartphone app. Based in San Francisco and founded by Peter Szulscewski, a computer

scientist and former Google employee, the company recently raised nearly $600 million from investors, among them JD.com, China’s second biggest online retailer. Perhaps not surprisingly, Puerto Rico government officials have tried to capture a slice of that lucrative e-commerce pie for tax revenue purposes. Legislation on the matter has also been brought about due to complaints from local retailers, who have argued that online shopping constitutes an unfair advantage over stores with a physical presence on the island. This is because the current 11.5% sales & use tax is not charged when a retailer does not have a physical presence in Puerto Rico. A legal framework to collect sales taxes from online shopping retailers has been in place since 2013. However, the results were mixed, with original estimates of $20 million annually in tax revenues reportedly falling far short of the mark. A renewed push towards charging for online

Amazon warehouse in Madrid, Spain

purchases took place last June, when lawmakers discussed a tax reform that would replace the sales & use tax with a value-added tax system, but the effort was largely ineffective. Other U.S. jurisdictions have also had difficulties enforcing tax collection on online retailers, especially in cases where the retailer in question does not have a physical presence in the jurisdiction. Combined with that, experts have said that Puerto Rico’s Treasury Department is woefully underprepared to carry out an overhaul of its local tax system, much less attempt to police the vast online wilderness. No matter the cause, subsequent attempts to secure tax revenues from e-commerce outlets may prove to be a case of too little, too late. “Two years ago, we conveyed our message to the local government administration, specifically the Senate, but they did not listen,” said ICSC’s Oliveras. “I think that at this juncture, it would be fair to say ‘I told you so.’”

| Thursday, APRIL 14, 2016

ECONOMY

BUSINESS BRIEFS

Debt Moratorium Act in the Spotlight BY JOSÉ L. CARMONA j.carmona@cb.pr

Moody’s Says Evertec’s Delay is Credit Negative Moody’s Investors Service has said that Evertec Group LLC’s parent company Evertec Inc.’s announcement last month that it expects further delays in filing its 10-K form for the fiscal year ended Dec. 31, 2015 is credit negative. However, Evertec Group’s existing ratings, including its B1 Corporate Family Rating and the B1 ratings for its senior-secured credit facilities, as well as the stable ratings outlook, are not affected at this time, Moody’s indicated. As previously reported by Caribbean Business, the San Juanbased electronic transactionprocessing firm announced last month it would restate its quarterly financial statements for 2013, 2014 and 2015 as a result of an erroneous accounting treatment. P.R. CofC.: ‘Moratorium Act is Disastrous’ Puerto Rico Chamber of Commerce (CofC) President José Vázquez Barquet said April 7 the institution declared Act 21 of 2016, better known as the Moratorium Act and signed by Gov. Alejandro García Padilla on April 6, as “unacceptable, disastrous” as it violated the Constitution of Puerto Rico, undermined contractual relations and further affected the island’s business climate. “Puerto Rico’s Constitution needs to be respected. Statechartered credit unions, investors, creditors and everybody else that trusted in Puerto Rico to make it a more prosperous place need to be respected as well. The people of Puerto Rico deserve respect and we categorically reject any intent

to undermine any thread of life left in our economic system,” Vázquez Barquet said, adding this is one more example of how recommendations from economic development experts given to the governor and the legislative branch are being ignored. Cossec: Co-ops Ready to Soften Moratorium’s Blow The Cooperatives Supervision & Insurance Corp. (Cossec by its Spanish acronym) is working alongside the island’s state-chartered credit unions, or co-ops, to find alternatives and solutions to mitigate the effects of the fiscal emergency declaration, or Moratorium Act, signed last week by Gov. Alejandro García Padilla, which could impair their financial health, said Executive President Daniel Rodríguez Collazo. According to Rodríguez Collazo, some of the strategies the agency is undertaking include meetings with co-op leaders and representatives, economists and finance experts who can shed light on how to mitigate the measures taken by the government of Puerto Rico. The Cossec top executive asked co-op members to dismiss speculations and have trust in the solvency, liquidity and strength in what he described as one of the island’s safest economic sectors. Agricultural Biotechnology Industry, UPR-RUM Sign Collaborative Agreement The Puerto Rico Agricultural Biotechnology Industry Association (Prabia) and the University of Puerto Rico-Mayagüez campus (UPR-RUM by its Spanish acronym) on April 6 signed a collaborative agreement that will benefit the

agronomists who graduate from the educational institution each year. The objective of the agreement is to further education and research in the agricultural biotechnology industry through initiatives that include strengthening academic curricula, developing innovative technologies and hosting conferences, symposiums, workshops, internships and more. Part of the agreement between Prabia and UPR-RUM features efforts such as AgBio workshops for students and faculty; student access to the facilities of Prabia member companies for research purposes; developing a Prabia scholarship program; recruiting students for employment at Prabia member companies; internship programs, and more. GM Security signs strategic agreement GM Security Technologies, a leading organization in secure cloud computing, big data and integrated security, announced last week a strategic agreement with the Puerto Rico Science, Technology & Research Trust and the Universidad Politécnica de Puerto Rico. The partnership will help launch an innovation and incubation “cluster” for cybersecurity workforce education, training and career development that in the future will serve to meet the needs of all vertical industries, both in Puerto Rico and the rest of Latin America. Héctor Guillermo Martínez, executive vice president, Office of Strategy & Development, at GM Security Technologies, said the initiative will prepare young Puerto Ricans for the working world and help them remain in Puerto Rico for career growth in

“Puerto Rico’s Constitution needs to be respected. State-chartered credit unions, investors, creditors and everybody else that trusted in Puerto Rico to make it a more prosperous place need to be respected as well.” —José Vázquez Barquet, Puerto Rico Chamber of Commerce president

this sector, as well as export these in-demand services to the rest of Latin America. $300 Million Loss in MA funds to be Mitigated Puerto Rico will be able to mitigate the projected $300 million cut in Medicare Advantage (MA) funds due to a temporary allocation that would alleviate some of the impact from the cut to go into effect in 2017, based on the recent Rate Announcement & Call Letter from the Centers for Medicare & Medicaid Services. “The disparity in payment persists, with Puerto Rico MA base rates 38% below the lowest state for

2017. Under the 2017 rate structure, baseline monthly rates for MA will still drop to $473 per beneficiary, from $488 in the prior year, so unfortunately, no ‘permanent fix’ [has been] given to the island yet, and the historical funding inequities for Puerto Rico continue,” explained Jim O’Drobinak, president of the Medicaid & Medicare Advantage Products Association. Based on an initial analysis of the Call Letter, MA rates in Puerto Rico are expected to range from an overall -1% reduction to a 1.25% increase, depending on how the impacted changes relate to the Stars-bonus calculation rating system for individual MA contracts.

ECONOMY

Thursday, APRIL 14, 2016 |

finance p

WINNERS OF THE WEEK STOCK Triple-S Management Corp.

52-wk 52-wk PRICE PRICE SYMBOL LOW HIGH 4/1 4/8 CHANGE GTS 17.34 27.23 25.44 25.74 0.30 q

LOSERS OF THE WEEK STOCK Popular Inc. Evertec Inc. OFG Bancorp First BanCorp

SIN COMILLAS

52-wk SYMBOL LOW BPOP 22.40 EVTC 11.27 OFG 4.56 FBP 2.06

52-wk HIGH 35.81 23.12 17.25 6.76

PRICE 4/1 28.39 14.04 6.97 2.89

PRICE 4/8 26.68 13.22 6.32 2.66

CHANGE -1.71 -0.82 -0.65 -0.23

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M -0.31% -0.32% -0.46%

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WINNERS & LOSERS WEEKLY PERFORMANCE OF PUERTO RICO STOCKS

Sin Comillas is a Spanish-language digital media website that specializes in business news in such areas as economics, banking, planning and tourism. Sin Comillas was founded in 2010 by economist and journalist Luisa García Pelatti.

WINNERS FOR THE WEEK 52-wk STOCK SYMBOL Weekly Comment on Puerto Rico LOW Stocks

52-wk

PRICE

HIGH

12/31

1/8

CHANGE

Propelled by a strong rally -in crude -oil and energy shares, U.S.- stocks bounced back last Friday. However, the upswing was not strong enough to prevent the top three indexes from registering weekly losses, as investors LOSERScautious FOR about THE the WEEK remained upcoming earnings season. Most analysts are projecting a third-straight52-wk quarterly decline PRICE in earnings at Standard 52-wk PRICE & Poor’s (S&P) 500 companies. Profits for S&P companies are expectSTOCK SYMBOL LOW HIGH 12/31 1/8 CHANGE ed to have declined 7% to 8% in the first quarter of this year. U.S. crude oil settled last Friday more than 6% higher after data showed lower U.S. Popular Inc. BPOP 25,80 35,83 28,34 25,84 -2,50 stockpiles. The news drove a 2% gain in the S&P energy index. Meanwhile Federal Reserve Janet Yellen last Thursday the Triple-S Management Corp.Chairwoman GTS 17,34 27,07 said23,91 22,07 -1,84U.S. economy was on a “solid course” while New York Fed President William Evertec Inc. said one dayEVTC 23,12 16,74 approach 15,47 to-1,27 Dudley later that14,93 a cautious and gradual raising rates was appropriate. For the week, the Dow Jones Industrial Average OFG Bancorp OFG 6,25 17,83 7,32 6,30 -1,02 lost 1.2% to 17,576.96. The S&P 500 erased 1.2% to 2,047.60, while the 4,850.69.2,97 The S&P6,76 500’s weekly was its-0,26 biggest FirstNasdaq BanCorp fell 1.3% toFBP 3,25 loss2,99 since early February. The index had mostly rallied since mid-February as oil prices rebounded and worries over China eased. After posting a moderate gain the previous week, the Government DeWeekly on Puerto Ricoclosed Stocks velopment Bank’sComment Puerto Rico Stock Index (PRSI) last week in the red, dragged down by the commonwealth’s fiscal woes. For the week, the PRSI lost 92.97, or 5.65%, to close at 1,579.27. Last week’s sole gainer Ghvslwh#d#vwurqjhu0wkdq0h{shfwhg#X1V1#mrev0jurzwk#uhsruw#iru#Ghfhpehu/# was Triple-S Management Corp., which rose 30 cents, or 1.18%, to close wkh#Vwdqgdug#)#Srruġv#+V)S,#833#Lqgh{#dqg#Grz#Mrqhv#Lqgxvwuldo#Dyhudjh# at $25.74. Topping the list of nongainers was OFG Bancorp, which erased srvwhg#wkhlu#zruvw#Ľyh0gd|#vwduw#wr#d#|hdu#rq#uhfrug#odvw#Iulgd|/#rq#frqwlq65 cents, or 9.33%, to close at $6.32. It was followed by First BanCorp, xhg#frqfhuqv#d#vorzgrzq#lq#Fklqd#frxog#gdpdjh#wkh#joredo#hfrqrp|1#Dw# which fell 23 cents, or 7.96%, to close at $2.66. Shares of Popular Inc. wkh#hqg#ri#wudglqj#odvw#Iulgd|/#wkh#Grz#ihoo#4135(/#wkh#V)S#833#orvw#413;(# edged down $1.71, or 6.02%, to close at $26.68. Evertec Inc. sank 82 cents, or 5.84%, to close at $13.22. dqg#wkh#Qdvgdt#Frpsrvlwh#gursshg#31<;(1#Wkh#zhhno|#ghfolqhv#rq#wkh#V)S# -

dqg#wkh#Grz#zhuh#wkh#odujhvw#vlqfh#Vhswhpehu#5344/#dqg#wkh#odujhvw#rq#uhBy José L. Carmona

frug#wr#pdun#wkh#vwduw#ri#d#|hdu1#Gdwd#uhohdvhg#e|#wkh#X1V1#Exuhdx#ri#Oderu# Senior Reporter, Banking/Finance Caribbean Business Vwdwlvwlfv#vkrzhg#X1V1#qrqidup#sd|uroov#lqfuhdvhg#e|#5<5/333#lq#Ghfhpehu#

dqg#wkh#mreohvv#udwh#khog#vwhdg|#dw#8(1#Lq#dgglwlrq/#X1V1#sd|uroov#iru#Rfwrehu# dqg#Qryhpehu#zhuh#uhylvhg#wr#vkrz#83/333#pruh#mrev#fuhdwhg#wkdq#suhyl-

