Cemex seeks arbitration in Venezuela takeover
Posted: Thursday, August 21, 2008
MEXICO CITY (AP) -- Mexican cement maker Cemex SAB said late Wednesday to seek World Bank arbitration over Venezuela's move to nationalize its local cement plants this week -- a step it called flagrantly illegal.
The Monterrey, Mexico-based company announced in a statement that it would file a claim before the International Center for Settlement of Investment Disputes, an autonomous division of the World Bank in Washington, D.C.
Cemex called the confiscation of its assets a "flagrant violation" of Venezuela's Constitution and its expropriation laws, and said Venezuela's offer of US$650 million in exchange for its local operations "significantly undervalues its business in Venezuela."
Government officials, backed by National Guard troops, seized control of Cemex's plants in Venezuela after a deadline for negotiating terms for their takeover expired at midnight on Monday. The move marks left-leaning President Hugo Chavez's latest step to nationalize key sectors of the nation's economy.
Cemex spokesman Jorge Perez said the company would file its arbitration claim imminently, although he said no exact date had been set. Cemex will ask for what it considers fairer compensation, he said, without specifying how much the company is seeking.
According to Venezuelan Vice President Ramon Carrizalez, Cemex had demanded US$1.3 billion, a figure he called "well above its real value."
Cemex says its Venezuelan assets include three cement plants, 30 smaller concrete plants, a shipping terminal and other facilities. It entered the country in 1994 when it bought out a Venezuelan cement company, and it until this week had some 3,000 employees.
Two other cement companies, Lafarge SA of France and Switzerland's Holcim Ltd, agreed to nationalization terms for their own Venezuela units this week.
Venezuela agreed to pay US$267 million to Lafarge and US$552 million to Holcim in compensation. Both will stay on as minority partners.
In contrast, given its production capacity and earnings, Cemex said the offer it received was proportionally lower than the two other companies'.
"The Venezuelan government's actions highlight a lack of respect for the principles of international law and the treaties relating to reciprocal protection of investments," Cemex said in its statement.
The Monterrey, Mexico-based company announced in a statement that it would file a claim before the International Center for Settlement of Investment Disputes, an autonomous division of the World Bank in Washington, D.C.
Cemex called the confiscation of its assets a "flagrant violation" of Venezuela's Constitution and its expropriation laws, and said Venezuela's offer of US$650 million in exchange for its local operations "significantly undervalues its business in Venezuela."
Government officials, backed by National Guard troops, seized control of Cemex's plants in Venezuela after a deadline for negotiating terms for their takeover expired at midnight on Monday. The move marks left-leaning President Hugo Chavez's latest step to nationalize key sectors of the nation's economy.
Cemex spokesman Jorge Perez said the company would file its arbitration claim imminently, although he said no exact date had been set. Cemex will ask for what it considers fairer compensation, he said, without specifying how much the company is seeking.
According to Venezuelan Vice President Ramon Carrizalez, Cemex had demanded US$1.3 billion, a figure he called "well above its real value."
Cemex says its Venezuelan assets include three cement plants, 30 smaller concrete plants, a shipping terminal and other facilities. It entered the country in 1994 when it bought out a Venezuelan cement company, and it until this week had some 3,000 employees.
Two other cement companies, Lafarge SA of France and Switzerland's Holcim Ltd, agreed to nationalization terms for their own Venezuela units this week.
Venezuela agreed to pay US$267 million to Lafarge and US$552 million to Holcim in compensation. Both will stay on as minority partners.
In contrast, given its production capacity and earnings, Cemex said the offer it received was proportionally lower than the two other companies'.
"The Venezuelan government's actions highlight a lack of respect for the principles of international law and the treaties relating to reciprocal protection of investments," Cemex said in its statement.
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