Banking and Insurance | Capital Markets | Energy and Oil | Labor and Employment
Litigation and Arbitration | Mergers and Acquisitions
Project Financing and Debt Restructuring
Regulatory Procedures. Competition and Antitrust | Tax | Telecommunications | New

Banking and Insurance

• We are working with Mayer Brown in assisting the insurers or the reinsurers that provided coverage with respect to the expropriation of certain assets that were being used for the provision of services to PDVSA, the national oil company. In one case, our clients are the insurers of the drills belonging to Helmerich & Payne de Venezuela C.A., and, in the other case, our clients are the reinsurers of the ships belonging to Transportes Marinos de Occidente

• In 2010, we assisted MetLife in the purchase of a group of AIG investments worldwide, because these investments included a 50% participation in a local insurance company called Seguros Venezuela. In 2011, we assisted MetLife in the sale of its participation in Seguros Venezuela.

• We assist the most important Venezuelan banks, such as (i) Banesco, with regard to the design and implementation of certain new banking products, the standard form agreements it proposes to its borrowers and suppliers, important individual loan and services agreements, certain consumer law and antitrust law issues related to its contracts, matters related to its shareholding structure and certain investments; (ii) Mercantil, on the drafting of the documents (loan agreements, mortgages and pledges, etc.) related to the financing of constructions, and the revision and analysis of the documentation regarding the corresponding security interest; and (iii) Citibank, regarding the limitations that apply to the offer to clients in Venezuela of banking, investment and insurance services rendered abroad. We also provide advice to Citibank with respect to certain problems that have arisen with regard to estates, trusts, exchange control regulations, etc. In addition, we have been assisting several of Citibank’s entities or branches abroad in reviewing the corporate documentation of Venezuelan companies which are to do business with such entities or branches.

• We are assisting the bank lenders of the Orinoco Belt heavy oil project financings, Petrozuata (US$ 2,400 million, in 1997) and Hamaca (US$ 3,500 million, in 2000), in the release of the Venezuelan security granted at the time, when we were local counsel to the lenders and drafted the Venezuelan security documents. The lender of record structure used in the Petrozuata financing was the first of its kind in Venezuela. For the Hamaca financing, our firm designed and drafted a security trust, which was also a first in Venezuela in the oil sector. The Venezuelan law documents drafted by our firm for these projects, including the security trust, were used as a model in other financings. Since them, we have assisted the bank lenders in different matters of interest, including the nationalization process which began in 2007. The Hamaca lenders’ credit was completely prepaid in December 2007; and the Petrozuata lenders’ credit was completely prepaid in July 2008.

• We have been assisting the bank lenders in other important project financings, such as Fertinitro (US$ 810 million, in 1998) and Sidor (US$ 1.8 billion, in 2000). We represented the lenders in such financings as local counsel for the banks, and then continued to assist them in matters of their interest, including the nationalization of both projects. Fertinitro’s nationalization finally occurred in 2011, when the credit was totally prepaid (only the release of security is pending). Most of Sidor’s debt was prepaid in 2009, when assisted the bank lenders with regard to the replacement of Deutsche Bank AG New York Branch by Banco Industrial de Venezuela as agent for the bank lenders.

Capital Markets

• In 2008 we assisted one of the largest Venezuelan financial institutions with regard to the design and implementation of a new product for the capital markets. The legal analysis included banking and capital markets regulations, credit and tax issues, in a structure that, if and when approved, will be the first of its kind in local markets; as well as the drafting of all the related documents and agreements.

• In 2008, we assisted a government owned company, the purpose of which is to finance certain projects or to guarantee the payment of the corresponding debt, with regard to the design and implementation of a new product for the capital markets. Again, the legal analysis has included banking and capital markets regulations, credit and tax issues, in a structure that, if and when approved, will be the first of its kind in local markets; as well as the revision of all the related documents and agreements and the drafting of a trust agreement.

• We represented Telefónica International Holding BV, a subsidiary of the Spanish telecommunications giant Telefonica, with regard to the tender offer by the Venezuelan state of CANTV, the major Venezuelan telephone and communications corporation in the 2007 “nationalization” process. Telefonica held 54 million class “A” shares, acquired in the 1991 privatization of CANTV, in which we represented the purchasers.

