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Venezuela’s PDVSA Sues Newspaper for Hurting Bond Swap

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Venezuela’s state-run oil company PDVSA has filed a lawsuit against a local newspaper on grounds of defamation. The suit comes after the newspaper, El Nuevo Pais, published a story saying the company was in financial trouble and that the socialist government plans to privatise the company. Petróleos de Venezuela, S.A. [PDVSA.UL] (PDVSA) has been trying to get investors to back a bond-swap of bonds maturing next year, for new bonds that will mature in 2020. The company is trying to ease its debts and reduce what would be very large payments next year, which it currently can’t maintain. The bond-swap is valued at $5.3 billion. In order for the bond to succeed, 50 percent of investors would need to get on board. The company extended the deadline for a second time to Monday, after it was reported that investors had been less than enthusiastic.

This prompted the company to go after El Nuevo Pais, which it believes is the reason behind the failure of the program so far. PDVSA president, Eulogio Del Pino, said “They are trying to harm, in whatever way they can, an operation that we have offered transparently.” The newspaper has anti-government sentiments, thus giving PDVSA more fuel for their suit. PDVSA reportedly planned on using their US subsidiary, Citgo Holding Inc as collateral for the new debt. The government has been adamant that they would pay their debts, with backing also coming from the central bank. The president of the Central Bank, Nelson Merentes, assured investors at a private meeting in Washington, that all debts shall be repaid.

 

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