MARIELA LEÓN
EL UNIVERSAL

Venezuelan President Hugo Chávez threatened to initial an expropriation decree of Orinoco steelmaker Sidor if a "fair settlement" on the company's value was not agreed by next Tuesday. This move would return the company to the state's hands.

In his weekly TV and radio program Aló Presidente, he said, "Do they consider themselves the owners of that company? Do they take us for fools? We are not. According to them, Sidor valuation is at USD 4 billion. I just laughed at that. I will not pay that amount because that company is not worth it. Sidor used to be larger before."

In Chuao, central Aragua State, the Venezuelan president instructed Vice-president Ramón Carrizalez to meet with Minister of Basic Industries and Mining (Mibam) Rodolfo Sanz and Sidor representatives to "establish a fair cost for the company. However, we are not going to pay the amount proposed by them."

Chávez stated, "If no fair settlement is reached regarding this issue by next Tuesday, I will sign a nationalization decree and order the company's takeover."

Furthermore, he said that "false accountancy books and taxes, as well as environmental and labor liabilities are surfacing. If they are not serious, I will expropriate the company. Stop playing the fool!"

Last Sunday, Mibam Minister Rodolfo Sanz stated that, upon the analysis of several files, Ternium Sidor value was USD 800 million.

Out of that total amount, environmental and labor liabilities and some other debts pending should be deducted. Among those debts there is one with state-run oil company Pdvsa for USD 200 million related to gas supply. In addition to that, the payment of collective bargaining benefits to workers is still pending.

In his statements, Sanz would not explain whether such amount corresponded to 50 percent or 60 percent of the shares. That is to say, there was no precise information on whether the Venezuelan government would allow the private partners to keep a 10 percent of shares or not, or whether the steelmaker would be fully nationalized.

It was made known that an offer in this regard has been presented before the Negotiation Commission, which meets weekly with the interested parties.

In the amounts discussed there is a gap of USD 2.8 million between the value calculated by Argentinean steelmaker Techint (USD 3.6 million) and the one estimated by the Venezuelan government (USD 800 million).

A brief review
The Venezuelan government's offer of USD 800 million for Sidor shares is lower than the amount paid by steelmaker Consorcio Amazonia Ltd for 70 percent of the plant's shares.

In the privatization process held on December 18, 1997, Amazonia offered in public tender USD 2.3 billion for all of the company's shares. Such amount was 50 percent above the base price established by the Venezuelan government, which was USD 1.53 billion.

In one of the clauses of the sales agreement, it was established that, once the operations were resumed, the winning bidder could deduct from the amount agreed the debts and liabilities outstanding. Finally, upon the comparison of financial statements, the conglomerate paid the steelmaker USD 1.2 billion for 70 percent of the shares.

Sidor, being a private company, has invested USD 926 million in modernizing and digitalizing the plant during that period. It has also increased the production from 3 million to 4.5 million tons of fluid steel.

Translated by Karina Gómez P.