Mossack Fonseca Strolled Through Puerto Rico Looking for Clients

Public-Debt Audit Committee to Hold First Meeting Next Week By OMAYA SOSA PASCUAL Center for Investigative Journalism

offices in 35 countries and has arrest warrant for an alleged specialized in creating anonymoney-laundering scheme under mous companies and offshore the command of former Panama bank accounts for clients that The Panamanian multinationPresident Ricardo Martinelli. include a long list of the rich and al law firm Mossack Fonseca is According to the examined docufamous, as well as politicians and rarely known by the majority of ments, in 2008, Rivera ordered criminals from around the world. Puerto Ricans, but Puerto Rico MF to build an “offshore” corpoWith regard to Puerto Rico, is not exactly unknown to the ration, giving him the choice of MF has served a number of Puerlaw firm. possible venues in the British Virto Rican clients directly, such as More than 6,000 internal docgin Islands, Seychelles, the BahaOmega Engineering, Banco Popuments of the controversial law mas, Samoa or Panama. He chose ular of Puerto Rico, GlobalTek firm mention Puerto Rico, a few Panama and requested the name Puerto Rico Ltd. and Galephar of their businessmen and comOESE Financial Panama Inc. panies, and a dozen of the main Puerto Rico Ltd. Galephar Puerto Rico Ltd. was law firms in San Juan, according Omega Engineering S.E. is an investigation and pharmaceutiSxhuwr#Ulfr#Vhqdwh#Suhvlghqw#Hgxdugr#Ekdwld#fdoohg#iru#wkh#Ľuvw#phhwlqj#qh{w#Wxhvgd|/#Mdq1#4</#ri#wkh#Sxeolf# to research by the Center for Inthe construction company that cal product-development corpoGhew#Dxglw#Frpplwwhh1#Wkh#frpplwwhh#zloo#h{dplqh#dqg#hydoxdwh#wkh#klulqj/#uhĽqdqflqj#dqg2ru#uhqhjrwldwvestigative Journalism (CPI by started the controversial Paseo ration registered in Puerto Rico lqj#surfhvv#ri#Sxhuwr#Ulfrġv#sxeolf#ghew/#wkh#ruljlq#dqg#ghvwlqdwlrq#ri#uhvrxufhv/#dv#zhoo#dv#wkh#shuirupdqfh#ri# de Puerta de Tierra, and at the its Spanish initials), as part of the in 1987, originally organized in the surjudpv#Ľqdqfhg#zlwk#lqwhuqdo#ru#h{whuqdo#ghew1#Wkh#Ľuvw#phhwlqj#zdv#ruljlqdoo|#vhw#iru#Ghfhpehu#exw#zdv# moment, the president & CEO 11.5 million files that were leaked islands of St. Vincent & Grenafdqfhoohg1#Wkh#Sxeolf0Ghew#Dxglw#Frpplwwhh#zdv#fuhdwhg#wkurxjk#Dfw#<:#ri#5348#lq#Mxo|/#dqg#kdv#wr#uhqghu# of this company, Oscar Rivera, to the International Consortium dines by Arthur Deboeck; the uhsruwv#ri#lwv#shuirupdqfh#hyhu|#vl{#prqwkv1# is being accused by the Panama of Investigative Journalists. Justice Department and has an Mossack Fonseca (MF) has Continues on next page Wkh#frpplvvlrq#kdv#wr#ghĽqh#wkh#phwkrgrorj|#wr#frqgxfw#wkh#dxglw#ri#Sxhuwr#Ulfrġv#':3#eloolrq#ghew#dv#rughuhg#e|#odz/#fuhdwh#d#gdwdedvh#wkdw#doorzv#iru#doo#pdqqhu#ri#dqdo|vlv#uhjduglqj#wkh#lqghewhgqhvv#surfhvv#dqg#

ECONOMY

| Thursday, APRIL 14, 2016

SIN COMILLAS Continues from previous page

company was “cancelled” in 2014. In 1995, Deboeck also incorporated Galephar Pharmaceutical Research in Puerto Rico, which is in the same line of business. GlobalTek Puerto Rico Ltd. was registered in 2002 as a foreign corporation with offices in Santurce, San Juan, but after that date, no activity has been reflected within the P.R. State Department; therefore, the company was apparently “cancelled” as well. In that same year, MF registered the company in the British Virgin Islands. The CPI was not able to determine what kind of commercial activity the company dedicated or dedicates itself. Popular entrusted MF with jobs related to purchasing the technological development company T.I.I. Smart Solutions in Costa Rica, incorporated in the [U.S.] Virgin Islands, by Popular International Bank, the transference of such shares to Popular Inc., and those of Popular Inc. to Evertec Latin America, and the subsequent incorporation of the new T.I.I. Smart Solutions resulting from the transaction. In March 2009, MF personnel completed an analysis of the principal law firms in Puerto Rico to determine which would be visited

during a search for new clients. “With the information I could find, the most important…are: (1) McConnell Valdés; (2) Fiddler González & Rodríguez; (3) O’Neill & Borges; (4) Cancio, Nadal, Rivera & Díaz; [and] (5) Pietrantoni Méndez & Álvarez. Sofía Rodríguez can give us the prospectus and the clients in Puerto Rico that appear in the database to see if the previous ones are included and also, to add more possible contacts,” reads one of the internal emails sent March 30, 2009 by Humberto Urroz, director of business development at MF. The five law firms mentioned were contacted, as well as Fernández, Collins & Rivero-Vergne; Nigaglioni & Ferraiuoli; PellotGonzález; and Ferraiouli, Torres, Marchand & Rovira, as evidenced by subsequent exchanges. Attorney Samuel Céspedes, of McConnell Valdés, indicated in a telephone interview that he does not recall the meeting with MF personnel, nor does he remember the name of the firm, but that it was possible for the meeting to have taken place, since external law firms regularly visit McConnell Valdés to present their services. However, he assured that they have never conducted any business with MF and that the Panamanian law firm is not a

member of the two international associations with which they have done business: Lexmundi and the Ibero-American Association of Lawyers. For his part, attorney Fernando Rovira, of Ferraiouli,

Torres, Marchand & Rovira, said he remembered the visit and having participated in the meeting, but it was “inconsequential,” and his firm also did not do any business with MF. According to him, MF personnel presented their

New Housing Sales Decline 24% in February By SIN COMILLAS

In February, only 89 new homes were sold in Puerto Rico, 24% less than the same month last year and the lowest number in nine months, according to statistics from the Financial Institutions Commissioner’s Office (OCIF by its Spanish acronym). On the other hand, sales of existing homes increased 1% in February, reaching 685. In total, 774 homes were sold in February, 2.6% less than last year.

services and incorporation in Panama and put themselves at the disposal of Rovira’s law firm if they had any interested clients. “We did not have business with them, and we have not heard of them ever since,” he affirmed. n

During the first two months of the year, total sales have decreased 5.8%, swept away by a big drop in new housing sales (-16.4%), while sales of existing homes decreased 3.9% during the same time. The average price of a new home in Puerto Rico was $153,442, which was 10.3% less than February of last year. On the other hand, the average for an existing home fell 3.7% to $144,218. In 2015, 1,446 new homes and 8,435 existing homes were sold, or a total of 9,881 homes islandwide, according to OCIF data. The number of homes sold last year was up 3.4% over sales in 2014, which was the lowest in four years. According to a Caribbean Business report (Sept. 18, 2015), due to the massive outmigration to the U.S. mainland that Puerto Rico has experienced in recent years, about 22% of the housing units on the island are vacant. n

ECONOMY

Thursday, APRIL 14, 2016 |

POLL

Not surprisingly, males frequent beer buyers

Beer Remains Puerto Rico’s Most Popular Alcoholic Beverage Medalla Most Purchased Brand BY ROSARIO FAJARDO r.fajardo@cb.pr

As some readers may have been aware, April 7 was National Beer Day in the U.S. With that in mind, let’s take a look at how Puerto Rico consumers have been behaving in terms of beer consumption. According to this week’s Gaither International survey, about 27% of the local population who consume alcoholic beverages state that their preferred beverage is beer. Gaither asked local residents whether they have purchased beer during the past 30 days and about a quarter of them responded “yes” (26%). The male population, in particular, accounted for 64% of those who said they bought beer in the past month. When asked how much beer they consumed, 61% said they did not consume any during the past week, but among those who did, 16% reported

consuming 1-6 units—one unit is equivalent to a can, bottle or glass of beer—while 11% said they had 7-14 units and 9% said they had 15 or more units of beer. In contrast, the female population accounts for 36% of those who bought beer in the past month, and their consumption levels are much lower than that of the male population. About 80% of them said they did not have any beer during the past week, but among those who did, 10% of them said they only had 1-6 units, 3% had 7-14 and only 2% had 15 or more units of beer. Respondents in the higher socioeconomic levels had a higher purchasing incidence than those in the lower socioeconomic levels. Among age groups, the one with the lowest purchase incidence was that of those ages 18 to 34 with a 28% purchase incidence, and the age group with the largest purchase incidence was that of ages 35 to 54 with 41%, followed by the 55-

plus age group with 31%. The top mentioned beer brands respondents said they have purchased during the past month were (in order of most mentions): Medalla, Coors Light, Busch Light, Heineken, Corona and Michelob. “When we asked those who prefer to drink beer where they usually consume alcoholic beverages, most of them answered they prefer to drink during gettogethers at a friend or family member’s household, at home or at dive bars (locally known as chinchorros),” said Melanie Dederick, a client service associate at Gaither International. Interestingly, 27% of those who responded that beer is their preferred alcoholic beverage said they did not drink any during the past week, while 36% of those who did, said they had at least 1 to 6 units of beer. “Nevertheless, when we asked those who claim to prefer other types of alcoholic beverages if they had

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consumed any beer during the past week, more than half of respondents said they did not, but 18% said they had at least 1 to 6 units of beer,” Dederick said. The results are from Gaither International’s Media Brand Profiles tracking survey, which interviews more than 80 people daily from among a representative sample of Puerto Rico’s population 12 years and older. Polling is conducted by Gaither International and the results are reported exclusively by Caribbean Business.

