EXCLUSIVE Luxembourg banks ask to freeze Ecuadorian property amid Perenco dispute, paperwork present

  • Bailiff orders 122 banking institutions operating in Luxembourg to freeze Ecuadorian assets
  • Ecuador to issue Luxembourg-listed bonds in 2020 debt overhaul
  • Some bondholders received interest payments due on July 31

LONDON, Aug. 1 (Reuters) – A Luxembourg bailiff has ordered banks to freeze assets held by Ecuador in Luxembourg accounts due to a dispute over a $391 million settlement prize that Anglo-French oil and gas company Perenco said it has yet to be paid, a document seen by Reuters Programmes.

The Ecuadorian government has pledged in June 2021 to honor the debt, awarded by the World Bank’s Center for International Investment Disputes (ICSID) to Perenco, pursuant to a ruling Ecuador has terminated its illegality production sharing agreement with the company.

Ecuador’s attorney general said last year that due to tight finances, the government had contacted Perenco to negotiate a payment plan. read more

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“To date, more than a year later, Perenco has yet to receive a single dollar from Ecuador,” Perenco said in a statement Monday, adding that it will “take steps to enforce the its settlement rights with respect to Ecuador in Luxembourg and other jurisdictions”.

Ecuador’s Economy Ministry and Energy Ministry were not immediately available for comment. The global law firm Hogan Lovells, Ecuador’s legal advisor on US law, declined to comment.

A spokesman at the London office of Cleary Gottlieb Steen & Hamilton LLP, legal counsel to the Ecuadorian euro dealer, did not immediately respond to a request for comment.

Fabio Trevisan, partner and head of Dispute Resolution at BSP, the law firm representing Perenco, said Perenco now has eight days to start court proceedings to verify the attached documents. and Ecuador have 50 days to instruct a law firm to represent them in Luxembourg.

A document seen by Reuters shows that a Luxembourg bailiff, Pierre Biel & Geoffrey Galle, on July 28 ordered 122 banking institutions operating in Luxembourg to freeze assets in accounts held by Ecuador. used on behalf of Perenco.

A spokesman for European settlement agency Clearstream confirmed that Clearstream Banking SA in Luxembourg had received the bailiff’s notice, though declined to provide further details.

An employee at the bailiff’s office declined to comment when contacted by Reuters because they were not authorized to speak to parties unrelated to the case.

Reuters could not immediately determine what assets Ecuador holds in the Luxembourg account. Banks named include Deutsche Bank(DBKGn.DE)Credit Switzerland(CSGN.S) and HSBC(HSBA.L).

Credit Suisse and Deutsche Bank declined to comment, while HSBC did not immediately respond to requests for comment.

LUXEMBOURG . BOND

Two years ago, the Latin American country defaulted on $17.4 billion in foreign debt as it faced one of the worst coronavirus outbreaks in the region after years of economic stagnation.

As part of the subsequent debt restructuring, Ecuador sold new bonds maturing in 2030, 2035 and 2040 listed on the Luxembourg Stock Exchange. ,

Many of these bonds have interest payments due on July 31. Some bondholders received interest payments due on securities on July 31, sources familiar with the matter. said.

According to data available on EMAXX, holders of Ecuadorian international bonds include major asset managers such as BlackRock, PIMCO and JPMorgan. PIMCO declined to comment, while BlackRock and JPMorgan were not immediately available for comment.

The case that led to the ICSID award stemmed from a 2007 decree issued by then-President Rafael Correa to promote the Ecuadorian state to profit from the sale of oil produced by private companies in excess of a certain threshold. certain. read more

Perenco sued Ecuador in 2008 and was eventually awarded $412 million last May. Perenco is entitled to $391 million after taking into account the compensation it was ordered to pay to Ecuador for environmental damage caused in the areas it operates in Blocks 7 and 21.

President Guillermo Lasso, a conservative former banker who took office in May 2021, has promised to revive Ecuador’s economy and attract investment – especially in the mining and oil sectors. read more

“Perenco remains hopeful that the Government of Ecuador will ultimately honor its international obligations, demonstrate its commitment to the rule of law, and uphold its promises to foreign investors, by rapidly responding to the Agreement.” bonus without further delay,” the company said in its statement.

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Reporting by Rowena Edwards and Karin Strohecker in London; Additional reporting by Alexandra Valencia in Quito and Jorgelina do Rosario in London; Edited by Elisa Martinuzzi, Daniel Wallis and Louise Heavens

Our standards: Thomson Reuters Trust Principles.

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