Venezuela to compensate 650 million dollars to Holcim cement

Swiss cement giant Holcim said on Monday that Venezuela will pay 650 million dollars (507 million euros) in compensation for nationalising its Venezuelan subsidiary.

“Holcim signed a settlement with the Bolivarian Republic of Venezuela agreeing on the terms for Venezuela’s compensation payment for the June 2008 nationalization of Holcim Venezuela C.A,” the group said in a statement.

With the agreement, a complaint brought by Holcim to a World Bank panel over the nationalisation has been suspended, added the group.

Total compensation reaches 650 million dollars, including 260 million dollars in down payment which Holcim said it has received.

The remaining sum would be paid out in four yearly instalments, added the group, which is one of the world’s biggest cement-makers.

Peter Gysel, spokesman for the group, declined to give a figure for the amount of compensation originally sought but said the agreed sum was lower than the market value of the subsidiary.

“We think it’s certainly below the fair market value. But to avoid further delays, we have decided to settle for this amount,” Gysel told AFP.

The government of leftist leader Hugo Chavez has been nationalising a string of companies, including those in electric utilities, steel, oil services and banking.

Spain’s Santander bank has also been affected by these nationalisations, after the Venezuelan government decided to nationalise Banco de Venezuela, a subsidiary of the Spanish bank.

Holcim last August signed a memorandum of understanding to sell 85 percent of Holcim Venezuela to the authorities after Chavez announced in April that he would nationalise the entire cement industry in the country.

Both parties then proceeded to negotiate terms of the deal, but Holcim claimed that the Venezuelan government “ceased communications” with the group last October.

Holcim took the case to the International Centre for the Settlement of Investment Disputes, which resolves legal disputes arising from investment operations through conciliation or arbitration.

The cement maker had sought compensation that is equivalent to the market value of assets at the time of nationalisation.

Holcim Venezuela posted net sales of about 200 million dollars in 2007, making up about one percent of the group’s overall turnover.