• We assist our clients in their dealings with the securities exchange regulator, the Superintendencia Nacional de Valores (formerly the Comisión Nacional de Valores), representing them in administrative procedures, recommending strategies, and generally defending their interests in capital markets related issues, such as takeover defenses, acquisition structures, listing and delisting of securities, etc

• During 2001 and 2002, we advised the Caracas Stock Exchange in the development and public offer of new products similar to index-tracking stock and bond portfolios, which are known as the “Jewels” and were negotiated for the first time in Venezuela in March 2002.

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Energy and Oil

• We are assisting our clients Va Tech Hydro GMBH and Andritz Hydro, C.A. with regard to the project of supply and installation of major equipment in the Yacambú-Quíbor hydraulic plant. Our advice included general legal assistance, as well as in the drafting and reviewing of documentation.

• We continue to assist Andritz Hydro Gmbh (formerly Va Tech Escher Wyss Gmbh), Voith Hydro Ltda (formerly Voith Siemens Hydro Power Generation Ltda), and their Consortium Euro-Bras Guri, with regard to the performance of the contract to design, build, install, repair and test all the equipment and spare parts necessary to rehabilitate the Guri Hydropower Plant, the largest hydro-electric facility in Venezuela, which provides more than 60% of the electric energy across the country. We deal with all their corporate requirements in Venezuela, as well as with tax and labor issues arising from the original contract, which was executed in 2007, and which has been extended.

• We participated in three of the four most important project financings of Venezuela, all of them extra-heavy oil projects. In two of them, Hamaca (US$ 3.5 billion, in 2000) and Petrozuata (US$ 2.4 billion, in 1997), we assisted the bank lenders when the credits were granted, designing the security systems under Venezuelan law. We continued to assist the banks in later stages, including the nationalization process which began in 2007. Within that context, we reviewed the current regulatory framework and all the legislation changes made by law and by Presidential decrees, in taxation and other matters; building upon our firm’s long history in the oil sector. We are now assisting our clients with the release of the local security interest. In the third project financing, Sincor (now Petrocedeño), we assisted Calyon, who replaced JPMorgan Chase as leader. We reviewed the Venezuelan law aspects of all the loan documentation implementing such replacement (2009). The Sincor project was the only one to be refinanced in the wake of the 2007 nationalizations. The lender of record structure that our firm designed for Petrozuata was reproduced in the Sincor project.

• In 2009 we provided assistance to Prominvest, a Russian public sector company, in relation to a joint venture with PDVSA, the Venezuelan national oil company. Prominvest undertakes environmental reclamation in areas next to oil exploitations, which permit the recovery of oil.

• We have been providing advice to the bank lenders regarding the FertiNitro nationalization, which finally took place in 2011. We had advised the bank lenders with regard to the US$810 million financing for Fertilizantes Nitrogenados de Venezuela (FertiNitro); a credit granted in 1998. Since then, we have been advising the bank lenders with regard to issues which have arisen, such as price controls and quotas that have been imposed or may be imposed on Venezuelan sales of fertilizers; tax matters; exchange control matters; and issues related to the security granted at the time. This loan was repaid to the bank lenders in 2011 and the release of the security interest is pending

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Labor and Employment

• We are currently assisting Zurich, a provider of insurance services, with the negotiations and payments to all workers that leave the company. The current Venezuelan political system and the very protective labor laws, mean that our extensive experience in labor litigation is used in carefully drafting and negotiating the closing of the work relationship, using detailed expertise in order to avoid further claims from the workers.

• We assist the local subsidiary of Asea Brown Boveri (ABB) with respect to all the claims by its former employees, in labour related cases; some of which have reached the Supreme Tribunal of Justice.

• We assisted CANTV, the major telecommunications provider in Venezuela, with regard to their labor litigation since its privatization in 1991 until 2009. In 2005, the number of cases handled by our firm increased significantly, reaching at times more 2,000 simultaneous trials, at all levels of the judicial system. Since 2007, following the “nationalization” of CANTV, we continued to assist the company in the transition, applying its policy to reach agreements with its former workers. In this transition period we successfully closed a large proportion of the cases.

