UPDATE 1-Gold Reserve makes push in Luxembourg to collect Venezuela award
CARACAS, April 13 (Reuters) - Gold Reserve Inc has served banks in Luxembourg with the equivalent of writs of garnishment relating to around $700 million in interest payments on Venezuelan bonds and funds, cranking up its push to collect an arbitration award from the South American country.
"These banks were chosen because they are designated as paying agents or transfer agents in listing memoranda relating to various bonds issued by Venezuela and listed on the Luxembourg Stock Exchange," the Toronto-listed gold mining company said in a statement on Monday.
"So far, the banks have denied holding funds for the account of Venezuela, which appears to contradict the information contained in the listing memoranda. As a result, the Company intends to have the issue determined by the appropriate court or judge having jurisdiction in Luxembourg over such matters."
The fresh push by Gold Reserve Inc to collect its arbitration award is likely to worry cash-strapped Venezuela, which is struggling to foot hefty bond payments and seeking to delay payment of major arbitration awards.
Targeting banks could also unnerve bondholders amid worries over the OPEC country's debt servicing.
"Venezuela is going to have to turn around and be very careful now about paying and how it pays interests on coupons. Clearly Gold Reserve is going to look for assets to seize or freeze," said Russ Dallen head of Caracas Capital Markets in Miami.
Still, Dallen said Venezuela would likely ultimately pay the award when it runs out of dilatory actions.
The government did not reply to requests for comment. It was not clear when a Luxembourg court might decide on the issue. Continued...