Chavez Won’t Pay Market Value For US Telcom

From the UK’s Times:

Chávez refuses to pay market rate for seized US company

January 23, 2007
Thomas Catan

Hugo Chávez, the firebrand President of Venezuela, delivered a fresh blow to foreign investors yesterday, saying that he would not pay market value for the US-owned telecommunications company that his Government is seizing.

Shares in CANTV, which is controlled by Verizon Communications, of the United States, plunged 16 per cent in New York. CANTV’s stock had taken a beating two weeks ago when Mr Chávez announced his intention to nationalise the company, along with other utilities.

Company shares, which account for 20 per cent of the Caracas stock exchange, have fallen by about 30 per cent since his announcement a fortnight ago, but Mr Chávez’s latest statement compounded Verizon’s woes by dashing hopes that it would be compensated fairly.

“Some people are saying that we have to pay the international price for CANTV. No!” Mr Chávez said on state television. “The State gave that company away. We’re going to take it over first and pay later.”

Verizon had been on the verge of selling its 28.5 per cent stake in CANTV to Carlos Slim, the Mexican billionaire, who agreed in April to buy $3.7 billion in Latin American assets from Verizon.

Mr Chávez said that Venezuela’s former state telecoms monopoly was “given away” when it was privatised in 1991, under President Pérez. “So I don’t want to hear stories about how I have to pay at such-and-such price, at the international price,” Mr Chávez said. “No, no, no. CANTV was given away.”

The President added that the Government would first deduct the value of pensions owed to former employees from any price that it decided to pay investors.

Mr Chávez’s uncompromising stance was bad news for other foreign investors expecting to lose assets in the nationalisation drive. AES, the US-based power company, owns 87 per cent of Electri-cidad de Caracas, the largest electricity utility in Venezuela.

Mr Chávez has also promised to take control of four multibillion-dollar heavy-oil upgrading projects in the country’s Orinoco Belt. Several international oil companies own stakes in the projects, including BP, ExxonMobil, Total, ConocoPhillips, Chevron and Statoil. All are waiting to see how hard a bargain Mr Chávez intends to drive.

A US Government spokesman said on Friday that Mr Chávez’s plans had “caused us some concern”, prompting the American-baiting leader to say: “Go to hell, gringos! Go home!”

Mr Chávez, a former paratroop commander who was elected to a third term last month, has vowed to complete the transformation of the world’s fifth-largest oil exporter into a socialist state. He has asked the Venezuelan Congress for sweeping powers to rule by decree for 18 months and vowed to strip the country’s central bank of its remaining autonomy. On Sunday he promised to seek expanded access to the central bank’s foreign currency reserves to fund his Government’s soaring spending plans.

Mr Chávez is not expected to face much congressional opposition, because his coalition holds all 167 seats after the Opposition boycotted the election, saying that it feared fraud.

Castro lives!

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