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Friday, February 1, 2008

Pdvsa debt was USD 16 billion in 2007



Pdvsa debt was USD 16 billion in 2007
Caracas, miércoles 23 de enero, 2008

MARIANNA PÁRRAGA
EL UNIVERSAL

A USD 7.5 billion debt issue in the domestic market, as well as loans received from French BNP Paribas and Japanese Marubeni and Mitsui, increased the consolidated debt of state-run oil conglomerate Pdvsa and its affiliates to USD 16 billion.

A report, published in the domestic press by KPMG's Alcaraz, Cabrera & Vázquez, shows that out of the consolidated debt, the parent company's debt amounts to USD 12.37 billion. The parent company contracted such debt virtually over the last 12 months.

In January 2007, Pdvsa entered into an agreement with a group of banks headed by BNP Paribas to extend a credit line of USD 1.12 billion. In the following month, the conglomerate negotiated a USD 3.5 billion loan from Japanese Marubeni and Mitsui, with the Japan Bank for International Cooperation acting as dealer. In April last year, Pdvsa placed a USD 7.5 billion debt issue in the domestic market. This way, the oil giant in one year contracted a USD 12.12 billion, and only repaid USD 173 million to the Japanese firms.

Additionally, there was the debt of Pdvsa's refining and marketing branch in the US Citgo. According to the debt report published by Alcaraz, Cabrera & Vázquez, Citgo's debt was USD 2.33 billion at the end of 2007. Pdvsa's branch in the US in December 2007 negotiated a USD 1 billion loan aimed at providing financial support to the parent company.

Another part of the Venezuelan oil holding's debt is that represented by Pdvsa's stake in the joint ventures that replaced the extinct strategic partnerships.

At the end of 2007, Pdvsa bought back USD 501 million (99 percent) of Cerro Negro bonds. The holding also repaid USD 129 million to banks to settle Cerro Negro's standing debt and repay all of Hamaca's debt. In December 2007, the standing debt of the two former strategic partnerships was USD 1.21 billion -mostly Petrozuata's bonds.

Finally, the debt balance shows the debt of Pdvsa Virgin Islands (USD 76 million), Tropigas (USD 5 million) and Bariven (USD 3 million).

The notes to the report state that the USD 16 billion debt includes accounts payable, income tax payable, indemnifications, retirement payments and other liabilities.

The report also accounts for the debt contracted by Pdvsa when it purchased 93.61 percent of power utility La Electricidad de Caracas in 2007. This operation involved a USD 269 million debt.

"As of the date of this balance, we are performing the audit of the consolidated financial statements of Pdvsa up to December 31, 2007," said the firm.

More expenses expected
Pdvsa's quick pace of indebtedness is likely to start hitting cash flow this year, additionally to the fact that some of the loans contracted restrict the corporation's ability to get additional funding, pay dividends, encumber assets or sell assets, the auditors warned.

Based on the balance, in 2008 Pdvsa and its affiliates are facing debt maturities at USD 2.87 billion, in 2009 the sum is USD 447 million and USD 422 million in 2010.

Such figures do not include recurring payments of debt servicing, with agreed annual interest rates ranging from 1.70 percent and 17.67 percent.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com

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