Respondents in the higher socioeconomic levels had a higher purchasing incidence than those in the lower socioeconomic levels.

| Thursday, APRIL 14, 2016

POLITICS

PUERTO RICO

Lúgaro, Independent Candidate for Governor, Unveils Comprehensive Government Reforms BY ISMAEL TORRES i.torres@cb.pr

Alexandra Lúgaro, age 34, is a lawyer and entrepreneur in the field of education, based in San Juan, and is running as an independent candidate for governor in the Nov. 8 general elections. The daughter of a private entrepreneur also linked to the country’s education, Lúgaro said her passion is education and that she spends much of her political discourse on this issue because she believes that “without education or justice, there is no country.” Independent candidate The March 17, 2015, announcement of her candidacy initially generated disbelief, surprise and skepticism among many because she was not known for political activism before she stated her intention to seek an independent candidacy for governor for the 2016 general elections, which went against the grain of traditional partisan efforts. Besides the other indpedent candidate for governor—bakery entrepenur Manuel Cidre—those seeking the gubernatorial candidacy from Puerto Rico’s registered parties include dentist David Bernier for the Popular Democratic Party (PDP); lawyer and legislator María de Lourdes Santiago for the Puerto Rican Independence Party (PIP); university professor Rafael Bernabe for the Working People’s Party (WPP); and whomever is elected as candidate for governor from the New Progressive Party’s (NPP) primaries on June 5,

between scientist Ricardo Rosselló and attorney and P.R. Resident Commissioner Pedro Pierluisi. In contrast to other candidacies, Lúgaro’s transmits certain freshness in a harsh political atmosphere, which allows her to very calmly make her proposals outside of the party politics that ordinarily result in scandals when they are not concerns and suspicions. With enthusiasm, she expresses that she hopes to strengthen her presence on the Web, where she says she has more than 250 followers. That is why she says that if elected governor, she would not reside in Santa Catalina Palace, known as La Fortaleza, in Old San Juan because it is a building that would better serve as a museum and not as an official residence because of its maintenance costs. “In moments when there is no money in public coffers, it does not make sense at all,” she said. Government reforms Lúgaro, who presents her solid academic formation in the legal, administrative and financial fields, also believes that due to the government’s critical fiscal situation, the island’s 78 municipalities should be reduced to eight regions that would operate administratively as large municipalities. She would also reduce from four to two years the terms for legislators, and would increase from for four to six years the term for governor with a recall mechanism through which voters can remove the governor from office if he or she does not make the grade.

Education reforms In addition, she would promote complete educational reform, with teachers and students at its center, as well as simplify the overall educational system. She said that due to the government’s fiscal crisis, the electronic vote count—to be implemented in the general primaries and in the following general elections in November— would no longer happen. “The Dominion company, which is in charge of the electronic vote count, is doing everything possible to rescind its contract with the State Elections Commission because the company isn’t getting paid,” she said. As an independent candidate, Lúgaro does not have running-mate candidates for resident commissioner, the House of Representatives or the Senate, or for mayors of the island’s municipalities. “I aspire to steer the country with people of all parties, the best people. I want to lead a government team with the best people of the political parties, outside of the parties,” she said.

Alexandra Lúgaro, independent candidate for Puerto Rico governor

The elections & the CEE She does not count on traditional electoral-political structures because she believes that to achieve the endorsements needed for her candidacy (some 26,903 signatures), she had to have the support of about 1,000 people, who voluntarily joined to work with her and reached that goal. “For my campaign, I rely on hundreds of people on a voluntary level, and we are already working to have 30,000 voting center functionaries who will be on post at all of the 7,555 voting centers since we are not going to count on the electronic vote count system, because it will not exist, and there is

“The government does not make decisions for fear of losing votes or makes them a function of the votes they would yield, without taking into account the effectiveness of the decisions that are adopted.” —Alexandra Lúgaro

no money to pay for it,” she said. She is concerned about the State Elections Commission (CEE by its Spanish initials) staging the general primaries June 5 and the general elections Nov. 8 because she does not see where the needed funds to cover their costs have been identified. Lúgaro is sure her candidacy responds to a need in Puerto Rico to have candidates from outside of the traditional political parties, who break from the existing party politics, besides needing to have people who are experienced in finance, economy and law. “In my case, I have knowledge about the educational system’s framework,” she said. Her decision to aspire as an independent candidate also responds to the impossibility of working with the existing educational and justice systems because “the government does not make decisions for fear of losing votes or makes them a function of the votes they would yield, without taking into account the effectiveness of the decisions that are adopted,” she said. She added that her decision to

Continues on page 24

POLITICS

Thursday, APRIL 14, 2016 |

PUERTO RICO/U.S. Continued from page 23

aspire to the governor’s office is also to give the island an efficient government that can provide continuity to the efforts that are implemented, both in the short and the long run. She feels confident the independent governor she is proposing will be able to direct functionaries from all other parties in projects that are coherent and viable with the few resources left for Puerto Rico.

Lack of continuity Regarding the current public administration, she believes the greatest problem it faces is a lack of continuity that results from party politics, or “partidocracy,” where every four years the party in office is changed and the new party comes in to destroy all that the previous party had achieved, initiating new projects, sacking all functionaries from the former party in charge and replacing them with their members, compounded by the fact that the practice of the

Bio Data Name: Alexandra Lúgaro

Date of birth: June 10, 1981, San Juan Political party affiliation: Independent gubernatorial candidate Alma mater: University of Puerto Rico-Río Piedras Campus, Bachelor’s degree in finance, marketing & economics, (2002); Juris Doctor, UPR Law School, (2005); Universidad Complutense de Madrid,

Focus on Primaries in the Northeast

Big Apple is the big Prize With Huge Delegate Haul at Stake BY ISMAEL TORRES & ROSARIO FAJARDO

i.torres@cb.pr; r.fajardo@cb.pr

With significant numbers that place them at the head of their respective races, presidential hopefuls Hillary Clinton, of the Democratic Party, and Donald Trump, of the Republican Party, will enter the next stage in the primary contest by focusing their eyes on the heavily populated Northeast, with both frontrunners leading the polls in their respective races in New York and Pennsylvania.

New York is widely considered to be Clinton’s adopted home state, as she served as New York’s U.S. Senator from 2001 to 2009. Real-estate mogul Trump, meanwhile, was born and raised in Queens, New York. Clinton enters the New York primary on April 19 with 1,756 delegates of the 2,383 she needs for the Democratic nomination, while Trump has 748 delegates of the 1,237 required for the Republican nomination. Bernie Sanders, Clinton’s opponent in the Democratic Party, has 1,037 delegates after having won the last six primaries.

merit system has been eliminated from public service, where political positions are scaled according to the criteria of party politics. Her government proposal is based on three fundamental pillars: government system reform, economic development and education. “I do not pretend that I can fix Puerto Rico in four years, but I can take some forward steps to improve the country’s critical situation, supported by the three main points in my government proposal,” she said.

Masters of Law, (2014), Ph.D. in finance and taxation law (2016) Professional experience: She has managed several entities from which she has led science-based educational initiatives in Puerto Rico, improving the academic achievement of thousands of students in more than 5,000 schools on the island. As a criminal lawyer, she has represented more than 100 pro bono clients.

In the Republican camp, Ted Cruz has 533 delegates and Ohio Gov. John Kasich has 144 delegates. Florida Sen. Marco Rubio, who pulled out from the race, has 173 delegates who could be freed in the Republican National Convention that will be held in Cleveland from July 18-21. After the New York primaries on April 19, both parties will hold primaries on April 26 in Connecticut, Delaware, Maryland, Pennsylvania and Rhode Island. There is a lot at stake in the six East Coast states, particularly for Clinton and Sanders, as candidates are vying for 631 Democratic delegates and 267 Republican delegates, according to CNN. For the Democratic race, New York is the biggest prize of the six, with 247 delegates at stake, followed by Pennsylvania with 189. For the Republicans, the biggest number of delegates at stake is also in New York, with 95, followed by Pennsylvania with 71. The Democratic National Convention will be held in Philadelphia from July 25-28.

Oye Como Va There’s nothing like an election year to spice up pop culture with quotable quotes. This weekly section—Oye Como Va, roughly translated as “this is how it goes”—features the most entertaining statements from the campaign trail in Puerto Rico and the United States. The picks range from the sublime to the ridiculous. —Executive Editor P.S.R.

Pidiéndole peras al olmo “In such critical times, Puerto Ricans cannot be hostages of uncertainty and constant speculation. It is my constitutional responsibility and as representative of the people to demand that transparency. My point is a simple one and I hope that the Executive understands it.” Senate President Eduardo Bhatia asks Gov. Alejandro García Padilla for clarity in the management of the fiscal moratorium law. sticks and stones “His expressions, coated in a typical character of opponent, represent generalities in issues that we are already addressing, such as acting in a transparent manner and explaining to the country in the most simple manner, the complex issues we are working on. It does not warrant a reply.” Gov. Alejandro García Padilla’s comments on criticism by Senate President Eduardo Bhatia on management of the issue of the moratorium bill.

it takes a village “For my campaign, I rely on hundreds of people on a voluntary level, and we are already working to have 30,000 voting center functionaries who will be on post at all of the 7,555 voting centers since we are not going to count on the electronic vote count system, because it will not exist, and there is no money to pay for it.” What does independent candidate for governor, Alexandra Lúgaro, know about the electronic vote counting that the rest of us mortals do not know? Same as it ever was “That was then; now maybe he would say something else because things change.” What former Justice Secretary Sánchez Betances said regarding the possibility of former Gov. Hernández Colón changing his opinion about what sovereignty is—he said it resided in Congress in 1989—in light of recent developments in the U.S.

Still mingos?

| Thursday, APRIL 14, 2016

HEMISPHERE

LATIN AMERICAN AFFAIRS

Panama Papers Tsunami and its Far-Reaching Waves

Panama City

BY JUAN A. HERNÁNDEZ j.hernandez@cb.pr

Within the first 24 hours after being printed in the Western Hemisphere, the global exposé of the Panama Papers claimed its first victim in the Americas, as the president of an anti-corruption organization in Chile, bent on promoting transparency and accountability in government and private sectors, was forced immediately to resign. The revelation that Gonzalo Delaveau, the president of Chile Tansparente—the Chilean branch of Transparency International— could be involved in a shady business scheme to avoid the transparency and accountability the organization has so ardently defended, came down as a bucket of ice water on his head. “These structures may not be to everyone’s liking, but they are perfectly legal,” said Delaveau during

an interview, when he also claimed that he used offshore shell companies as an option to avoid double taxation. Since 2009, Delaveau has been entangled in a series of communications with Panamanian law firm Mossack Fonseca, the source of the infamous documents, in which the latter was trying to obtain documentation regarding the owners of Turnbrook Corp., an offshore entity allegedly owned by some of Delaveau’s clients, who for reasons unknown, had failed to provide the required information for more than a year. When the information was finally provided, it turned out that the owner of Turnbrook—Gemma Properties Group Ltd.—was a company registered in the British Virgin Islands and was also owned by Delaveau’s clients, whose alleged intention was to exchange shares from each corporation. The transaction is similar to the “shell

game” street scam whereby the unwary victim unsuccessfully tries to guess under which shell a little ball is hidden. But while Delaveau’s resignation and Transparency International’s statement about many secret corporations being used to “hide money trails and support corruption” could be construed as accepting responsibility, it seems to be a mere administrative decision. “It’s good to step aside,” said Delaveau about his resignation. Truth be told though, his term in office would have expired in about two weeks. Fallout in Argentina In Argentina, President Mauricio Macri, who assumed office in December 2015, was implicated in the global scandal as a member of the board of an offshore company registered in the Bahamas since 1998. According to the Panama Papers,

Fleg Trading Ltd. operated with Macri at the helm as vice president & director, until 2009, his first year as head of government of Buenos Aires. He never disclosed his professional relationship with this company while he held office as government head of Buenos Aires, even though he did mention that he had assets in the U.S. According to a presidential spokesperson, the Argentine president did not mention his relationship with Fleg Trading because he did not have any capital interest in the company, which was part of his family’s holdings. “It is a legal operation… It was in 1998, and the [company] ceased operations in 2008 because the investment was not made. Everything is perfect, there is nothing strange,” said Macri in an interview last week. Up next, Brazil The Panama Papers dossier lists at least 107 offshore companies linked to individuals and/or entities involved in the Petrobras scandal, Brazil’s largest corruption investigation involving Petróleo Brasileiro S.A., the country’s semi-public oil company and other large firms. Among the documents leaked from Mossack Fonseca are several identifying specific offshore companies that have direct business relations with big Brazilian construction and development corporations now accused of paying bribes to top

Petrobras executives and public officials in exchange for multimillion-dollar contracts. More than 100 people have been arrested in the past two years for their alleged involvement in the Petrobras corruption scheme. The documents also reveal the Panamanian law firm created, managed and sold offshore companies owned by politicians and party leaders, or their families, from at least seven political parties, including the Partido del Movimento Democrático Brasileiro, which recently severed ties with the ruling Partido dos Trabalhadores. Other prominent political and/ or business leaders in Mexico, Peru, Colombia and Venezuela, among other Latin American countries, have also been mentioned in the Panama Papers. Many of them have denied any wrongdoing and some have characterized the leaked information as “concocted lies.” The Panama Papers comprise more than 11 million documents obtained by an unnamed source from the database of the Panamanian law firm Mossack Fonseca and leaked to the German newspaper Süddeutsche Zeitung, which shared the data with the International Consortium of Investigative Journalists and over 100 news agencies around the world. The result of their collective evaluation of the documents was simultaneously published worldwide on April 3.

