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AUTHOR : Venezueln

TITLE : Debt of Venezuela. Proposal

forwarded by the governwm ent
fvownn the Wholdevs of the wmiternal.

PLACE : Lovndown

DATE : 1882 VOLUME :
CALL 2 M NEG : a3-

 
 
 

 

 

 

 

 

 

 

 

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DOCUMENT
SOURCE

The Bancroft Library |

 
 

UNNUMBERED
PAGE [S]

numbering starts at

P- Z; pp- C1]
not indicated

 
(5)

DEBT OF VENEZUELA.

2

Proposal forwarded by the Government from the
Holders of the Internal Debt for the Unification
of the External and Internal Debts into Four per

Cent. Bonds on the basis of a reduction of the
present principal by Eight per Cen.

LONDON:
CORPORATION OF FOREIGN BONDHOLDERS,
17, MoorGATE STREET, E.C.

1882.

 
 

 

 

 

TRANSLATION. |

LEGATION OF THE U.S. OF VENEZUELA,
PAR1s, 27th June, 1882.

Right Honble. E. P. BOUVERIE,
&e., &e., &e.

SIR,

I have received orders from my Government to
submit for the consideration of the holders of Venezuelan
Bonds in London, the proposition made by the holders of
Internal Debt, with a view to arriving at an arrangement
which may permit the conversion of the whole Consolidated
Debt of Venezuela. I have, therefore, the honour to en-
close the original proposition, signed by the Committee of
Cardcas, and I beg to request you immediately to call a
General Meeting of Bondholders to take it into consideration
.and resolve upon it as they may find advisable.

I think it my duty to inform you that if this scheme
should not be accepted it will be impossible to fuse together
the two amounts set aside of the 27 per cent. assigned for the
service of the whole debt, and the Government of Vene-
zuela will only continue to pay, on the External Bonds,
the 3 per cent. per annum as it has done, and up to the
present time, with the most religious exactitude.

The holders of Internal Debt have suffered on all ocea-
sions considerable losses in their capital. In the Internal
Debt is included an amount of great importance which
belongs to the Institutes of Benevolence and Public Instrue-
tion, and these establishments are wanting in the legal
power to accept any reduction in their capital and interest.
The other creditors are disposed to submit to a reduction of

 
2

8 per cent. in order to arrive at a settlement, if the holders
of External Bonds will accept the same sacrifice.

So long as the unification of the Debt is not effected by
virtue of an arrangement between the External and In-
ternal creditors of the Republic, the Government cannot
fuse together into one sum the two amounts set aside out of
the 27 per cent.; and it is evident that one only of these
amounts is not sufficient to pay from February next the
interest at 4 per cent. on the External Debt.

It is therefore indispensable that the External creditors
<hould take into account the true situation of the affair,
and decide if it suits them to accept the proposition of the
Internal creditors, or to wait until, by virtue of the amor-
tization of Bonds of the External Debt, it may be possible,
later, to pay the 4 per cent. per annum with the proceeds of
the 27 per cent. assigned for the service of the External

Debt.

I have the honour to subscribe myself with the most
distinguished consideration, :

Your most obedient, humble servant,
DE ROJAS,

Fiscal Agent of Venezuela.

 

 

BASES

For a scheme of settlement with the holders of External
Debt, presented by the Committee of holders of bonds of
the 5 per Cent. Consolidated Internal Debt, for the purpose
of effecting the conversion of the latter into the former,

Capital of the External Debt ... ... B.68,750,000
» , Internal Debt ... ... B.36,246,000

B.104,996,000

As the sum assigned in the Convention is B.100,000,000,
the following scheme has been agreed on in order that the
conversion may be carried out.

Legal difficulties existing in the way of effecting the
conversion of Internal Debt held by public establishments,
and as the bondholders in general cannot be compelled to
effect the conversion, this being in opposition to their
acquired rights, there are omitted from the conversion :—

B.10,000,000, which remain as registered stock at 5 per
cent. in favour of the Institutions of Benevolence and
Public Instruction ; and of persons holding small amounts
who do not wish to enter into the conversion.

In order that the amounts set aside may make a total
sufficient for the payment of interest, differences of
exchange, office expenses in Cardcas and London, and
the application of some amount for redemption, the
B.94,996,000 shall be reduced by 8 per cent., and this
amount is reduced to B.87,396,321, which will bear the 4
per cent. fixed in the Fiscal Convention.

The rate of 8 per cent. is fixed, even should all or part
of the small holders accept the unification, with the firm
understanding that the difference of interest proceeding
from this source shall be applied to the increase of the
Sinking Fund.

 
 

4

These bases being agreed on, the calculation of the opera-
tion is as follows: —

Amounts set aside, together ... ... B.4,195,000

Interest on B.10,000,000 re- :
gistered Stock and un-
converted Bonds at 5 per
cent. a “i ‘

Interest on the net Capital
entering into the unifica-
tion, say B.87,396,320 at
4 per cent. yo ... 3.490,852:80 3,990,852:80

B.500,000

B.204.,947-20

Out of this amount of B.204,947:20 shall be taken in
the most economical manner the charges for differences
of exchange, office expenses in London and Carécas, and
the remainder is assigned for the sinking fund of both
Debts, that is to say, the registered stock and small holders,
and the Unified Debt.

In accordance with this demonstration, your Committee
submits the proposed resolution for your acceptance :—

« That this scheme be communicated to the Committee
of Venezuelan Bondholders in London as the proposition
presented to them by the holders of the 5 per cent. Con-
solidated Debt, in order to effect the Conversion of their
Stock into Bonds of the External Debt.”

Caricas, 4th April, 1882.

LUCIO PULIDO.

M. A. MATOS.
GEORGE STELLING.
C. MORALES.

E. DE SOLA.

 

Wertheimer, Lea & Co., Printers, Circus Place, London Wall.

 

 
 

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