Lazard bids to replace Centerview as Venezuela financial adviser, source says

By Abu Sultan and Chandni Shah

June 14 (Reuters) – U.S. investment bank Lazard is making a bid of $25 million to try to replace Centerview Partners as Venezuela’s financial adviser for one of the largest-ever sovereign debt restructurings, a source familiar with the matter told Reuters on Sunday. 

Venezuela said in May it hired financial services firm Centerview, also based in the United States, after launching a restructuring of its sovereign debt and that of state oil firm PDVSA, lifting bond prices. Venezuela’s government on Sunday reiterated that it has hired Centerview as its financial adviser.

The source, speaking on condition of anonymity, told Reuters, “Given Lazard’s experience in sovereign advisory, it believes that the Venezuela government does not need to significantly overpay for world-class restructuring advice.”

The bid was earlier reported by Bloomberg News. Lazard’s proposed fee is a fraction of the at least $150 million Centerview was negotiating with the government as recently as last month, Bloomberg reported. 

“We thank Lazard and other firms for their interest in supporting our debt restructuring efforts,” Venezuela’s Ministry of Communication and Information said in an emailed statement to Reuters.

“As in our previous adviser selection processes, we applied a consistent set of criteria focused on team experience, expertise, quality analysis and understanding of our circumstances,” it said.

“Based on those same considerations, we selected Centerview Partners as our financial adviser,” it added.

A Lazard spokesperson declined to comment.

Centerview said in a statement to Reuters that the terms of its engagement will be based on market rates, and that “speculation to the contrary is false.” 

Reuters earlier reported that the appointment of Centerview without a formal competitive process has raised questions among investors and officials about fairness and transparency.

Centerview had discussed a monthly retainer of $750,000 and a success fee of 0.1% of the total debt amount restructured, equating to a price of $150 million to $200 million, the Bloomberg report said, citing a draft contract. 

Venezuela is one of the world’s largest sovereign default cases, with the sovereign and PDVSA totaling about $60 billion in defaulted bonds outstanding. Analysts estimate total liabilities, including arbitration awards and accrued interest, could exceed $150 billion. 

Venezuela’s adviser will be tasked with hammering out the government’s financial strategy and leading talks on its debt, which the country defaulted on under former President Nicolas Maduro in 2017. At stake are billions of dollars Venezuela owes to creditors earmarked for a writedown, whose size will be crucial in determining the sustainability of the country’s finances and its economic health.

(Reporting by Chandni Shah and Abu Sultan in Bengaluru; Additional Reporting by Vivian Sequera in Caracas and Preetika Parashuraman in Bengaluru; Editing by Tomasz Janowski, Chizu Nomiyama and Will Dunham)