HEMISPHERE

Thursday, APRIL 14, 2016 |

FEDERAL AFFAIRS

Lawmakers charged Congress will fast-track federal oversight-board bill to ensure payment to bondholders

Lawmakers: Oversight Board Will go to Markup Factions in U.S. House Could Pose Impasse

BY EVA LLORÉNS VÉLEZ e.llorens@cb.pr

As early as this week, the U.S. House of Representatives is slated to vote on legislation that would create a fiscal oversight board with extreme powers over Puerto Rico as part of a strategy to ensure bondholders can recover their investments. The information was provided by P.R. House Speaker Jaime Perelló and New Progressive Party (NPP) Sen. Carmelo Ríos, who are in Washington this week to lobby against the legislation amid a hearing held by a House committee on the bill, known as “Promesa” or the Puerto Rico Oversight, Management & Economic Stability Act. Ríos told Caribbean Business that lobbyists for bondholders have been using their muscle in the U.S. House Natural Resources Committee to approve the bill with “a very light” restructuring mechanism so they do not lose their ability to go to court to force payments on general obligations. The government has said that without a restructuring mechanism, Puerto

Rico will not be able to get out of the fiscal crisis. As it is, the proposed fiscal oversight board will approve restructuring of entities only after they submit a plan and audited statements. “The idea is to approve this in a fast-track manner so the Senate can pass it before May,” he said, referring to the government’s deadline to make a general obligations payment. The Fiscal Oversight Board under discussion in Congress would have extreme power over Puerto Rico. These powers can be broadly divided in four different categories. First, the board would assume control over Puerto Rico’s fiscal issues, including setting overall spending guidelines as part of a fiscal plan, setting budget spending levels in every agency and taking over all debt issuance. This includes the power to issue debt guaranteed by specific revenue streams, which the board would have the power to pledge in support of the debt. The board would have the power to increase taxes even if the Puerto Rico Legislature opposes such tax increases.

Second, the board would have broad policy-making powers regarding the overall structure, staffing levels, human resources, management, and amount and scope of government services. Third, the board would exercise significant powers over the island’s economic development program through a possible takeover of local tax incentive approvals and government permitting processes. Finally, the board would have broad oversight powers to monitor compliance with the fiscal plan. This includes total access to government information and wideranging subpoena power. The House Republican leadership’s current draft does not provide aid or tools for ensuring sustainable economic development. Without economic development, a long-term plan is doomed to fail, officials say. The board’s powers over fiscal issues would pervade every aspect of Puerto Rico’s government. Its two-tiered mandate is intended to stabilize spending in the short term and put into place a five-year fiscal plan.

To comply with that mandate, the board would have to approve any budgets proposed by the local government. Specifically, the governor would have to submit his proposed budget to the board before presenting it to the Legislative Assembly. Afterward, the budget would pass through the usual legislative process. However, the budget could not go into effect without the board’s final approval. Should no legislated budget go into effect, the board would approve the government’s budget. Historically, the commonwealth has had the power to establish its own tax code. However, the bill would allow the board to recommend tax increases and, if the Legislature refuses them, the board would impose such increases. “This is an unprecedented takeover, since Puerto Rico’s voters have always had veto power over tax increases through the Legislature. The principle of no taxation without representation is a bedrock principle of the United States. Even during colonial times, Americans zealously reserved for themselves the power to refuse tax

increases. And the United States has always respected that principle toward Puerto Rico since civilian government was instituted,” noted Sen. Ángel Rosa, who is running for resident commissioner under the Popular Democratic Party (PDP). Ríos noted that the board consists of “a parallel government with veto power, whose only goal is “to ensure bondholders get paid.” Like the PDP, the NPP says the legislation will not work because it does not contain economic development initiatives. The U.S. House’s fast-track vote on the bill was also prompted by the P.R. government’s decision to enact a debt moratorium into law, which will be repealed if a federal oversight board is approved, Ríos said. Officials say that even if the U.S. Supreme Court rules that the Puerto Rico Debt Recovery Act is constitutional and gives the green light to the debt-restructuring mechanism, it may be too late for the island to take advantage of it once the federal control board over Puerto Rico is appointed.

Photo: Noticel

The board consists of “a parallel government with veto power, whose only goal is to ensure bondholders get paid.” —NPP Sen. Carmelo Ríos

SPECIAL FEATURE April 14, 2016 Pages 27-32

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F E A T U R E

The Time is Now: Hybrid Microgrid Solutions from Rimco Cat BY CB STAFF

Cost-effective electric power has long been a challenge for communities and industrial or commercial installations in Puerto Rico and the Caribbean due to electricity’s high cost. Now a better model is emerging that combines cost-effective renewable energy from wind or solar sources with conventional diesel or gas-fueled generation in a system called a hybrid microgrid. Caribbean islands, with sky-high electricity prices and abundant sunlight and wind, are a natural home for solar and wind power. Hybrid microgrids are wellsuited for a host of applications, including individual buildings, resorts, mine sites, remote villages and small islands. The basic concept is simple. Wind or solar

energy can account for any percentage of the load, and the generator sets can be used to supplement power when conditions are unfavorable, such as during nighttime, for producing energy from renewable sources. Energy storage helps the generator sets respond smoothly to significant fluctuations in output, while maintaining consistent voltage and frequency. For 90 years, customers have depended on the power of Caterpillar for reliable energy, grid backup and sustainable continuous power. Recognizing the benefits of renewable energy in this era of volatile fuel prices, Caterpillar has designed a full range of Cat Hybrid Microgrid solutions from 10kW to 100 MW. Each component of the Cat Hybrid Microgrid solution brings

advantages that strengthen the system as a whole. Renewables Solar photovoltaic (PV) systems, while requiring higher capital and significant space, have minimal operating and maintenance costs once installed. They displace greenhouse gases and other pollutants and strongly contribute to sustainability initiatives. Cat’s microgrids use thin-film technology for the solar panels, which is ideal for hot, humid and dusty environments. Generator sets Generator sets offer high power density, simple-cycle electrical efficiencies, high part-load efficiency and excellent capability to follow loads. They tolerate a wide range of ambient temperatures

Thursday, april 14, 2016

and high altitude without derating, and units can be added in a modular fashion to create systems of substantial size. Energy storage Energy storage is a key enabler of hybrid microgrids, thanks to rapidly advancing technology. The conventional energy-storage system consists of banks of deep-cycle lead-acid, nickel-metal hydride batteries, flywheels or lithium-ion. However, two other energy-storage technologies—ultra-capacitors and rechargeable metal-air—are now gaining favor. The Cat Hybrid Microgrid Solutions system offers traditional lithium-ion as well as rechargeable metal-air for energy storage. Choosing Rimco as a partner Finding a partner with deep experience in power systems will simplify the process of installing and operating a hybrid microgrid.

Rimco, the Cat dealer for Puerto Rico, the Eastern Caribbean islands and Cuba, can provide vital support through all stages of the project, including fast response time, prompt parts delivery and efficient technical support to ensure proper system operation and maintenance. With the low and declining cost of solar PV energy opening new possibilities for clean, reliable and affordable electric power, this is the ideal time to investigate the hybrid microgrid concept as an alternative to conventional power generation. n

ambition to maintain our premier position in the industry by delivering superior customer satisfaction; pursuing cost and operating efficiencies; maintaining proactive environmental awareness; and reinforcing our commitment to continuous improvements in the areas of health and safety and corporate social responsibility,” Marchena said. “Smurfit Kappa continues to be the best positioned supplier of differentiated paper-based packaging solutions in its chosen markets, providing customers with innovative, consumer focused, sustainable and cost-effective packaging and

logistical solutions that help to drive the sale of our customers’ products.” Marchena said that Smurfit Kappa is always looking for new possibilities to expand and in the past six months, the company successfully completed the acquisition of two businesses in California and others in Brazil. Worldwide, Smurfit Kappa has 103,000 hectares of forest plantations in Venezuela and Colombia; 36 mills, 28 of which produce containerboard; 247 converting plants; 51 recovered fiber facilities; and 33 other production facilities. n

Smurfit Kappa Leads With Top-Notch Paper-Based Packaging Solutions BY MARIO BELAVAL DÍAZ As one of the world’s largest integrated manufacturers of paper-based packaging, Smurfit Kappa is committed to the sustainable management of its operations, basing its actions on protecting the environment, promoting social programs that improve people’s well-being and generating economic value. In Puerto Rico, the company serves the corrugated and paper-sacks markets through its Dominican Republic plant and operates a recycling plant in the municipality of Ponce. Furthermore, Smurfit Kappa in Puerto Rico supplies fiber to most export markets with an unparalleled reputation for ethical business practices; the company has been in the fiber supply business

for more than 35 years. “We manufacture paper-based packaging, and our locations are supported by a network of paper, recycling and forestry operations, which consolidates us as a company with a closed cycle,” said Carlos Marchena, sales manager for reclamation & sacks at Smurfit Kappa. With global headquarters in Dublin and regional headquarters in Miami, Smurfit Kappa is one of the leading providers of paper-based packaging solutions in the world, operating in about 370 production sites across 34 countries and with revenue of €8.1 billion (about $9.2 billion) in 2015. The company has operations in 21 countries in Europe and 13 in the Americas, employing a total of 45,000 people. “Our customers are in

continuous demand for new and efficient solutions for their businesses, which has led the company in the past years to not only have better products, but also to be the partner of choice for our customers’ packaging solutions,” Marchena said. “This is due to our strengths in design innovation, understanding our customers’ businesses and our contribution to their supply chains through product efficiency and sustainability.” Smurfit Kappa has also maintained its leadership in the market by developing long-term relationships with customers by providing them with differentiated packaging solutions that enhance customers´ prospects of success in their end markets. “This objective is underpinned by our group’s clearly stated

Thursday, april 14, 2016

Fracking and the Energy [R]evolution By LUIS VALLDEJULI

extract more fossil fuels from below the surface of the earth.