• We are currently assisting Compass Group, a major international provider of food and maintenance services, with regard to the claim for severance payment made by the former President of its then subsidiaries in Venezuela, for over US$ 1,7 million. There are very interesting issues arising in this case, since the former president of the three companies is a French citizen, who was working for the parent company, came to Venezuela as an expatriate worker and wants to receive severance payments and other labor benefits under Venezuelan law, instead of the applicable foreign law.

• We represent Red de Abastos Bicentenario, formerly Cadena de Tiendas Venezolanas, CATIVEN, regarding severance claims from former employees (as well as benefits that have already been paid), in over 20 cases. The client has around 50 stores (mainly supermarkets and hypermarkets) in many cities all over Venezuela.

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Litigation and Arbitration

• Our client, Seguros Orinoco had won an arbitration procedure in 2000 against Banco de Venezuela (now a subsidiary of the Spanish financial organization, Grupo Santander). Banco de Venezuela contested the arbitration award in a court of appeals, and obtained a favorable decision in 2005. In a precedent setting decision dated April 11, 2008, the Supreme Tribunal of Justice decided in our favor. This is a very important case from the point of view of the future of arbitration in Venezuela, since the Supreme Tribunal’s decision revoked the court of appeals’ decision, setting a precedent the final result of which is favorable to the upholding of arbitration judgments. Indeed, according to the Commercial Arbitration Law, arbitration awards may only be contested by requesting a declaration of nullity from the courts of appeals. The Supreme Tribunal had formerly considered that the courts of appeals’ decisions annulling arbitration awards could not be the object of revision; however, in this case, changing its position, the Supreme Tribunal allowed the revision of the court of appeals’ decision, and ruled against it.

• In 2007 we won a landmark decision by the Supreme Tribunal of Justice regarding the non labor relationship of a medical doctor with respect to the private hospital where he renders services to his patients, our client, Centro Médico Docente La Trinidad. In a very long and complicated case, which started in 1986, the Supreme Tribunal of Justice finally decided on the merits of the case, rejecting the claim that medical doctors are the employees of the private hospitals where they attend their patients, and, that consequently such private hospitals should grant doctors severance payments and other labor benefits upon the termination of the supposed labor relationship. The decision establishes a precedent for other professionals in similar conditions; and is especially significant because of the very ample protection that Venezuelan labor legislation grants to employees, which includes severance payments calculated with respect to the duration of the working relationship.

• We assist Chadbourne and Parke in acting for London reinsurers on a facultative reinsurance dispute in the United Kingdom and Venezuela following a US$27 million claim in Venezuela (the losses allegedly amounted to US$12,258,647.10 and the business interruption claim is for US$ 14,805,016).

• We represented Four Seasons Corporation in a case with ramifications in Venezuela and abroad, regarding the Four Seasons Hotel in Caracas, which is one of the largest hotels of Venezuela. In this case, we handled the litigation in the Venezuelan courts, for an amount of approximately US$ 14 million and we provided advice with regard to Venezuelan law aspects in an arbitration procedure held in Miami, for an amount of approximately US$ 25 million.

• We assisted CANTV, the major telecommunications provider in Venezuela, with regard to their labor litigation since its privatization in 1991 and until 2009. In 2005, the number of cases handled by our firm increased significantly, reaching at times more 2,000 simultaneous trials, at all levels of the judicial system. Since 2007, following the “nationalization” of CANTV, we continued to assist the company in the transition, applying its policy to reach agreements with its former workers. In this transition period we successfully closed a large proportion of the cases.

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Mergers and Acquisitions

• In 2010 we assisted MetLife in an international transaction by means of which it acquired American Life Insurance Company (ALICO) from AIG, for approximately $15.5 billion. The transaction included the acquisition of 50% of Seguros Venezuela, an insurance company. And in 2011 we again assisted MetLife in the sale of its participation in Seguros Venezuela.

