CARACAS -- The trustee of Venezuela's $650 million bond issue for state electric company Corpoelec has declared the company in default after it failed to pay the company's only dollar bond, which matured on April 10.
Electricidad de Caracas (EleCar or EDC) Trustee Wilmington Trust has declared an Event of Default on Venezuela's $650 million of Electricidad de Caracas 8.50% bonds that matured April 10.
Wilmington Trust reports that the Paying Agent notified them that neither the $650 million principal maturity nor the $27.6 million coupon was received.
"The Paying Agent has notified the Trustee that the interest and principal payments that were due on April 10, 2018 were not received by the Paying Agent," Wilmington Trust wrote in declaring the Event of Default. "As a result an Event of Default under the indenture has occurred due to the failure to pay principal on the Notes when it became due on April 10, 2018."
The "Notice of Event of Default" goes on to advise bondholders of their options.
"Pursuant to Section 5.1(m) of the Indenture, the Required Holders shall have the right to direct the Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes," Wilmington states, but then goes on to warn that it will have to compensated for further actions.
"Pursuant to Section 1.1(b)(F) of the Indenture, the Trustee is under no obligation to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonable assured to it."
Wilmington invites holders to contact Peter Finkel at Wilmington Trust in Minneapolis, Minnesota for further questions. It also lists Gregg Bateman at law firm Seward & Kissel in New York as Trustee Counsel.
"We can only account for only about 20% of the Electricidad de Caracas (EDC) holders via a Bloomberg data search, with the biggest known holder being Grantham, Mayo, Van Otterloo & Co. with $111.5 million face in their GMO Emerging Country Debt Fund (GMCDX) -- that is a little over 17% of the $650 million face amount of the bond," notes Caracas Capital head Russ Dallen, who reported the default notice over the weekend.
The $4.15 billion GMCDX fund was reporting EDC as their 28th largest holding as of November 30 at a price of 40.
Electricidad de Caracas Event of Default Declared by Wilmington Trust - 12 April 2018 by Latin American Herald Tribune on Scribd
Electricidad de Caracas 8.5% 4-10-2018 Bond Prospectus by Latin American Herald Tribune on Scribd