Venezuela's biggest private debtor faces default
venezuela's biggest private company, la
electricidad de caracas, will meet with bank creditors in new
york on monday to discuss the danger of a  default on its 622
mln dlr foreign debt, a company spokesman said.
    "we are in an impossible situation. Unless we get
government relief, the company will be bankrupt in three
years," he told reuters.
    La electricidad's problems stem from the government's
december decision to set private debt payments at 7.50 bolivars
per dollar instead of 4.3.
    Company officials estimate that the currency change raised
the debt to 4.67 billion bolivars from 2.67 billion. additional
preferential dollar premiums put the total cost at 7.47
billion, not including interest payments.
    Under the government plan for repaying the 7.8 billion dlr
private debt, the central bank will guarantee debtors their
dollars at 7.5 with a premium of 4.50 per dollar.
    La electricidad president francisco aguerrevere will meet
his bank advisory committee, led by morgan guaranty, to explain
that unless government assistance is forthcoming the company
cannot meet its obligations.
    La electricidad ceased principal payments under a five-year
refinancing plan last year, althouigh interest has been paid,
the officials said. They said exchange contracts, which the
government no longer recognizes, were signed with the central
bank for this refinancing at 4.3 per dollar.
    The company spokesman said the new york meeting will be
held to inform the committee, representing 72 banks, of the
latest developments on efforts to lobby the government.
    "the banks are anxious to know the situation on debt
payments, but we can only tell them we are waiting for a
government response to our proposals," he said.
    La electricidad is seeking permission for a 50 pct rate
increase, which officials say would bring in an extra 1.3
billion bolivars this year.
    The 30 pct tariff increase introduced in january will only
bring in an extra 600 mln bolivars per year against additional
debt costs of 900 mln.
    Without relief, the company will incur losses of 287 mln
bolivars this year, 556 mln in 1988, 733 mln in 1989 and 1.47
billion in 1990. In 1990 the company would be decapitalized 874
mln bolivars.
    As alternatives to the rate increase, the company has also
proposed allowing la electricidad a grace period on payment of
the exchange risk premium to the central bank, a longer period
to pay it, or a soft loan from the government.
    The company spokesman said the government has not responded
to the proposals and there have been no formal meetings since
january.
    "if these solutions are not agreed to, we face the final
resort of either the government buying the debt or the company
being nationalised," he said.
 Reuter
