EXCLUSIVE Luxembourg banks have been told to freeze Ecuadorian assets in Perenco dispute, documents show


LONDON, Aug 1 (Reuters) – A Luxembourg bailiff has ordered banks to freeze assets held by Ecuador in accounts in the country following a dispute over a $391 million settlement fee that , according to the Anglo-French oil company Perenco, remains unpaid, according to a document seen by the Reuters broadcast.

The Ecuadorian government pledged in June 2021 to honor the debt granted to Perenco by the World Bank‘s International Center for Settlement of Investment Disputes (ICSID), which ruled that Ecuador had illegally terminated a production sharing agreement with the company. The country’s solicitor general said last year that due to financial difficulties, the government had contacted Perenco to negotiate a payment plan. Read more

“To date, more than a year later, Perenco has still not received a single dollar from Ecuador,” Perenco said in a statement on Monday, adding that it will “take steps to enforce its rights payment against Ecuador in Luxembourg and other jurisdictions”.

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Ecuador’s Ministry of Economy and Ministry of Energy were not immediately available for comment outside of normal business hours. Global law firm Hogan Lovells, Ecuador’s legal adviser on US law, declined to comment.

A spokesman for the London office of Cleary Gottlieb Steen & Hamilton LLP’s, the dealer manager’s legal advisers on Ecuadorian Eurobonds, did not immediately respond to a request for comment.

A document seen by Reuters shows that a Luxembourg bailiff, Pierre Biel & Geoffrey Galle, on July 28 ordered 122 banking entities operating in Luxembourg to freeze the assets of accounts used by Ecuador on behalf of Perenco. An employee of the bailiff declined to comment when contacted by Reuters because he is not authorized to speak to parties not involved in the case.

Reuters could not immediately establish what assets Ecuador held in Luxembourg accounts. Banks named included Deutsche Bank, Credit Suisse and HSBC.

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

Two years ago, the Latin American country defaulted on $17.4 billion in external debt as the country collapsed under one of the region’s worst coronavirus outbreaks after years of economic stagnation. .

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

Many of these bonds had interest payments due July 31.

It was not immediately clear what impact a freeze might have on Ecuador’s ability to make those payments. Ecuadorian international bondholders include major asset managers such as BlackRock, PIMCO and JPMorgan, according to data available on EMAXX, which provides details of fund holdings based on their public disclosures. PIMCO declined to comment, while BlackRock and JPMorgan were not immediately available for comment.

The case that led to the ICSID decision stems from a 2007 decree issued by then-President Rafael Correa that boosted Ecuadorian state revenue on sales of oil produced by private companies above a certain level. Read more

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

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

“Perenco remains hopeful that the Ecuadorian government will finally honor its international obligations, demonstrate its commitment to the rule of law and deliver on its promises to foreign investors, quickly meeting the price without further delay,” the company said in its statement. communicated.

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

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