Venezuela’s state-owned PdV has transferred its 49pc stake in the 34,000 b/d Refidomsa refinery to the Dominican Republic in a debt-for-equity transaction that could set a precedent for Venezuelan asset sales and debt restructuring.
By Argus Media – Patricia Garip and Canute James
Aug 20, 2021
The Dominican government paid $88.13mn for the refinery stake in exchange for the retirement of defaulted PdV corporate and Venezuelan sovereign bonds held by Dominican private-sector conglomerate Grupo Rizek, people close to the deal tell Argus.
In back-to-back transactions, Grupo Rizek’s financial vehicle PATSA purchased the refinery stake from PdV and immediately on-sold it to the Dominican government.
The bonds were retired at far below their nominal value but above the secondary market value of pennies on the dollar, Argus was told.
The purchase of the PdV asset was done at an “advantageous” price for the Dominican Republic, finance minister Jose Manuel Vicente said yesterday. “This will allow the government to control the company’s expansion plans and strengthen it as a player in the hydrocarbons market,” he said.
According to the finance ministry, PdV had acquired its stake in the refinery, near Santo Domingo, in 2010 for $131mn.
Refidomsa is among several Caribbean refineries that PdV once promised to expand but later abandoned as it struggled to sustain crude production and meet its overseas obligations, particularly after the US imposed financial sanctions on Venezuela in 2017 and oil sanctions two years later. Venezuela’s government blames the sanctions for causing it to default on its debt obligations.
Saddled with billions of dollars in debt, Caracas is hoping the modest Dominican deal will establish a framework for other debt-for-equity transactions encompassing local and international assets as it engages diplomatically to break an impasse with the US-backed opposition and lift sanctions.
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For Santo Domingo, the transaction will restore Refidomsa’s access to local and international credit to finance an upgrade of the refinery. And for Grupo Rizek, the deal takes defaulted obligations off its books.
Read More: Argus Media – PdV exchanges Dominican refinery stake for debt