Venezuela named a temporary state-run board at steelmaker Siderurgica del Turbio SA after the government seized the company’s assets in 2010, according to a resolution by the Industry Ministry published today in the Official Gazette.
Sidetur’s management had continued to operate the company since the seizure as it waited to conclude compensation talks with the government. Ramon Ernesto Perdomo was named as the head of the board, according to the resolution.
President Hugo Chavez said today that his government took control of six of Sidetur’s plants after some workers protested against the previous administration, slowing output.
“Sidetur had been producing steel rods at half of its capacity and there have been labor strikes that were affecting the supply of rods to our housing projects,” Chavez said on state television.
Chavez has seized the two largest steel companies since 2008, including Siderurgica del Orinoco, or Sidor, that was previously operated by Ternium SA. Chavez created a housing program last year to try to close a 2 million unit deficit as he seeks re-election in presidential elections in October.
Venezuela agreed to pay Ternium $1.97 billion for Sidor.
Chavez’s government seized seven processing plants and 15 scrap metal collection centers belonging to Sidetur in November 2010 and its owners went to the Supreme Court to appeal the expropriation decree, according to an earnings statement on the company’s website.
Sidetur has about $80 million of 10 percent bonds due in 2016 outstanding. The yield on the bonds rose 21 basis points, or 0.21 percentage point, to 18.58 percent today at 3:15 p.m. in New York, according to Hapoalim Securities USA Inc. The price fell 0.5 cents to 75.5 cents on the dollar.
The steelmaker will buy back its debt once it receives compensation, Oswaldo Sahmkow, finance director of Sivensa, Sidetur’s parent company, said in a phone interview on December 6.