• In 2008 we counseled Henkel KGaA, as local attorneys for the acquisition from Azko Nobel of ICI Group’s global business of adhesive and electric materials, for a total value of $5 billion. The Venezuelan transaction included two companies: ICI Venezolana, S.A. and National Starch & Chemical, C.A.

• In 2007, at the request of Debevoise & Plimpton, we assisted Freeport-McMoRan Copper & Gold Inc. with regard to the international transaction whereby General Cable Corporation purchased Phelps Dodge International Corporation for approximately US$ 710 million. The deal included the acquisition of subsidiaries in several countries, including two Venezuelan companies. We performed the due diligence needed in order to implement the operation in Venezuela, undertaking the examination of labor issues, tax consequences and matters of strict corporate law, which were then reflected in the documentation.

• In 2007 we counseled our client, Compass Group, with regard to the sale of all its Venezuelan subsidiaries: (i) Servicios Evcaven, C.A., (ii) SHRM de Venezuela, C.A. and (iii) Servicios Costa Afuera C.A.S.C.A., C.A. Compass Group provides food and a range of selected support services to companies and other institutions, in around 62 countries. The three Venezuelan subsidiaries provided food and maintenance services to many of the larger and more important corporations, national and international, government owned and private, in numerous localities all over Venezuela, including very remote areas. The sellers were (i) Compass Group International BV and (ii) Compass Group France Holdings SAS (f/k/a Compass Group France SAS). The buyer was Argyle Leisure Fund S.A. (Luxembourg). After the closing, some issues arose which required further negotiations, and a final settlement was executed in May 2008.

• We advised the controlling shareholders of the Orinoco Group, which included Banco del Orinoco (a bank), Seguros Orinoco (an insurer) and Venoco (a petrochemical corporation), with regard to the sale of such three companies to, respectively, CorpBanca, Inversiones y Valores Mercantil and Klim 2003 C.A./Inversora Petroklim, C.A. We assisted the former shareholders of the Orinoco Group in the sale of their shares and afterwards in very complicated negotiations with the three buyers, which involved also a local bank (Banco Mercantil) and a foreign bank (Commerce Bank), since these two banks controlled the security interest granted under the Seguros Orinoco stock purchase agreement and the Venoco stock purchase agreement. Such negotiations included providing solutions to the problems that surfaced in relation with the representations and warranties made by the sellers in the three stock purchase agreements, as well as other matters. Such negotiations took several years and included providing solutions to the problems that surfaced in relation with the representations and warranties made by the sellers in the three stock purchase agreements, as well as other matters. The last settlement agreement, which was the one entered into by the former shareholders of Seguros Orinoco and Inversiones y Valores Mercantil, was executed in December 2007.

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Project Financing and Debt Restructuring

• We advise Pering Group, one of Venezuela’s largest, real estate, engineering, design and construction firms, with regard to the “Blue Residence Club” in Aruba, which is in its early stages of development, as well as with regard to the completed project of “Oceania”, the largest privately owned residence condominium in Aruba. Our advice includes strategic planning of investment and financial matters, structure design and negotiation and drafting of contracts.

• We have counseled the bank lenders in important project financings, such as Hamaca (US$ 3.5 billion, en 2000); Sidor (US$ 1,8 billion en 2000); Fertilizantes Nitrogenados de Venezuela, FertiNitro (US$ 810 million, in 1998); and Petrozuata (US$ 2,4 million, in 1997). Our assistance began when the structure was defined and the credits were granted, and we designed the security systems under Venezuelan law. Since then, we have continued to assist the banks in matters of their interest, including the nationalization processes (since 2007) and the payment of the credits (since 2007 and until 2011).

• We assisted Voith Paper Maquinas e Equipamientos Ltda. and Andritz AG with regard to the Purchase Contract of certain process machinery, equipments and engineering (Package 1) for a pulp and paper mill to produce 250.000 tons of newsprint per year, for an amount of US.$ 90,588,000 plus 219,060,000 euros. We also assisted on the drafting of many other related contracts, such as Social Contribution Agreement, Professional Service Agreement and Technical Assistance and Technological Services Agreement. The project began in 2007, the first agreement was executed in December 2007, and many issues have been resolved in 2008, with further agreements executed in February 2008. The deal included very sensitive political and regulatory issues regarding arbitration and foreign law, and interesting matters arose in connection with the laws of other jurisdictions (Brasil, Austria and Spain). We are still assisting Voight and Andritz in the relationships that stem from such agreements.

