Venezuela to Seize Cement Plants in Takeover Fight

Por Venezuela Real - 19 de Agosto, 2008, 17:44, Categoría: Prensa Internacional

REUTERS
The New York Times
August 19, 2008

CARACAS (Reuters) - Venezuela will seize plants owned by Mexico's Cemex after failing to reach a deal in cement nationalization talks, a show of strength by President Hugo Chavez in a drive to control the OPEC nation's key industries.

Chavez, a socialist leader who has already taken oil and telecommunications companies from private hands, also is buying a large Spanish-owned bank and a steel company.

The move against Cemex's local unit will further chill the investment environment in major oil exporter Venezuela, where companies enjoy fast growth but face heavy regulations on prices and frequent government takeover threats.

"At midnight we are going to take operational control of Cemex's installations and from that moment the expropriation decree takes effect," said Energy Minister Rafael Ramirez, who oversaw the takeover process.

Cemex said in a very short statement that it acknowledged the takeover but gave no more information.
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Ramirez said Venezuela would pay Cemex considerably less than the $1.3 billion for its local plants that it had sought in compensation talks. Cemex's position is weakened by the impending expropriation.

As part of the cement takeover, Venezuela struck deals to buy majority shares in the local operations of European cement makers Holcim and Lafarge.

The government said it paid $552 million for an 85 percent stake in Switzerland's Holcim and $267 million for 89 percent of the shares in France's Lafarge. But Venezuela said Cemex was asking for too much.

ROCKY RELATIONSHIP

Cemex has long had a rocky relationship with Chavez, who is struggling to meet home-building targets and accuses the Monterrey-based company of exporting too much of its local output.

A group of Chavez supporters set up camp outside Cemex Venezuela's main plant on the northeastern port of Guanta in preparation for the state occupation of the facility.

Reuters was unable to reach a representative for Holcim Venezuela.

Cemex's Venezuelan operations accounted for 4 percent of the group's total earnings before interest, tax, depreciation and amortization (EBITDA) in 2007.

Venezuela last year seized oil projects in the Orinoco oil belt after takeover negotiations stalled. In the end more-or-less fair compensation deals were struck with most of the companies. Exxon Mobil and ConocoPhillips are suing Venezuela over the nationalization.

Some analysts hope the takeover could still have a silver lining for Cemex if a reasonable compensation deal is struck. An asset sale could reduce Cemex's $19 billion debt that surged last year after it bought Australian rival Rinker in its biggest takeover deal yet.

As a rule of thumb, Cemex avoids minority partnerships in companies. After Chavez ordered the nationalization, Cemex Venezuela transferred its small overseas assets, probably to another Cemex unit, in a move that angered Venezuela.

Venezuela slammed Cemex with a $37 million tax bill earlier this month as the takeover talks hit rough ground.





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