Venezuelan government and international private banks in SIDOR debt restructure deal

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, June 22, 2003 By: David Coleman

Venezuela's Siderurgica del Orinoco (Sidor) has cut its debt to $700 million under a restructuring deal between the Chavez Frias government and international private banks, it was revealed this weekend by the Venezuelan Guayana Corporation (CVG) state-owned heavy industry holding conglomerate. SIDOR produces on average 3.5 million tonnes of liquid steel every year and manufactures finished goods from pellets to sheet and long materials.

CVG president, Major General (ret.) Francisco Rangel Gomez says the Venezuelan state has increased its share in the South American region's largest steel producer from 30% to 40.3% to capitalize more than half its debt with the government after privatization in 1997 by the Amazonia Consortium which includes Mexico's Hylsamex and Tamsa, Argentina's Siderar, Brazil's Usiminas and Venezuelan Sivensa.  Amazonia partners have reduced their participation from 70% to 59.79% in what Rangel Gomez describes as debt management that brings "guarantees for shareholders and allows for better technology and investment." he said.

The debt restructure took 11 months to complete from signing in July 2002 with the involvement of Venezuela's development bank, CVG, Citibank, Deutsche Bank and four Venezuelan commercial banks.  SIDOR president Maritza Izaguirre says the government capitalized half of the Sidor debt with the state and refinanced the other half over 15 years with a interest rate Libor plus 1.75 points. The banks had pooled Sidor debt and bought at a discount another $133.5 million in the company.  The state's participation will diminish later with the completion of the transfer of 20% of Sidor shares to employees as laid out in the privatization process.