(T)Hugo Chavez has just completed the theft of the electric utility that has served Venezuela – investor owned until now – since 1885. The company he stole it from, US based AES was paid $739.3 million. They had bought controlling interest in the company in 2000 for 1.7 billion and have invested another $600 million in it since then.
If I owned AES stock I would be very, very unhappy right now. But that is likely all they could get from the Thug of Caracas.
The agreement to pass the company's 82-percent stake in the utility to the Venezuelan government was signed by Paul Hanrahan, president and chief executive of Arlington, Va.-based AES, during a ceremony at the presidential palace in Caracas.
The final contract will be signed Monday, and AES' shares will be transferred to state oil company Petroleos de Venezuela SA, or PDVSA, within 30 days, Energy Minister Rafael Ramirez said.
Venezuela valued EDC at $900 million and will pay AES $739.3 million for its share, Ramirez said.
"We are very satisfied with this agreement. This agreement from our point of view respects the interests of both parties. … It is an acceptable amount," said Ramirez, who is also president of PDVSA.
AES has invested at least $2.3 billion in EDC since taking control of the company. It paid $1.7 billion for its stake in 2000 and subsequently invested another $600 million in the company, Hanrahan said.
"It wasn't in our plans to part with EDC. It's with a heavy heart that we part with EDC," he said. "It is one of the best utilities in Latin America."
But he said AES respected the Venezuelan government's decision to take control of the electricity sector.
"It has been a fair process," he said. "It respected the rights of the investors."
Let's all snort together on that one, shall we? Hanrahan had a gun to his head and had to either take the offer or lose everything. But fear not. Venezuela has plenty of chicken feet to go around. How long until the blackouts roll? I have a background in that industry, remember. It is very capital-intensive and requires a lot of infrastructure investment.
Where will that money be coming from? People look at what Chavez just did and will decide – unless they are interpretive dance artistes – to send their money somewhere safer. It will not take long for that utility to degenerate.