It used to be that only organizations such as Greenpeace would be seen and heard protesting in the streets, demanding governments provide eco-friendly alternatives for energy. It also used to be that people believed such an idea was too far off and expensive, not only for governments, but also for consumers. Today, the discussion remains on the table: What binds us to fossil fuel use and why haven’t we reached a point where renewable energy is practical and applicable? Fossil fuel Fossil fuel is made by the decomposition of animal and plant waste combined with the minerals on earth, plus time—it takes millions of years for fossil fuel to form. In fact, today we are using fossil fuel created before there were dinosaurs roaming the earth. This is because fossil fuel is not renewable; it cannot be replaced or replenished. Because fossil fuel is not renewable, and because humans have used so much of it, it becomes harder, as time goes by, to extract it from below the surface of the earth, from where these fossil fuels are extracted in the form of oil, coal and natural gas. According to livescience.com, most of the energy we use comes from fossil fuel. And most fossil fuel affects our ecosystems

Fracking Fracking is the process of drilling into the earth using a highpressure water mixture directed at the solid rock far below the surface to release the gas inside. The system is also used to create a crack (or fracture) in the solid rock to access difficult-to-reach resources of oil, coal and gas. The problem with fracking, though, is that it destabilizes nature’s balance. Fracking has been blamed for making the core beneath the surface of the earth unstable, thus resulting in tremors around the areas where it is practiced (The Weekday, Jan. 2015).

directly or indirectly. To transform oil or coal into energy, they must be burned. When oil and coal are burned, they release unhealthy fumes into the air. And because natural gas does not have a smell of its own, other chemicals are added so anyone can detect it. Methane—the main component in natural gas—and its added chemicals are by nature highly flammable in addition to creating fumes when burned. One other thing about fossil fuels: Because it is nonrenewable, at some point we will run out of it. This is why the companies that provide fossil fuels have been using the process called fracking to

Renewable energy The alternative to using fossil fuels is found in renewable energy (or green energy) in the form of solar, water and wind energy. While governments are distracted by exploring processes for pumping more fossil fuels from the earth, this policy inevitably leaves far behind the creation and use of renewables. The Energy [R]evolution’s (so coined by Greenpeace) goal is to stop global climate disruption, which is caused mainly by burning oil, coal and natural gas. What is holding back the evolution from fossil fuels to renewables? It is more costly to create renewable energy because

S P E C I A L

technology has not advanced enough to make it equitable or even less expensive To this end, the federal government has created some programs for renewable-energy companies to aid in their research. In Puerto Rico, the Green Energy Incentives Act of 2010 created the Green Energy Fund (GEF). To increase the production of green energy and promote sustainability locally, the GEF offers incentives in the form of rebates to eligible individuals and companies that use applicable

F E A T U R E

technologies and methodologies to forward the change from the antiquated use of fossil fuels for renewable energy. Because fossil fuels are limited and will run out, it is imperative that new sources of energy be found, preferably ones that do not create danger for humans or the planet, according to advocates. The future is in green energy. Federal and state governments must cooperate in this effort, and educate consumers about this important issue. n

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F E A T U R E

Ifco Continues as a Pioneer in its Commitment to Recycling BY CB STAFF Founded in 1967, Ifco Recycling Inc. (Ifco) has had the vision and leadership to foresee the future and become a pioneer in the recovery, classification and packaging of recyclable materials such as paper, cardboard, plastics, concrete, foam, vegetation, and ferrous and nonferrous metals. Ifco, which is the island’s leading recycling firm, services more than 400 customers throughout Puerto Rico, the Caribbean and the continental United States. In Puerto Rico, to provide topquality service to clients, Ifco has four processing plants, in Caguas, Bayamón, Gurabo and Guayanilla, which are fully certified to process all recyclable materials under the most rigorous scrutiny.

With a focus on high-quality service, the company offers clients a wide range of recycling alternatives: residential, commercial and industrial recycling; on-site & off-site recycling; shredding and destruction of confidential materials; vegetation shredding and composting; de-manufacturing; decommissioning and dismantling; demolition; concrete recycling; lead & asbestos abatement; recycling equipment construction; and recycling equipment installation, repair & maintenance. Furthermore, Ifco services some of the largest commercial and industrial accounts, including waste haulers and government dependencies, with an impressive motorized fleet and multiple equipment. This fleet is specifically designed to establish

regular and systematic collection of all recyclable materials. Meanwhile, Ifco’s brokerage service is one of the company’s strongest growing divisions, with brokers purchasing recyclable materials from the island’s major recycling plants, as well as in the Caribbean and the United States, marketing these commodities worldwide. Quality control is a priority at Ifco, and the company has a full department focused on this effort, supervising all materials, which are recycled within its facilities and at other sites. Such performance meets, surpasses and guarantees recycling industry standards and assures client satisfaction. Possessing the most advanced recycling machinery and technology, Ifco handles more than 30 grades of classified materials

Thursday, april 14, 2016

at its processing plants, positioning the company in the forefront of the industry. With a 24-hour maintenance facility, the company ensures not only that its equipment but also its customers’ machinery is kept modern and efficient around the clock. This effort enables Ifco to remain the leading and most competitive recycling firm in the Caribbean. Throughout the years, Ifco’s performance and commitment has been recognized by several prestigious organizations for its leading contributions to both the island’s environmental wellbeing and the recycling industry. Organizations such as the P.R. Solid Waste Management Authority, Chamber of Commerce, U.S. Environmental Protection Agency and Reynolds Aluminum Corp., have been some of the civic, government and charitable groups to recognize Ifco’s industrial and ecological impact on Puerto Rico. As a Minority Business and part of the Puerto Rico

Minority Supplier Development Council, Ifco has also provided benefits to industrial clients. As for Ifco’s future, the company is committed to continuing to explore new materials that can be extracted from the solid waste stream for reuse, which is in line with its primary objective to move a step further in reducing Puerto Rico’s contamination. The company maintains this commitment every day by offering clients the most advanced technologies available and the highest-quality service and products in the market n

| Thursday, april 14, 2016

As Ranked by

PUERTO RICO’S LARGEST RECYCLING COMPANIES (Listed According to Number of Full-Time Employees as of November 2015) Current/ Previous Ranking

Company Name Telephone/Fax Internet/Email Address

Physical Address

No. of Full-Time Employees

Locally Owned Company

Types of Materials Recycled

1/1

IFCO Recycling Inc. (787) 653-4300 / (787) 653-4306 www.ifcopr.com

Bo. Bairoa Hwy. 1, Km. 32.2 Caguas 00725

180*

Yes

Metal, paper, foam & plastic

1967

Guillermo Tous President

2/2

Reciclaje del Norte Inc. (787) 262-0305 / (787) 262-0300 www.reciclajedelnorte.com

Hwy. 2, Km. 88.1 Hatillo 00659

130

Yes

Metal, paper & electronics

1996

Luis Sánchez President

3/3

Olein Recovery Corp. (787) 266-2103 / (787) 893-0224 www.oleinrecovery.com

500 Ernesto Carrasquillo Rd. Yabucoa 00767

115

Yes

Motor oil

2004

Jorge González President

4/6

Carolina Recycling Corp. (787) 273-7639 / (787) 687-0337 www.conwastepr.com

Bo. Mamey Rd. 189, Km. 9 Gurabo 00778

Yes

Paper, plastic & metal

1993

Carlos Contreras President

5/4

Borinquen Metals Corp. (787) 747-5850 / (787) 747-5999 orivera@borinquenmetals.com

Bo. Turabo Hwy. 1, Km. 39.8 Caguas 00725

Yes

Ferrous & nonferrous metal

1981

Ramón Lizardi President

5/6

Schnitzer Steel P.R. Inc. (787) 824-6133 / (787) 824-3503 www.schnitzersteel.com

Bo. Aguirre Hwy. 3, Km. 156.4 Salinas 00751

55*

Ferrous metal

2009

Elsworth Mink Regional General Manager

7/5

Hugo Neu Environmental LLC (787) 765-5858 / (646) 810-3897 www.hugoneuamericas.com

Hwy. 1, Km. 22.3 Guaynabo 00970

Metal, paper, electronics, plastic & cardboard

2010

Mariedy Collazo President

8/10

Oil Energy System Inc. (787) 832-5757 / (787) 832-5780 rodriguezk@oespr.net

256 Concordia St. Mayagüez 00680

Yes

Oil

1997

José A. González President

9/9

Environics Recycling Services Inc. (787) 745-7891 / (787) 286-8151 www.environicsgrouppr.com

Hwy. 1, Km. 39 Caguas 00725

Yes

Oil, glass & electronics

1992

Thomas J. Danner President

10/-

Shred-it Puerto Rico (787) 751-0043 / (787) 759-7352 www.shredit.es

Minillas Ind. Park 449 E St., Suite 2 Bayamón 00959

Yes

Paper, cardboard, electronics, hard drives

1997

Juan P. Valcarce General Manager

11/-

W.R. Recycling Inc. (787) 254-4328 / (787) 254-4328 wrrecycling@hotmail.com

Bo. Bajura Rd. 103, Km. 2.3 Cabo Rojo 00623

Yes

Nonferrous metal, glass, paper, plastics, cardboard,batteries

2002

Waldemar Ramos President

12/11

S murfit Kappa Fibras Internacionales de Puerto Rico Inc. (787) 843-7145 / (787) 812-0540 www.smurfitkappa.com

Reparada Ind. Park A St., Lot 10 Ponce 00730

Paper & corrugated box

1974

Carlos Marchena Operations Manager

* CARIBBEAN BUSINESS estimate Chart is as published in The Book of Lists 2016. The Battery Recycling Co., ranked No. 6 last year, closed operations. Number of full-time employees corresponds to recycling divisions and includes part-time employees where applicable (every two part-time employees = one full-time employee). Unless otherwise noted, all information was provided by the companies. Research by Marilda A. Quiñones del Castillo & Ana D. Ortiz Copyright © 2016 CARIBBEAN BUSINESS

Year Established in P.R.

Top Executive Title

Thursday, april 14, 2016 |

PUERTO RICO’S MAIN RENEWABLE ENERGY PRODUCTS & SERVICES COMPANIES

As Ranked by

(Listed According to Number of Full-Time Employees as of March 2016) Current/ Previous Ranking

Company Name Telephone/Fax Internet/Email Address

Physical Address

No. of Full Time Employees

Main Line of Business

1/1

Máximo Solar Industries (787) 891-8080 / (787) 882-5943 www.maximosolar.com

Bo. Corrales Rd. 459, Km. 2.5 Aguadilla 00603

Photovoltaic solar systems sales & installation

2009

Máximo Torres CEO

2/4

New Energy Consultants & Contractors LLC (787) 946-0522 / www.newenergypr.com

171 Carlos Chardón Ave. Suite 302 Hato Rey 00918

Photovoltaic systems assembly & installation

2008

Alejandro Uriarte CEO

3/3

Universal Solar Products Inc. (787) 781-5555 / (787) 783-7733 www.universalsolar.com

1108 F.D. Roosevelt Ave. San Juan 00920

Solar water heaters sales & installation

1965

Moisés Almansa President

4/2

Genesis Green Systems Corp. (787) 200-8787 / www.genesisgreenpr.com

Valle Escondido C-28 3rd. St. Guaynabo 00969

Photovoltaic solar energy systems design, installation & maintenance

2010

Walter Muller CEO/President

5/5

Planet Solar (787) 303-4220 / (939) 336-1365 www.planetsolar.com

Altamira Urb. 592 Aldebarán Ave. San Juan 00920

Photovoltaic systems design & installation

2013

Ben Siebert CEO/President

5/7

Puerto Rico Solar Products (787) 877-0011 / (787) 877-0499 www.prsolarproducts.com

Rd. 111, Km. 5.9 Moca 00676

Solar water heaters distributor

1989

Roberto Colón Owner

7/6

Aspenall Energies LLC (787) 796-4487 / (787) 796-4409 www.aspenall.com

Casa Bonita Business Center 875 Rd. 693, Suite 101 Dorado 00646

Renewable energy systems

2007

Raoul G. Slavin Managing Director

7/-

Sun Pro P.R. Inc (787) 774-7974 / (787) 731-1092 www.sunpropr.com

María Julia Ind. Park 696 B St., Suite 1 San Juan 00920

Solar panel installation, design & permit processing

2008

Franklin E. Fuster President

9/10

Solar Roots LLC (787) 687-0104 / www.solarrootspr.com

Baldrich Urb. 596 Hostos Ave. Hato Rey 00918

Photovoltaic systems design, installation, certification, maintenance & interconnection

2013

Carlos Martínez President

10/8

Green Energy Systems Corp. (787) 912-7402 / (787) 912-7405 www.greenergysys-pr.com

3 Ernesto Ramos Antonini St. Las Piedras 00771

Renewable energy systems sales, energy auditing, electrical design

2007

Jeramfel Lozada President

10/8

Tanagua (Energía 2000 Inc.) (787) 730-2000 / (787) 730-2027 www.tanagua.com

Rd. 167, Km. 17.2 Bayamón 00957

Solar water systems design, solar water heaters & water tanks maintenance

1978

Isaili Mariñez CEO

12/11

Ciro Energy Corp. (787) 993-5996 / (787) 963-0900 alberto@ciroenergygroup.com

151 Federico Costas St. Suite 2 Hato Rey 00917

Solar & wind power equipment sales & lease, renewable energy solutions

2011

Mario Tomasini President

13/12

Acevedo Solar System LLC (787) 877-4270 / (787) 818-1320 www.acevedosolarsystem.com

Bo. Capá Rd. 111, Km. 12.2 Moca 00676

Solar water heaters & water tanks distributor

1985

Graciano Acevedo President

14/13

Nextility Inc. Puerto Rico (787) 607-6320 / www.nextility.com

1064 Ponce De León Ave. Suite 201 Río Piedras 00925

Photovoltaic systems installation

2013

David Steinberg CEO

* CARIBBEAN BUSINESS estimate List includes companies that sell renewable energy products and/or offer related services in Puerto Rico. Number of full-time employees includes part-time employees where applicable (every two part-time employees = one full-time employee). Unless otherwise noted, all information was provided by the companies. Research by Marilda A. Quiñones del Castillo Copyright © 2016 CARIBBEAN BUSINESS

Year Established in P.R.

