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PDVSA pledges to honor Cerro Negro venture bonds
By Guillermo Parra-Bernal
Bloomberg
Sao Paulo
Petroleumworld.com 05 14 07State oil company Petroleos de Venezuela SA will assume $494 million in bonds issued by a heavy- oil venture it seized this month, seeking to allay concern that a change in ownership may prompt bondholders to accelerate payments on the debt.
In an e-mailed statement, Caracas-based Petroleos said payments are being fulfilled and vowed to cooperate with bondholders. Officials at Pdvsa, as Petroleos is known, already informed Deutsche Bank AG, the Cerro Negro bondholders' trustee, of their intentions to assume the venture's obligations.
``The potential default events have not taken place,'' the statement said. Petroleos ``ratifies its intention to continue collaborating with bondholders, with the objective of resolving their questions and fulfilling the obligations derived from the accords that ensure financing to the project.''
Venezuelan President Hugo Chavez obtained control of Cerro Negro from Exxon Mobil Corp. and BP Plc as part of his drive to regain the nation's oil industry from foreign companies. Three other ventures, with total debt of $4 billion, were also seized May 1. Under terms of the bonds, a change in control to Pdvsa could trigger a technical default.
The yield on Cerro Negro's 7.9 percent notes maturing December 2020 was unchanged for a seventh day at 7.84 percent yesterday, according to prices from Lugano, Switzerland-based Aston Bond SA. The price, which moves inversely to the yield, stood at $103.50.
Cerro Negro bonds have climbed 10.6 percent since the week of Jan. 8, when Chavez announced the nationalization of the ventures. Provisions in the bond indicate that creditors can accelerate the bonds' payments in the event of a default.
Calls made to the offices of Deutsche Bank officials handling the Cerro Negro matter weren't answered. Messages left at the office phone of Eudomario Carruyo, Petroleos' chief financial officer, weren't returned.
To contact the reporter on this story: Guillermo Parra-Bernal in Sao Paulo at gparra@bloomberg.net
Bloomberg: May 12, 2007 13:54 EDT
Copyright© 2007 Bloomberg. All Rights Reserved.
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