The Daily Journal. — A group of legal and financial advisers has created a committee to bring together and represent Venezuela’s commercial creditors, aiming to coordinate their participation in the debt restructuring process announced by the government, Reuters reported.
The committee, formed in early August and scheduled for an official launch this Thursday, seeks to bring together companies with claims against the Venezuelan state and Petróleos de Venezuela (Pdvsa), including unpaid contractors, companies holding arbitration awards stemming from expropriations, and investors who purchased debt on the secondary market.
The initiative comes as Venezuela prepares to restructure its financial obligations, which analysts and financial reports cited by Reuters estimate at between $150 billion and $240 billion.
Commercial claims exceed $30 billion
Advisers to the new committee estimate that commercial claims and arbitration awards against Venezuela exceed $30 billion.
The group initially plans to focus on the largest claims to strengthen commercial creditors’ position in potential negotiations with the Venezuelan government.
“We anticipate that we will have members on the committee that will include investors who have acquired debt, those with arbitration awards, and then direct claim holders — construction companies and oilfield service companies,” William Barry, president of the law firm Miller & Chevalier Chartered, told Reuters.
Barry said the goal is to “bring all these parties with similar interests together to achieve two things fundamentally: resolve the claims and resolve them in an orderly manner through a process that everyone can trust.”
Priority sectors include construction, infrastructure and oil industry services because of the volume of obligations accumulated by the state and PDVSA.
Committee seeks to concentrate the largest claims
Brian Jarmain, managing director of financial firm Aethel Partners, said the committee does not necessarily intend to include every commercial creditor but instead plans to start with the largest claims.
“We don’t need 30 claims to have a strong voice at the table, at the restructuring table. We really only need a handful of the largest ones, and that’s our focus,” he told Reuters.
Jarmain identified oilfield service companies as one of the main groups the committee seeks to incorporate and described the sector as “probably the largest commercial creditor.”
The strategy aims to prevent fragmented representation among commercial creditors and establish a common position in potential talks over the recognition, prioritization and payment of outstanding obligations.
No contact yet with financial adviser
The committee’s organizers said they have not yet contacted Centerview, the financial firm selected to advise on Venezuela’s overall debt restructuring process.
The Venezuelan government has also yet to disclose a comprehensive assessment of its obligations or a definitive timetable for completing its debt sustainability evaluation. Both elements will play a key role in determining the terms of any eventual restructuring.
The process will have to address a broad range of obligations, including sovereign and Pdvsa debt, commercial claims, arbitration awards and other liabilities involving creditors from different jurisdictions and with different legal standings.
The committee’s creation adds a new participant to the negotiation process. It signals that commercial creditors intend to coordinate their representation before formal talks begin over the treatment of claims against Venezuela.
With information from Reuters