Top Executive Title

Special Feature April 14, 2016 Pages 33-38

S P E C I A L

F E A T U R E

Abartys Health Continues to Impact the P.R. Healthcare Market for the Best

Thursday, april 14, 2016

BY MARIO BELAVAL DÍAZ

Founded in 2014, to fulfill an industry need for cost-containment strategies to counterbalance rising corporate insurance premiums, Abartys’ system analyzes and identifies deficiencies in medical claims processing, markedly improving billing process quality. After all, according to various data analyses, the increase in healthcare costs is probably the greatest area of concern for policymakers, insurers and customers. In 2015, Abartys Health came to be in order to continue the commitment of providing advanced and relevant solutions that answer to the needs of clients and the demands of the market. “After one year in operations at Abartys Health, we have emerged as a health informatics company, engineered and designed to centralize patient healthcare data,” said Dolmarie Méndez, Chief Executive Officer at Abartys & Abartys Health. “Using a proprietary and patented control system, patient healthcare data is securely encrypted, parsed and presented through detailed reporting.” This reporting includes annual preventive screenings and providing individual healthcare data directly to patients; aggregation and de-identification of collective healthcare data for employers; and monetized health risk stratification for healthcare insurance companies. Méndez explained that Abertys Health’s proprietary system was developed to service the most recent ERISA (Employee Retirement Income Security Act) ruling, as well as new

From left, Chief Compliance Officer Shirley Cintrón, CCWS, CHRA, PMB-C; Chief Executive Officer Dolmarie Méndez Vidot, MBA, CHRS, SICS; and Chief Operations Officer Lauren Cascio, NCSF, ACSM at Abartys Health.

incentives and policies to promote employer wellness programs as defined by the Affordable Care Act (ACA), and the U.S. Health & Human Services, Labor and Treasury departments. In fact, ACA compliance and adaptation is built directly into and integrated throughout the Abartys Health’s system with encryption of patients’ health data as a prime consideration. The advanced tools provided by Abartys Health allow insurance companies to apply accurate actuarial values to group coverage plans based on real health data, while giving individuals direct and secure access to their protected health information in a remote and convenient fashion, said Méndez. Abartys Health services functionally perform as the world ’s market leading solution for local, national and global policy issues of securely managing and accurately optimizing patient health data. While in the healthcare field, Abartys Health fulfills a dire need for providers, patients and policymakers to access and analyze personal health information on a scalable, secure and cost-efficient base, which also has an impact on the local economy

by measurably lowering the cost of individual and business healthcare costs. “Widespread or individual adoption of the Abartys Health system creates immediate impact by reducing the cost of healthcare premiums, making corporate benefits more sustainable and lowering the percentage of income that employees must allocate to their medical care needs,” said Méndez. “Abartys Health uses the collection and aggregation of data to identify health risks and offers the tools necessary to improve the health standing of individuals and in turn, the population at large.” With headquarters in Galería San Patricio in Guaynabo, Abartys Health is reshaping and setting industry trends through bridging systemic gaps in building innovative solutions that merge markets and reorient industry actors to improve efficiencies that could not otherwise be realized, based on today’s industry architecture. “At Abartys Health, we have taken on and are successfully overcoming two of the greatest challenges in the health market,” noted Méndez. “These are centralizing vital health reporting and making the data readily available.” n

Thursday, april 14, 2016

Vidal & Rodríguez Advise Healthcare Operations on the Best Coverage for Their Needs BY B. G. DOYLE For nearly 30 years, Vidal & Rodríguez has been providing expert advice and a wide range of insurance options to the healthcare industry as a whole. “As insurance brokers, we handle a whole spectrum of insurance coverage for hospitals and healthcare facilities,” said Luis Rodríguez, co-founder & president of Vidal & Rodríguez Inc. This includes insurance on property and buildings, as well as coverage to protect against equipment breakdowns, machinery malfunctions and operational interruptions, as well as medical malpractice and professional liabilities, damage to third parties and crime-related incidences—all while protecting revenues. The firm also helps employers find the right healthcare packages for their employees, and supports individuals and families in this area as well. According to Rodríguez, given the complexity of any kind of healthcare operation, there are multiple areas that need to be considered when selecting the right kind of insurance, and his firm’s staff of 30 insurance professionals is fully trained to advise and assist in determining if a client has too little coverage or is paying for more than is actually required. “As brokers, we act as advisers to the healthcare facility or practice, given that we know where to get the best

“As brokers, we act as advisers to the healthcare facility or practice, given that we know where to get the best deals for them.” —Luis Rodríguez, co-founder & president of Vidal & Rodríguez Inc.

deals for them,” he said. “Because each client in this industry has a unique situation, we must analyze each one thoroughly and decide the best course of action regarding their particular risk, and how to transfer it or limit it.” He pointed out that this also includes negotiating the best terms of coverage so that each healthcare client will be properly insured while getting the most for their money in terms of premiums. “We make sure their claims are processed efficiently and they get their money soon, with our staff working together as a team, so that more than one insurance expert is involved with any account,” he said. “This way, everyone knows what’s going on and how to continue if one of the members is not available.” Given Puerto Rico’s current economic turmoil and the exodus of many residents, Rodríguez said the island’s entire healthcare industry has been greatly affected, with many hospitals reducing their bed capacity. This, in turn, is

affecting the insurance industry. “Believe it or not, fewer people are going to hospitals now, which means less revenue,” he said, adding that some hospitals have even closed entire floors. “A diminishing population means using fewer services, so hospitals are adjusting to match the lower demand.” He added that this has caused a ripple effect, with a reduction in insurance premiums as a result of the downsized operations. However, he also warned that reducing coverage can be risky if not done properly. “Dropping certain coverage to save money may incur more expenses down the line,” he said, adding that it’s a balancing act that requires expertise. “In these tough times when hospitals and healthcare operations are cutting back on expenses, they need to look to their insurance broker for advice,” he said. “This is the time for healthcare providers to make good use of their advisers, and we can help them make sure they do things the right way.”n

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Auxilio Mutuo’s Cardiovascular Team’s Rapid-Response Capabilities Save Lives BY B.G. DOYLE Focused on excellence in providing quality medical services aimed at preventing, relieving and curing illnesses within the ethical, moral and Christian framework established by its founders, Auxilio Mutuo Hospital boasts a medical faculty of more than 600 specialists and subspecialists, 2,000 health and administrative professionals, and a wide range of diagnostic and treatment services with units and centers specializing in various health conditions. Among this ensemble are the hospital’s Invasive Cardiovascular Laboratories and the emergency room’s Chest Pain Center. Auxilio Cardiovascular, as it is better known, is equipped with rapid-response teams trained to deal with heart attack patients requiring emergency intervention. “Our Chest Pain Center is open 24/7, 365 days a year, with an on-call team ready to treat and open the 100% occluded infarctrelated artery within 90 minutes of arrival at the emergency room door,” said Dr. Ricardo Santiago Trinidad, interventional cardiologist, new director of the hospital’s Chest Pain Center & co-president of the Professional Cardiovascular Intervention Group.

“Given that there are currently fewer than eight hospitals in Puerto Rico that provide primary percutaneous coronary intervention [primary PCI] services, we have four full-time dedicated interventional cardiologists who rotate every week, with two specialized nurses and one cardiovascular X-ray technologist on hand to ensure a four-person team is always available,” Santiago said. He added that the hospital’s Invasive Cardiovascular Laboratories average around 400 PCI cases per year and that his group practice performs over 95% of the emergency cases through an artery in the wrist, which portrays a lower complication rate and risk of bleeding than through the leg. “When an emergency case comes in, time is muscle, meaning that delays in treating a myocardial infarction increase the likelihood and amount of cardiac muscle damage due to localized lack of oxygen, and that’s why blood flow in the culprit artery has to be restored in 90 minutes or less. A team-based approach with innovative standardized protocols is imperative to achieve this task,” Santiago said. He explained that while the center has been in operation for about eight to 10 years, the hospital is now upgrading the

facilities with more modern equipment, revamping the logistics to ensure patients receive treatment as rapidly as possible, and doing whatever is necessary to earn accreditation from the Society of Cardiovascular Patient Care (SCPC). “Getting accredited is a very complex process, and very important for us right now,” he said. “It involves community work, patient orientation with awareness about heart disease, and what to do and what not to do when you’re having a heart attack. Facility-wise, it involves upgrading our technology, identifying gaps, measuring results, and revising current processes for timely and accurate diagnosis and treatment. This requires commitment and true dedication to provide exceptional cardiovascular care.” He added that there is currently only one civilian hospital on the island with accreditation in this area. Santiago also pointed out that because of Auxilio Mutuo’s Chest Pain Center relationship with the Professional Cardiovascular Intervention Group—the only group of its kind on the island— the hospital has a special integrated care liaison with several nearby medical facilities in the island’s northern area. “If there is a hospital that has a patient with a heart attack

Dr. Ricardo Santiago Trinidad, interventional cardiologist, new director of the hospital’s Chest Pain Center & co-president of the Professional Cardiovascular Intervention Group

needing our services, they have a direct connection line with our staff,” he said. “Minimizing the intermediaries means there’s no delay in patient management, and patients are immediately transferred for risk stratification and treatment.” In addition to emergency services, Auxilio Cardiovascular also houses the necessary high-tech equipment and trained professionals to treat a new subset of patients known as CHIP (Complex High-Risk & Indicated Patients). These patients are in need of very complex interventional endovascular procedures to treat disease entities such as unprotected left main (disease of the heart’s main blood vessel), coronary chronic total occlusions

Dr. Pedro Escobar Rodríguez Board Certified Gynecologist / Oncologist Dr. Jesusmanuel Salgueiro Bravo Board Certified Gynecologist

787-653-3456

Dra. Ana Vaillant Ortíz Gynecologist

HIMA San Pablo, HIMA Plaza 1 Suite 510, Caguas P.R. | Torre de Plaza Las Américas, Suite 403-A, San Juan P.R.