• In 2005 and 2006 we represented the bank lenders (Deutsche Bank AG, London Branch, Citigroup Global Markets Limited, Credit Suisse First Boston International and J.P. Morgan Plc. as Mandated Lead Arrangers) with regard to the Venezuelan law aspects of the financing of the acquisition of Kappa Holding B.V. and its subsidiaries by the Jefferson Smurfit Group. Both groups of companies are engaged in the manufacture and sale of paper and packaging products.

• In 2006 we assisted the bank lenders of Digitel (US$ 485 million, in 2002), with regard to the acquisition of Digitel, a wholly owned subsidiary of Telecom Italia Mobile (TIM), by Telvenco. Digitel is one of the three key players in the mobile phones market in Venezuela. The security structure for this transaction included a security trust designed by our firm over the assets of Digitel (the first of its kind in the area of telecommunications), as well as other more traditional instruments for securing debts.

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Regulatory Procedures. Competition and Antitrust

• We advise many of our clients (such as Citibank, Formiconi, Vicson, Guy Carpenter-Marsh, Inversiones Mundial, syndicate of bank lenders in the Hamaca, Petrozuata and Fertinitro cases, etc.) with regard to the issues which have arisen since the imposition of an exchange control system in January 2003, and the enactment of the Illicit Exchanges Law in September 2005 and the new Illicit Exchanges Law in December 2007, reformed in May 2010. An important part of our work load has been the assistance of many of our corporate clients with regard to the law and regulations, from the different perspectives of foreign investment, banking regulations, imports and exports, debt in foreign currency, etc.

• The recent enactment of many laws, including 26 decrees with force of law, by President Hugo Chávez (on July 31, 2008), regarding a wide range of regulatory subjects, such as consumer protection and price controls, have required our analysis for many clients, such as Coca-Cola and Organización Corona, who have requested our legal opinion regarding how said laws affect their businesses.

• In 2004, with respect to the $5.8 billion acquisition by Telefónica Móviles of the BellSouth Corporation’s Latin American assets which included Telcel, C.A. (the largest Venezuelan cell phone company), we acted before the telecommunications and competition/antitrust regulatory entities (Conatel and Procompetencia, respectively)

• In 2002 and 2003 we represented S.C.Johnson & Son, Inc. before the regulatory body that reviews antitrust and competitive practices in Venezuela, Pro-Competencia, with respect to the acquisition of certain productive assets from Bayer AG, and obtained Pro-Competencia’s prior approval for the asset concentration transaction.

• We advised two insurance companies in an administrative procedure regarding antitrust rules and the choice of third-party providers and we are currently advising an insurance company in a judicial procedure regarding the same matters.

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Tax

• Our firm obtained a favorable decision in the tax courts for our client, Coca Cola Servicios de Venezuela: In May 2009, the Second Tax Court (Tribunal Segundo de lo Contencioso Tributario) ordered the national tax authority, Seniat, that it should dictate a decision recognizing the value added tax credits of our client. Five days later, Seniat generated a decision, dated May 25, 2009, which immediately recognized a very large part of the fiscal credits, US$ 586.540,64, and opened the door for further recognition (of approximately US$ 3.5 million). The decision was confirmed by the Supreme Tribunal of Justice, through a decision dated May 18, 2010. This is a very important decision, because, since 2002, Seniat issued a ruling designating public entities and special contributors as withholders of value added tax. The withholding rate of 75% usually means an overpayment of the valued added tax, that has had a very damaging effect in the taxpayers cash flow. The complexity of the mechanism for obtaining recognition of fiscal credits originating in such withholding and Seniat’s delays in such procedures have meant –in practice– a violation of the legal right of automatic compensation provided in the Organic Tributary Code and the accumulation of enormous amounts of tax credits that cannot be recovered by the tax payers.

