Expat Village is edited and published by
Iain Williams in Caracas, Venezuela.
A Bloomberg story by Daniel Cancel and Steven
Bodzin at www.bloomberg.com
Venezuelan President Hugo Chavez escalated a dispute with Monterrey, Mexico-based Cemex SAB, saying the company's local unit polluted the environment and failed to invest by focusing solely on profit.
Venezuela seized the local operations of Cemex, the largest cement maker in the Americas, as part of a nationalization drive after the government and the company failed to reach an accord on a forced sale. Cemex said it would seek arbitration and called the expropriation a ``flagrant violation'' of the law.
``Go see the pollution not only along the coasts and in the trees, but in the lungs of the children,'' Chavez said on state television. ``Everything is full of powder. Cemex never invested in technology to eliminate the powder because they took all the money abroad.''
Chavez also said company executives acted in a ``disrespectful'' manner to Venezuelans and have a ``superiority complex.'' Cemex spokesman Jorge Perez declined to comment.
Chavez said in April he would nationalize cement companies as part of a plan to ensure state control of strategic industries. Chavez is working to bring about what he calls ``21st-century socialism'' and his administration has seized the country's biggest phone company and a steel mill, as well as assets of oil joint ventures and electricity companies.
Undervalued
The government takeover will help boost homebuilding, the Venezuelan leader said April 3. The president says his efforts to promote state-run enterprises, create joint ventures with private companies and cap prices for some goods will help redistribute wealth from oligarchs to the poor.
In a statement yesterday, Cemex said it has been ``respectful'' of the legal decisions and rules in the countries where it operates. Cemex said Venezuela offered it less than Lafarge SA and Holcim Ltd. when measuring the price by ton of capacity or by earnings before interest, taxes, depreciation and amortization -- a measure of cash flow known as Ebitda.
The Venezuelan government this month reached agreements to buy majority stakes in France's Lafarge SA and Switzerland's Holcim Ltd. for $267 million and $552 million respectively.
Venezuela offered Cemex $650 million for the unit, a figure that ``significantly undervalues'' the business, according to the company statement.
Valuations
On August 18, Venezuelan Energy Minister Rafael Ramirez said Cemex was seeking $1.2 billion for their local operations. Finance Minister Ali Rodriguez said yesterday that the government values Cemex at less than $400 million.
Cemex's American depositary receipts fell 37 cents, or 1.8 percent, to $20.41 in New York Stock Exchange composite trading at 4:15 p.m. The shares have fallen 18 percent this year.
Venezuela is facing arbitration claims in an international court by Exxon Mobil and ConocoPhillips over the expropriation of oil projects; Brandes Investment Partners over the takeover of phone company Cantv; Vestey Group Ltd. over a farm nationalization and Vannessa Ventures Ltd. over the seizure of a gold mine.
Chavez continues final negotiations for the value of Ternium SA's 60 percent stake in the nationalized Siderurgica del Orinoco steel mill, which he seized in April. The shares were worth only $800 million, Mining Minister Rodolfo Sanz said April 26. Luxembourg-based Ternium sought as much as $4 billion, Argentine daily La Nacion reported on April 27.
`Common for Chavez'
``This is common for Chavez,'' Jose Valera, a partner at King & Spalding LLP in Houston said. ``It's all part of a strategy to lowball the numbers as much as possible.''
Chavez has had tense relationships with the Mexican government including former President Vicente Fox which led to the withdrawing of their respective ambassadors in 2005. Chavez called Fox a ``lap dog of the empire'' for supporting U.S. backed free trade agreements for the America's and Fox has recently said that Chavez wants to be the Fidel Castro of the 21st century.
In January, current President Felipe Calderon said Chavez is trying to increase state control of the region's economies as a ``turn to a failed past.''
Chavez vocally supported Calderon's rival in Mexican presidential elections in 2007, and was accused of meddling in internal affairs by Calderon supporters.
``This is about Chavez and the Mexicans. Chavez has a long history of confrontation with Mexico,'' said Miguel Octavio, an economist at BBO Financial Services Inc in Caracas. ``He sees Mexico as a country that is against the Bolivarian project.''
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Expat Village is edited and published by
Iain Williams in Caracas, Venezuela.
