By Anatoly Kurmanaev and Carolyn Cui | Wall Street Journal
CARACAS, Venezuela—The head of Venezuela’s state oil company warned Tuesday that “all options are open” including delaying upcoming bond payments, the latest sign that the day of reckoning is approaching for investors in Petróleos de Venezuela SA.
Bondholders who choose not to participate in PdVSA’s $5.3 billion exchange offer “are playing a dangerous game they can end up losing,” Eulogio del Pino, the president of the firm, said in an interview in his office here. The sprawling firm’s “cash flow will be very complicated next year” if the offer to replace debt maturing in 2017 with bonds maturing years later doesn’t go through, he said.
The oil producer, the major economic engine in a country facing major social, economic and political challenges, has struggled to persuade owners of half of the tendered bonds to accept the deal despite three deadline extensions and an increase in compensation. The latest offer, expiring Friday, won’t be improved further, Mr. Del Pino said.
PdVSA needs to roll over the notes to save cash for a drilling campaign needed to reverse a decline in production. The state oil company and the Venezuelan central government are facing a total of $15 billion in principal and interest payments between now and end-2017, including a $2 billion amortization payment on Nov. 2 for a 2017 PdVSA bond.
“We are asking the bondholders to give us a breathing space so we can have more stability,” said Mr. Del Pino. “This will allow them to continue enjoying the great profits that they have reaped from us in the past decade.”
PdVSA offered to guarantee the new 2020 bonds with 50.1% of the shares in its U.S. subsidiary Citgo Holdings and offered around $1,200 for every $1,000 principal amount tendered. Venezuela’s public institutions hold less than 10% of the tendered bonds, said Mr. Del Pino.
Mr. Del Pino ruled out sweetening the terms further or lowering the 50% participation threshold, as it would dilute the value of Citgo, which could be used as a collateral for other deals.
Bron: Wallstreet Journal