(blood vessels in the heart 100% occluded for more than three months), bifurcation lesions and/or severely calcific coronary disease. It entails the use of specialized imaging devices, such as intravascular ultrasound, and other disease modification tools, including laser and rotational atherectomy. Santiago explained that the latter two items are endovascular interventional instruments that alter atherosclerotic plaques in blood vessels within the body and make them more amenable for treatment. “No other hospital has all the tools, training, equipment and executive administrative back up necessary to perform these procedures like we do,” he noted. n

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787-751-7610 'BY t XXX WJEBMSPESJHVF[ DPN Capital Center Building, 239 Arterial Hostos Ave. Suite 501, San Juan, Puerto Rico 00918-1478

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Thursday, april 14, 2016

As Ranked by

PUERTO RICO’S TOP 10 PRIVATE HOSPITALS

Primary Medical Specialties

Top Executive Title

General

Specialized

(Listed According to 2014 Net Patient Revenue) Current/ Previous Ranking

Hospital Name Telephone/Fax Internet/Email Address

Physical Address

2014 Net Patient Revenue $

No. of Beds in Use

No. of Licensed Beds

No. of Full-Time Employees

1/1

H ospital Español Auxilio Mutuo de P.R. (787) 758-2000 / (787) 771-7952 www.auxiliomutuo.com

715 Ponce de León Ave. Stop 37 1/2 Hato Rey 00918

239,742,523

503

611

2,216

2/2

Manatí Medical Center (787) 774-6558 / (787) 774-5626 www.manatimedical.com

Atenas Urb. 68 Hernández Carrión St. Manatí 00674

200,000,000

235

1,235

3/3

Hospital HIMA - San Pablo Caguas (787) 653-1796 / (787) 653-1290 www.himapr.com

100 Luis Muñoz Marín Ave. Caguas 00725

196,714,218

414

440

4/6

Mayagüez Medical Center (787) 774-6558 / (787) 774-5626 www.mayaguezmedical.com

40 Hostos Ave. Mayagüez 00680

162,000,000

190

5/4

Hospital HIMA - San Pablo Bayamón (787) 620-4747 / (787) 620-9273 www.himapr.com

Santa Cruz Urb. 70 Santa Cruz St. Bayamón 00959

147,657,017

6/5

Doctors’ Center Hospital (787) 621-3322 / (787) 884-3307 www.tuhospitalfamiliar.com

Hwy. 2, Km. 47.7 Manatí 00674

7/7

Saint Luke’s Memorial Hospital (787) 844-2080 / (787) 844-7253 www.ssepr.com

8/8

Pediatrics, oncology, open- heart surgery, liver, kidney & pancreas transplant, obstetrics & gynecology

Jorge L. Matta Executive Director

Neurosurgery, orthopedics, general surgery, obstetrics & gynecology, family medicine

José L. Quirós CEO/President

1,963

Surgery, oncology, nuclear medicine, radiology, obstetrics & gynecology, neuro sciences

Joaquín Rodríguez Sr. Chairman/CEO

399

935

Cardiology, cardiovascular surgery, internal & family medicine, orthopedics

Jaime Maestre Executive Director

421

436

1,623

Surgery, cardiology, pediatrics, radiology, obstetrics & gynecology

Joaquín Rodríguez Sr. Chairman/CEO

144,000,000*

250

1,722

Oncology, obstetrics & gynecology, cardiology, nuclear medicine

Carlos Blanco CEO/President

916 Tito Castro Ave. Ponce 00733

114,000,000*

N/P

Hospital Pavía Santurce (787) 641-1616 / (787) 727-7500 www.metropavia.com

1462 Augusto Rodríguez St. Santurce 00910

108,000,000

193

247

722

9/11

Hospital Damas Inc. (787) 840-8686 / (787) 259-0680 www.hospitaldamas.com

2213 Ponce Bypass Ponce 00717

91,623,786

232

331

833

10/9

Hospital Menonita de Cayey (787) 535-1001 / (787) 535-1021 www.sistemamenonita.com

Bo. Rincón Las Lomas Sector, 14th St. Cayey 00737

85,713,624

262

1,039

* CARIBBEAN BUSINESS estimate N/P - Not Provided Number of full-time employees includes part-time employees where applicable (every two part-time employees = one full-time employee). Unless otherwise noted, all information was provided by the hospitals. Research by Marilda A. Quiñones del Castillo Copyright © 2016 CARIBBEAN BUSINESS

Type of Hospital

N/P

Pedro Barez Operations Executive Director

Internal medicine, general surgery, obstetrics & gynecology, neurosurgery, cardiovascular surgery

Karen Artau President

Internal medicine, cardiology, surgery, orthopedics, neurology, obstetrics & gynecology

Mariano McConnie Chairman

Bariatric & orthopedic surgery, cardiology, pediatrics & neonatal intensive-care unit

Pedro L. Meléndez CEO

SPECIAL FEATURE

April 14, 2016 Pages 39-43

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PRMA Excellence Awards APRIL 16, 2016 Hilton Condado Plaza, Ponce de León Salon Agenda 7:00 pm - 8:00 pm Cocktail 8:00 pm - 9:00 pm Dinner 9:00 pm -10:00 pm Presentation of nominees, regional awards, and announcement of awardees who will be celebrated at the annual convention (June 2-5 at El Conquistador) 10:00 pm - 12:00 pm Dance

Thursday, april 14, 2016

Letter From the President The Puerto Rico Manufacturers Association (PRMA) celebrates Industry Month in April by reiterating our mission to promote our industry’s growth and reaffirming that our local talent and quality are indeed world-class. Manufacturing’s contribution to our economy represents half of our gross domestic product and 99% of our exports, and is the purveyor of our economy’s highest average salaries. Each manufacturing job creates 3.3 indirect and induced jobs. Our products are our ambassadors with their quality and are used worldwide, contributing to life in areas such as food, medicine, electronics, textiles, technology and information systems. To kick off our Industry Month celebration, we will present on April 1 the “10 Pillars of Economic Development,” which the PRMA has developed as a proposal to revitalize the economy and has been discussing in private meetings with the candidates for governor. The 10 Pillars of Economic Development are: 1. Puerto Rican Industries–the island’s No. 1 Priority; 2. Manufacturing development and growth; 3. The island’s internationalization and agenda in Washington, D.C.; 4. Education: A pillar of economic sustainability; 5. Energy at competitive and sustainable prices; 6. Industrialized agriculture for local consumption and export; 7. Optimization of tourism offerings in Puerto Rico and the Caribbean; 8. Puerto Rico: Technological and professional capital for the Caribbean; 9. Knowledge-based economy: Innovation, research and development 10. Competitiveness: Spearheading the world. We are committed to our partners and Puerto Rico. Our Industrial Excellence Awards provide an opportunity to honor those who develop their companies against all odds. At this event, we honor all our nominees

and our industrial partners, executives, manufacturing managers and service managers, who are representatives of our seven regions across the island. They are all heroes whose commitment to quality and to Puerto Rico should be emulated. Our distinguished executives from the manufacturing and service sectors honor the name of their company as well as Puerto Rico every day, evidencing the private sector’s commitment and contribution. They are the best promoters of our island’s competitiveness. Their commitment is also highlighted through their support of community initiatives that bear witness to their human quality and social responsibility. We urge those who read this supplement to learn about our nominees’ achievements and share our pride in our talent. We invite you to celebrate manufacturing, a pillar of our economic development, by visiting industrial parks, becoming better acquainted with your town’s industries and selecting our products—not only because they are made by Puerto Ricans but because they also feature the highest quality. Support products made in Puerto Rico! n Carlos Rivera Vélez President

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Ramón Antonio Muñoz Grajales Ponce Plaza Hotel & Casino PRMA Excellence Award Nominee BY B.G. DOYLE

For Ramón Antonio Muñoz Grajales, general manager of the Ponce Plaza Hotel & Casino, excellence is achieved in many ways. “Excellence is achieved by years of experience, much training, having to deal with many situations and overcoming obstacles,” he said. “If you have a desire to be the best in your field, excellence is within your reach.” He also noted that in his line of business, it includes a hands-on management style as well. “Coming in every day and working side by side with each and every one of my employees has made a big difference in our hotel’s success,” he said. “Whenever a problem arises, we find a solution together, which not only makes us feel like a family, but enables us to treat our guests the same way, so they feel like we are their home away from home.” He also noted that to achieve this, excellence and great service mean paying attention to details, being proactive and surpassing expectations. Having started out as a 69-room boutique hotel and restaurant under a different name in 2009, the owners decided to leave the hotel chain’s brands behind in 2014 and become an independent entity, with Muñoz noting it’s been an amazing journey. “When we opened in 2009, we didn’t know that much about the hotel industry,” he said. “But with hard work and excellent customer service, we’ve grown from 25 employees to more than 150.” Given that tourism has recently been growing in Puerto Rico, especially in the region around Ponce, the hotel’s clientele and demand have increased as well. This growth has made it necessary to renovate and expand the property, which

has included the relocation and expansion of the Melao Coffee Shop for guests to enjoy breakfast, and the addition of two new meeting rooms with state-ofthe-art technology for 3,800 square feet of meeting space, and a casino featuring more than 260 slot machines, the Viva Casino Bar, and a multilevel parking garage to accommodate the hotel’s growing number of guests. “We have all the amenities needed to make anyone’s stay with us a memorable experience,” he said, and added that because the hotel is conveniently located in historic downtown Ponce, it’s also an ideal place to experience the city’s attractions at a walking distance. “Being an independent hotel and concentrating on offering personalized service has been such a big success for us,” he said. “Not only have we positioned ourselves as No. 2 on Trip Advisor, but we also have currently achieved 60% occupancy.” He added that he started very young, having worked all his life, and if there is something he has learned over the years it is that one leads by example. “As I always say, ‘we all need to row in the same direction to keep the boat afloat and move forward.’” Muñoz Grajales also said he’s proud of the P.R. Manufacturers Association award nomination because it truly demonstrates the hotel’s positive work environment. “To me, the award is a great achievement in that it’s the result of a team effort, and I’m proud of the group of people I lead,” he said. “I want to thank all of them for their hard work and dedication because by offering excellent service to all our customers, we will continue to make the Ponce Plaza Hotel & Casino the best option when staying in our region.” n

“Excellence is achieved by years of experience, much training, having to deal with many situations and overcoming obstacles.” —Ramón Antonio Muñoz Grajales, general manager of the Ponce Plaza Hotel & Casino

Emma Pérez President Pirette Uniforms Drapery Creation of Pirette

“La gran familia de Pirette Uniforms, Inc. y Drapery Creations of Pirette, Inc. se enorgullese de tu nombramiento al reconocimiento como: INDUSTRIAL DEL AÑO 2016 REGION METRO. Emma eres un ejemplo de nuestros valores organizacionales, enfoca siempre en los resultados, en lograr los objetivos con una ética de trabajo excelente. Por tu destacada labor, compromiso y fervor. ¡Nos sentimos muy orgullosos de tí!

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Industrialist of the year Nominees Reynaldo Arocho Expressway Graphic

Orlando Burguera B&B Manufacturing Corp.

Larry A. Lugo Indulac

Juan F. Méndez CR Bard Shannon

Abimael Padilla Challenger Brass Cooper

Executive of the year Nominees Emma Pérez Pirrette Uniforms, Inc.

Limaris Alvarado Echo Consulting

Ruth C. Ramón Jugos del Centro

Migdalia Cariño Comercial Collazo

Carlos J. Rovira Rovira Biscuit Corp.

Rafael Díaz RF Maintenance

Francis J. Vázquez Prado Patheon P.R. Inc.

Ricardo Estrada Grainger Caribe Inc.

Luis Torres Acosta JLL-Jones Lang LaSalle, Inc.

Julie García Action Services Corp.

Luis González Alsureste

Stephanie Arocho Expressway Graphic

Edwin Caraballo Roche Operations LTD

MAnufacturing Director Nominees Frances Ríos Frances Ríos Comm.

Adalberto Maldonado Baxter Healthcare Corp.

Frank Rodríguez Frank Electric

José A Marquez BMS Manati

Yanira Torrellas Quality Consulting Group

Olga Navarro Stryker Puerto Rico

Gerardo Rivera CR Bard Shannon

Oscar Rivera de León CR Bard Shannon

Jannette Soto Santiago BMS Manati

service Director Nominees

Josymar Acosta Infotech Aerospace

María Del C. Burgos Aon

Ramón A. Muñoz Ponce Plaza

Manuel Quiñones Honeywell Aerospace

Miguel Rivas TRYP By Wyndham I. V.

