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  • knowledgefreesus knowledgefreesus Sep 23, 2012 1:09 AM Flag

    China, CITIC Chavez & Las Cristinas

    The agreement on Las Cristinas with CITIC is great news for KRY and GRZ. Here is the gist:
    a.- China is a subscriber to the investment protection agreement that enforces the ICSID decisions.
    b.- CITIC surely knows this and , therefore, knows that access to Las Cristinas will require either a win by Vzla. or a payment to resolve the case. The good thing is that CITIC has the means to pay up for Vzla., which is not in a position to pay itself.
    c.- Chavez and China are "buying" insurance for an eventual loss by the former of the Oct. 7th. elections.
    For Chavez, it means protection by China in case he loses, since his goverment is so corrupt that an election loss will put him on the spot with few powerful friends to protect him, other than China. For China, Chavez has taken so much money in loans from it that securing control over assets may be the only way they will get their money back .
    d.- The good news though is that with this agreement, CITIC has most surely agreed with Vzla. on how the ICSID case will be managed. With the stakes involved, I cannot imagine that CITIC would agree to a situation in which it would not call the shots.
    So, a party with the financial means, with a home country that will enforce the ICSID decision and an investment time horizon much longer that Oct. 7th. is a much better party to negotiate with than Chavez'
    I see this thing unfolding in a positive manner for KRY and GRZ within the next 3-4 months.

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    • Would expect the kickback to Chavez is in the hundreds of milllions. Just in case he doesn't get re elected

    • all valid points, and an uptick with a volume increase would mean market is interested, we shall see, with a capriles victory or the eventual demise of hugo, venezuela will need foreign investment to move forward, and settling past wrongs would be a way to start anew. what would be acceptable to the long suffering shareholders of kry and grz? 600 million a starting point i would think, 300 million cash and 300 million gold

    • Citic definitly has the cash to give VZ to give to Kry. Hugo definitely seems like he is dying or will lose the election. And it definitely seems like both parties are signing an insurance policy against the unknown, a rarity for Mr Chavez. This play has lots of upside bias and more with a favorable Supreme Court ruling due anytime. If management doesnt away too many shares to bond holders through a plan of compromise then shareholders may be pleasantly surprised soon.