Venezuela Refinery Deal Valued Bonds at 24 Cents on the Dollar

(Bloomberg) -- A deal in which the Venezuelan government exchanged its stake in a refinery in the Dominican Republic to settle debt valued the defaulted bonds at around 24 cents on the dollar. 

Patsa Ltd., an investment vehicle owned by a prominent Dominican family, held $360.9 million of bonds originally issued by the Venezuelan government and state oil company PDVSA, the Dominican Republic Finance Ministry said in a written response to questions. Those bonds were valued at 74 million euros (about $86.5 million) when the deal closed last week, according to the statement. 

The Rizek family, which controls Patsa, transfered the bonds back to Venezuela in exchange for the country’s 49% stake in Refidomsa, a refinery located outside of the Dominican capital, Santo Domingo. The Dominican government then bought that stake in a deal that valued the bonds around 24 cents on the dollar. 

While the Dominican government was not part of the negotiation, the deal was conceived so that the refinery stake was immediately transferred from the Rizeks to the government on Aug. 19, Dominican Finance Minister Jose Manuel “Jochi” Vicente said in the statement. 

Neither the Venezuelan information ministry nor PDVSA immediately responded to requests for comment. 

Details about the transaction come as Venezuela seeks to work with creditors to find ways to honor $60 billion of defaulted debt. The government says it is unable to directly restructure debt due to U.S. sanctions, which ban some financial dealings with the Nicolas Maduro administration and PDVSA.

The refinery deal was the first debt-for-equity swap since sanctions were imposed. The deal was cleared by U.S. regulators, the Dominican government said last week. 

©2021 Bloomberg L.P.