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UPDATE 1-Miner Crystallex wins court order against Nomura over Venezuela deal

Published 2017-06-30, 07:01 p/m
© Reuters.  UPDATE 1-Miner Crystallex wins court order against Nomura over Venezuela deal
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(Adds context on Crystallex and Venezuela disputes)

By Brian Ellsworth and Corina Pons

CARACAS, June 30 (Reuters) - Canadian miner Crystallex, seeking to recoup financial damages from an expropriation by Venezuela, won U.S. court approval on Friday to bar Japanese bank Nomura 8604.T from transferring securities owned by the OPEC nation.

The court decision follows a Reuters report that Venezuela is seeking to sell some $710 million in fixed-income securities back to Nomura, which originally issued them in 2008, to raise cash amid an economic crisis. United States District Court for the Southern District of New York granted the request, according to court papers.

The company, which cited the Reuters report in its request, said Venezuela was seeking to draw down assets in the United States to prevent it from collecting on the award.

The move is one of the most aggressive legal gambits to date by a company seeking compensation for a wave of nationalizations under the leadership of late Socialist leader Hugo Chavez.

The ruling further complicates Venezuela's efforts to raise cash from international financiers amid a crippling financial crisis. Opposition leaders are already urging banks not to finance Maduro's government, citing human rights violations that have been registered during the crackdown on three months of opposition protests.

Crystallex, which cited the Reuters report in its request, said Venezuela was seeking to draw down assets in the United States to prevent it from collecting on the award.

Crystallex's dispute with Venezuela dates back to the 2008 nationalization of the Las Cristinas gold mine.

Around 20 companies have filed suits against Venezuela in the World Bank's International Centre for Settlement of Investment Disputes, or ICSID, primarily to seek compensation for nationalizations under late socialist leader Hugo Chavez.

Both Nomura and Venezuela will be able to respond to the restraining notices, Crystallex said in its request.

Nomura and Venezuela's government did not immediately respond to requests for comment.

The talks revolve around $710 million in securities known as credit-linked notes that were issued by Nomura to Venezuela in 2008, according to a finance industry source.

One of the notes has a face value of $390 million and matures at the end of 2018 while the other, with a face value of $320 million, matures in 2023, said the finance industry source, who asked not to be identified.

Venezuela is seeking to sell those securities before they mature, the source said, effectively accepting a loss on the notes as a way of getting the cash back sooner.

The government of President Nicolas Maduro is struggling under the collapse of the country's socialist economic model that suffers triple-digit inflation, chronic product shortages and rising incidence of malnutrition.

Maduro insists his government is victim of an "economic war" and has lambasted the opposition's campaign to block financing deals.

Julio Borges, head of the opposition-run Congress, this month publicly chided Nomura for participating along with Goldman Sachs Group Inc (NYSE:GS) GS.N in a $2.9 billion bond operation in May.

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