• In a judicial procedure, which our client Asea Brown Boveri lost against the Tax Authority (our firm did not originally handle the US$ 40,689 case), the process was paralyzed in the execution stage for more than seven years. At the current time, the tax administration seeks that our client should voluntarily pay the tax assessment. We have opposed this requirement claiming the prescription of the tax assessment. Our claim is currently pending the decision of the Supreme Tribunal of Justice.

• On behalf of the Insurance Chamber of Venezuela (Cámara de Aseguradores de Venezuela), we are claiming the nullity of the Tax Stamp Law, enacted by the Capital District, which increases the tax over a company’s capital from 1% to 10% over such capital, to be paid at the incorporation of new companies or when the capital of a company is increased. We claim that it violates the right of equality since this tax only applies to the corporations registered in the commercial registries located in the Capital District, while other corporations are obliged to pay only 1%. Furthermore, we claim the violation of the constitutional principle of proportionality and progressiveness of the tax on the basis that the application of this tax signifies a confiscation of capital. Lastly, we claimed that the Capital District does not have the power to create this kind of tax, violating the constitutional principle of legality. This action was filed before the Supreme Court of Justice.

• Our firm, in its own name and also in representation of several clients (Banco Plaza, Vicson and Olivenca), contested the taxable amount of an obligatory “social contribution” destined to the public housing policies of BANAVIH (a State owned financial institution). Our position is that this social contribution is a tax, and that the tax base should be just the normal salary and no other extraordinary income. We have obtained favorable decisions in all the cases, which have been confirmed by the Supreme Tribunal of Justice.

• On March 6, 2008, we obtained a favorable decision from VII Superior Court of Contentious Tax Matters with regard to a 2001 tax claim against our client, Citibank, for a difference in calculation of the bank debit tax (“impuesto al débito bancario”). The Tax Administration had imposed a fine, as well as compensatory interests and payment of the monetary actualization. Acting upon our advice, Citibank contested the monetary actualization (which was the equivalent of approximately US$ 370.000 in 2001) and compensatory interest. The court not only ruled in favor of Citibank, but also decided, among other things, that the Tax Administration should pay Citibank’s attorneys’ fees and other expenses. This is significant because Venezuelan courts are very wary of making the Administration pay the other parties’ attorneys fees.

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Telecommunications

• We assist Telefónica (the Spanish telecommunications company) and its Venezuelan subsidiary, Telcel, C.A. (Movistar), with regard to their corporate needs and activities in Venezuela, with special emphasis in the shareholders’ point of view.

• We represented Telefónica International Holding BV, a subsidiary of Telefónica, with regard to the tender offer by the Venezuelan state of CANTV, the major Venezuelan telephone and communications corporation, in the 2007 “nationalization” process. Telefónica held 54 million class “A” shares, acquired in the 1991 privatization of CANTV, in which we had represented the purchasers.

• In 2006, acting as advisers of the bank lenders of Digitel, we assisted these lenders with regard to the acquisition of Digitel by Telvenco, from its sole shareholder, Telecom Italia Mobile (TIM). Digitel is one of the three key players in the cell phones market in Venezuela, which is a rapidly expanding and very important sector of the economy

• We have assisted CANTV, the major telecommunications provider in Venezuela, with regard to their labor litigation since its privatization in 1991. In 2005, the number of cases handled by our firm increased significantly, reaching at times more 2,000 simultaneous trials, at all levels of the judicial system. Since 2007, following the “nationalization” of CANTV, we have continued to assist the company in the transition, applying its policy to reach agreements with its former workers. In this transition period we have successfully closed a large proportion of the cases.

• In 2004, we counseled our client, Telefónica Móviles S.A., regarding the $5.8 billion acquisition of the BellSouth Corporation's assets in Latin America, including the Venezuelan company Telcel, C.A., the fourth largest private corporation in Venezuela and the most important mobile phone company.

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New

• We are working with Mayer Brown in assisting the insurers or the reinsurers that provided coverage with respect to the expropriation of certain assets that were being used for the provision of services to PDVSA, the national oil company. In one case, our clients are the insurers of the drills belonging to Helmerich & Payne de Venezuela C.A., and, in the other case, our clients are the reinsurers of the ships belonging to Transportes Marinos de Occidente
  

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