Xiomara Rodriguez Mentor

Daniel Rojas Grainger

Thursday, april 14, 2016

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Emma Pérez Labiosa Heads Pirette Uniforms into the Future BY MARIO BELAVAL DÍAZ

Creative inspiration is one of the drivers behind Pirette Uniforms Inc., the dynamic Puerto Rico uniform and embroidery enterprise. However, for Emma Pérez Labiosa, founder & president of the company, there is another source of inspiration that motivates her on a daily basis. “That would be the responsibility of providing jobs for the people who work in the company,” said Pérez Labiosa, who was born and raised in San Sebastián. After graduating from high school, she moved to San Juan to pursue studies in interior decoration and design. “I also enjoy the creative aspect of the work, and believe that an essential part of a strategy for success is to work hard with dedication and love.”

What would become one of the most successful enterprises in the art of decoration, as well as embroidery, began in 1971, manufacturing such products as curtains, pillows and bedspreads in a small workshop in Bayamón. Once incorporated, the company moved its operations to San Juan’s Hato Rey district where it began manufacturing products for businesses and institutions such as hotels and hospitals, as well as exclusive clients throughout the island. In 1974, along with a team of friends, Pérez Labiosa founded Pirette Draperies Inc. In 1984, under Pérez Labiosa, the company began manufacturing embroideries and monograms. For this process, Pirette adopted and incorporated in its production the most advanced technology and

computerized equipment. Due to its success in 1986, Pirette Draperies required a remodeling of its location, which would transform the company into what today is one of the most modern and sophisticated manufacturing operations in the area. Such was the growth of Pirette that in 1988 the company had to segment its operations into embroidery and decoration products. Thus a new enterprise, Drapery Creations of Pirette Inc., was born, which Pérez Labiosa directs and supervises. In 2008, to distinguish its different embroidery and uniform products, Pirette Draperies changed its corporate name to Pirette Uniforms Inc., under which it currently operates, dedicated to the manufacturing and sale of different lines of uniforms

and other products to fulfill the market’s high demand. Pirette is working to expand and develop its line of uniforms to compete with the most renowned brands in the U.S. market. Pirette

has become the name associated with two of the most important manufacturing enterprises in Puerto Rico. “For us, product quality and professionalism are essential aspects in everything we do,” said Pérez Labiosa, adding that despite the tough economic climate, “we have been able to maintain our enterprises’ standing and competitiveness in the manufacturing market, providing employment and products of the highest quality that benefit our clients and Puerto Rico.” While Pérez Labiosa is focused on her companies’ continued success and expansion, during her leisure time she has also picked up something that calls for creativity: practicing cooking to share with her family and friends. n

Industrialists Present Process Excellence To celebrate the month of manufacturing and as part of the activities, on April 22 the Puerto Rico Manufacturers Association will hold “Process Excellence Forum: Continuous Competitiveness & Improvement.” In this activity, manufacturing leaders with renown practices will share their processes and how these allow them to compete in the global market. Participants will learn how the improvement of processes and competition in business benefit individuals and teams at work. Through presentations about past experiences, participants will benefit first-hand from the operational experience models, especially how they have remained competitive while maintaining the manufacturing culture promoting constant growth.

Among the presentations will be: Medtronic - “Deployment Cell Operating System at Medtronic Puerto Rico” Félix Negrón, V.P. Medtronic P.R. Carlos Luis Rodríguez, Lean Sigma Director Tanya Miranda, Senior Lean Sigma Manager Eduardo Ramírez, Lean Sigma Program Manager Bard Shannon “Bard Puerto Rico Cultural Transformation” Baxter - “Sustaining Competitiveness with a Lean Management System”

Noel Pérez, Process & Product Director Fresenius - “The Succesful Implementation of the Fenwal Production System” Eric Santiago-Justiniano, V.P. Operations P.R. Yahaira Berríos, Senior Specialist Rafael Ramírez, Technical Services Department Director Amgen - “Structure of OpEx & People Empowerment at Amgen”

For more information and to make reservations, call 787.641.4455, assistant@prma.com www.prma.com

| Thursday, APRIL 14, 2016

WEEKEND Wine Bars for Every Mood BY ANDREA MOYA MUÑOZ a.moya@cb.pr

It began with craft-beer pubs, which were followed by whiskey bars and creative cocktail lounges. Now wine bars have entered the local scene. Puerto Rico’s love affair with wine is nothing new; what is a recent development is the variety and number of businesses specializing in wine with a large and varied selection. There is a wine bar for every taste and budget, and they are not limited to the San Juan metro area. Here are a few spots to start off with:

La Boutique du Vin Old San Juan The new location of La Boutique du Vin in Plaza de Armas, Old San Juan, is a meeting point of old and new, both in the architecture and decoration of the space and the wine selection. While La Boutique du Vin in Hato Rey is really a shop with small tasting area, the new location fully intends to be a wine bar as such. With about 300 labels to choose from, the staff can send over any wine from the Hato Rey store if a customer requests it. Their food selection includes cold appetizers and gourmet

Weekend Guide Agro-ecological Fair Celebrating Mother Earth Celebrating Earth Day, the collective Cooperativa Orgánica Madre Tierra is organizing an organic market and fair. April 17, 8 am to 5 pm La Placita Roosevelt, Hato Rey For more information, visit http:// www.coopmadretierra.org/or call 787647-4447 Noche de Luna Plena: De Vuelta al Glamour This fundraising event with a 1950s theme, features tapas and drinks stations by different restaurants and a view of the Condado Lagoon, all donations to benefit Centro Vida Plena. April 16, 7 pm to 11 pm Conservatorio de Musica, Miramar Donation $50 For tickets call 787-292-0420 or 787-587-7781 Paseo de los Artistas A cultural and gastronomic event

GUIDE products. Downstairs is a cellar space called La Cava, which is available for private parties. Cien vinos Guaynabo True to its name, Cien Vinos has an extensive wine menu dominated by Spanish wines and supplemented with French, Italian and American wines. Each month, they offer by-theglass wines of different varieties, regions and prices. They also have an excellent food menu of both hot and cold Spanish tapas and entrees. Tinto Aguadilla Tinto is a “neighborhood spot” where residents and visitors to Aguadilla can buy, taste and learn about

with live music, theater and dance performances, art exhibits, educational workshops and great food. April 16 from 5 pm to 12 am Paseo de las Artes, Caguas Free For more information, visit “Paseo de los Artistas” on Facebook Planet Earth Day The Puerto Rico Museum of Art is hosting a family day with art workshops and tours of the museum and garden in honor of Earth Day. April 17, 11 am to 5:30 pm Museum of Art of Puerto Rico, Santurce, San Juan For more information, visit Museo de Arte de Puerto Rico on Facebook or call 787-977-6277 Plus-Size Fashion Weekend An event dedicated to plus-sized fashion with shows by designers Ary Luna and Ivette Torres, panels featuring plus-size bloggers, and the finalists of Miss Puerto Rico Plus Size. April 16-17, 8 am to 10 pm Embassy Suites Hotel, Isla Verde $21.49 to $26.62

wine. While only 125 different wines are available, they still manage to have a

Tickets available at Eventbrite.com Traditional and Contemporary Dance Concert The Institute of Puerto Rican Culture presents a concert featuring Conjunto Guanina and pianist Luis M. Tirado, as well as the award ceremony for the Semana de la Danza Puertorriqueña. April 17, 3 pm Teatro Francisco Arriví, Santurce For information, email Josilda Ascota at jacosta@icp.pr.gov or call 787-7240700, ext. 1321 Whale Festival This annual festival honors the humpback whales that migrate off the coast of Rincón during this time of year. There will be live music, artisans and Chef Febus will prepare a gigantic rice dish with seafood. April 16-17, starts at noon Rincón Lighthouse (El Faro) Free For more information, visit “Municipio de Rincon Prensa y Comunicaciones” on Facebook or call 787-823-2180, ext. 2030

unique and varied selection that is perfect for the adventurous palate. They offer six different wines by the glass; those who want to taste several can order a “tasting” of six or a “flight” of three. They also serve gourmet tapas and craft beers. Bodega Andreu Solé Guánica Located in the Ensenada neighborhood of Guánica,

Bodega Andreu Solé is a hidden gem only open from Friday to Sunday. On Sundays, they offer guided tours of the vineyard and the winery where they produce their fortified wine, 12 Calles. Their wine list is accessible and they also offer different types of sangria and fruit liqueur made right there at the bodega. To get the best table, you have to make a reservation.

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Tel: 787-501-7727/ 787-717-1462

WEEKEND

Thursday, april 14, 2016 |

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Publicis One Announces Global and Regional Appointments BY MARIO BELAVAL DÍAZ m.belaval@cb.pr

Publicis One, the global communications enterprise that unites all Publicis Groupe agency brands, recently announced appointments to its global and regional leadership. Among agencies part of the group are Saatchi & Saatchi and Leo Burnett. While both agencies have offices in Puerto Rico, the effect, if any, on the local offices remains to be seen, as well as on the local operations of Starcom Mediavest Group and ZenithOptimedia media buying agencies. As for the region, Jarek Ziebinski, chief executive officer of Publicis One, said that for Latin America, Monica Gadsby has been appointed as the regional CEO, while Joseph Piazza has been named regional chief financial officer. According to the company press release, Gadsby has 28 years’ experience in advertising across the U.S. Multicultural and Latin America markets, and is considered a pioneer in diversity marketing, having started and developed the top-two U.S. multicultural media agencies, Tapestry and 42 Degrees. Over the past six years, Gadsby doubled Starcom Mediavest Group’s revenue in Latin America while successfully shifting the company’s focus to digital, data and content. With extensive experience working with multiple multinational clients across a variety of countries, she is described as “possessing a unique understanding of commonalities and differences that

define each Latin America country as well as various ethnic groups that comprise the new minority in the U.S.” Her successes have led her to numerous recognitions over the years, including 2013 People en Español’s 50 Most Powerful Women; 2011 ADCOLOR Legend; 2011 Broadcasting & Cable Hispanic Television Lifetime Achievement; 2009 Cannes Media Jury; 2005 Mediaweek All-Star; 2004 AdAge Media Maven; 2004

Crain’s Chicago Business’ 100 Most Powerful Women; and 2003 Vanidades Top 40 Hispanic Women. Meanwhile, over the past 11 years, Piazza has been at Publicis Groupe agencies, including ZenithOptimedia, SMG and Vivaki, where he worked extensively with markets in Latin America. “Joseph [Piazza] brings with him deep understanding of the various entities within the Publicis Groupe, as well as keen knowledge of the Latin America markets.

“The new Publicis One team comprises experienced leaders who represent the crème de la crème of Publicis Groupe talent.” — Jarek Ziebinski, chief executive officer of Publicis One

In his current role as CFO, along with SMG and ZenithOptimedia within Vivaki, he oversees all finance functions for both Publicis Groupe media brands in Latin America where he focused on cost management and revenue strategies,” the statement reads. “A result of that is reflected in Vivaki’s 30% revenue growth with margin growth of 400 basis points over the past three years.” “At the beginning of this year, we started a very significant transformation of Publicis Groupe that includes the creation of Publicis One, a new global communications enterprise. As we embark on this journey, our very first mission is to create a strong leadership team,” Ziebinski said. “The new Publicis One team comprises experienced leaders who represent the crème de la crème of Publicis Groupe talent, bringing diverse backgrounds, skill sets, entrepreneurial mindsets and an agnostic brand approach to our work.” Maurice Lévy, chairman & CEO of the Publicis Groupe, was cited as expressing confidence in the appointments, which were selected by Ziebinski himself. “Publicis One is a totally new approach to the market with end-to-end solutions,” Lévy said. “I am convinced that under the leadership of Jarek Ziebinski, Publicis One will deliver the very best to our clients, attract the best talents and offer great career opportunities to be the greatest agency in each market. I have great confidence in the team Jarek [Ziebinski] chose.”