Well, that was better
than the market expected: Venezuela is paying $17.85
per share to buy back the outstanding stock in telecom company CANTV. The
biggest stake is owned by Verizon, which will get $572.3 million, or about 25%
less than it was going to get by selling its stake to Mexico’s Carlos Slim.
But given that there were fears Verizon would get nothing at all, an extra half
billion or so is great news to them.
The nationalization takes away by far the biggest and most liquid stock in
Venezuela, which must be tough for investors looking for ways to place bets
on the country. Maybe they should just start selling protection on Venezuela’s
bonds instead.
there’s a rumor going around that CANTV will pay an extraordinary dividend of about $3/ADR, bumping the payout to shareholders to $21, or about what Slim was offering.
Chávez actually has a bit of a track record in paying for nationalizations. What would happen when he’s no longer flush with cash is the real question.
Chavez does pay something, but I’m not certain it’s enough. Slightly overlooked in the sale of Electricidad de Caracas was how much lower AES’ proceeds from the sale were compared to what it paid seven years ago to take control of EDC (a number that is slightly murky). AES disposed of some of EDC’s non-Venezuelan assets in the interim, but the operations were pretty profitable. This probably pales next to the sums that AES lost in Brazil, but I do think that investor expectations have been fairly successfully managed.