Barron’s: What’s Next In Venezuela: Lopez Freed, Sunday Vote, Pdvsa Financials?

Russ Dallen, a lawyer, publisher and investor in Venezuela bonds via Caracas Capital, writes that there are two big things on the Venezuela agenda, including the possibility of more information on the finances and debt at state-controlled oil company Petroleos de Venezuela (Pdvsa):

“… Two big things on the Venezuela agenda for today. The first is for leaks coming out of PDVSA investor calls organized by BancTrust which are supposed to be held today — and the release of PDVSA 2016 financials cannot be far behind. The second big news of the day will be whether Venezuela pays Gold Reserve the $29.5 million installment on the $1.036 billion settlement. Previous agreements to pay Gold Reserve its $800 million International Centre for Settlement of Investment Disputes (ICSID) judgment have gone unpaid, until this latest agreement saw Venezuela cough up $40 million on June 16. … Crystallex — which has a $1.4 billion ICSID judgment — is getting a great deal more aggressive in its attempts to collect. They have filed a preliminary injunction on $710 million Venezuela credit linked notes at Nomura …”

Wall Street Journal: As Venezuela’s Default Risk Rises, Battle Heats Up for Control of Refiner Citgo

“There are more hands out than there are assets to pay them,” said Russ Dallen, a partner at investment bank Caracas Capital Markets, based in the Venezuelan capital.


“Everyone in the game is a big boy and they know the only way Citgo is worth anything is if it is a going concern,” Mr. Dallen of Caracas Capital Markets said.


Fox Business: sigue la batalla por control de Citgo mientras sube el factor riesgo en Venezuela

“Hay más manos que no son activos para pagar ellos”, dijo Russ Dallen, socio del banco de inversión Caracas Capital Markets, con sede en la capital venezolana.


“Todo el mundo en el juego es un niño grande y saben que la única manera de Citgo es digno de cualquier cosa es si se trata de una empresa en marcha”, el Sr. Dallen de Caracas Capital Markets, dijo.

Owed $1.4 Billion by Venezuela, Crystallex Sues Russia’s Rosneft & PDVSA Bondholders for CITGO

maduro_putin“When China’s state-owned oil company CNOOC made an $18.5 billion bid for U.S. oil company Unocal in 2005, Unocal ended up having to accept a lower bid from ChevronTexaco after “political tensions,” notes Russ Dallen, who helped uncover and investigate the Rosneft lien.

“But even if a Trump administration that seems to regard Putin as a friend — despite the experiences of Bush and Obama — approves the transaction, more likely, as happened in 2006 when CFIUS approved the takeover of P&O (which owned and leased ports and terminals in the U.S.) by state-owned Dubai Ports World (DPW), Congress will move to block it. DPW ended up divesting P&O’s U.S. operations to American International Group after the furor,” Dallen notes.

“Last week, Rosneft managed to gain control of the shares in Ruhr Oel that it did not yet own,” points out Dallen. “As a result, Rosneft is now the third largest refiner in Germany — an aggressive expansion by Rosneft that we are seeing all over the world.”

In spite of European and U.S. sanctions on Rosneft and its head Sechin over the annexation of Crimea, Dallen points out that Rosneft has made billions of dollars in overseas acquisitions this year in addition to raising billions from an equity sale to Glencore and Qatar.

“Even as sanctions against them continue to be renewed, it is clear that the Russians are using Rosneft to further Putin’s geopolitical ambitions,” says Dallen. “But will the U.S. government stand for a country with which we have an increasingly adversarial relationship owning strategic energy assets in the United States? It could be an early test for a Trump administration that has seemingly conflicting viewpoints and relationships with Russia.”

На «дочку» «Роснефти» подали в суд в США из-за сделки с Венесуэлой

Поступившая в центробанк сумма может представлять собой остаток средств от предоставленного «Роснефтью» кредита, допускает также стратегический советник хедж-фонда Venezuela Opportunity Fund Расс Даллен.

Возможное расследование

Сделка «Роснефти» с PDVSA теоретически может стать предметом расследования Комитета по иностранным инвестициям США (CFIUS), говорит РБК Даллен из Venezuela Opportunity Fund. CFIUS изучает все сделки, в которых покупатель действует в интересах иностранных властей. Однако вряд ли дело дойдет до американских регуляторов, так как «Роснефть» не владеет 49,9% в Citgo — это лишь залог по возможному кредиту.

Но даже если дело дойдет до перехода залога в собственность «Роснефти» и администрация Дональда Трампа одобрит транзакцию, конгресс скорее всего ее заблокирует, говорит Даллен. Такие прецеденты уже были — в 2006 году законодатели не разрешили Dubai Ports World (DPW) приобрести старейшего британского портового оператора P&O с активами в США.

Среди потенциальных препятствий сделки — действующие в отношении «Роснефти» и ее главного исполнительного директора Игоря Сечина американские санкции, добавляет Даллен.

As ConocoPhillips Sues PDVSA for Fraud, Venezuela Says $7 Billion Bond Swap to Continue

cop-v-citgo-pdvsaIn a July 30, 2014 article, citing Russ Dallen, head of Caracas Capital Markets, the Wall Street Journal reported that “Venezuela is looking under couch cushions for coins because they need money . . . . [t]he Exxon and ConocoPhillips judgments are coming any day now and the easiest place to enforce those judgment will be the United States.”


The Financial Times (“FT”) has reported that this pledge of CITGO Assets as collateral could have severe consequences: “PDVSA’s proposed debt swap is also complicated by the proposal to offer up to 50.1 per cent of Citgo as security for bondholders who agree to the deal. Firstly, it is already the state oil company’s main seizable asset in case of a default; secondly, if it is fully pledged to underpin the bond swap then it would in practice deprive other bondholders of their main security.” FT further reported: “Lawyers say this would therefore probably fall foul of the ‘negative pledge’ clause in PDVSA’s existing bonds. Tellingly, the 442 pages of documentation on the debt swap lists no law firms or investment banks involved.” FT wrote: “This is a worrying sign, in that no counsel for PDVSA, no counsel for Citgo, no counsel for the bondholders, no counsel for Venezuela and no counsel for any of the collateral, paying,trustees is putting their name on this document,’ Russ Dallen of Caracas Capital wrote in a note.” FT continued: “Even if enough bondholders sign up, and the legality of the collateral pledge goes unchallenged, Citgo may prove scant security. If PDVSA defaults on the new bonds then investors can seize 50.1 per cent of the US petrol company, but this would trigger a ‘change-of-control’ clause in Citgo’s own $5bn of debt, making it immediately payable.”