O-I predicts lengthy legal battle with Chavez over plant takeovers

By Rory Harrington

- Last updated on GMT

Related tags: Venezuela

O-I has forecast faces a long legal fight with the Venezuelan Government over its decision to take over its glass packaging operations in the country, with a major issue likely to be the price the company receives for the plants.

The US-based giant told FoodProductionDaily.com the situation remains uncertain and that it had been talking to officials from the South American regime in a bid to ensure continuity of supply of glass bottles and jars into the domestic food and beverage sectors.

But the firm declared that despite the challenging turn of events, it remained committed to the region.

In late October, Venezuela’s president, Hugo Chavez, declared it would be ‘nationalising’ the company’s facilities in Los Guayos and Valera. The regime completed the expropriation just over a week later.

Complex and dynamic

“In the days since the government’s announcement, we have communicated to government officials the importance of planning for maintenance and supply needs so the plants can continue to serve the country’s food and beverage market,”​ said O-I spokeswoman Stephanie Johnston.

She added that the situation was “extremely complex and dynamic”,​ with employee safety and plant integrity their top priorities. Negotiation with Venezuelan officials is currently ongoing and O-I acknowledged its conclusion was uncertain.

“We may be facing a lengthy legal process,”​ said Johnston. “Of course, we cannot predict an outcome, but we will work toward a solution that allows the preservation of the operations. Many issues remain unresolved, including the fair value O-I should receive for these assets.”

OI said the two plants represented less than 5 per cent of its segment operating profit in 2010.

The company paid tribute to its Venezuelan team but said it would now only provide more information on the situation when it had something significant to share.

“We feel this decision is in the best interests of O-I, our employees and our customers,”​ said the spokeswoman.

Related topics: Processing & Packaging

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1 comment

Good luck O-I

Posted by revob22,

O-I is certainly facing an uphill battle in Venezuela.

None of the laws, especially article 115 of the Venezuelan Constitution were followed in this case. Indeed, almost all expropriations in Venezuela do not follow the law at all. Just an order from President Chavez is enough.

I hope one day O-I gets it's due, or its plants back, and that the personnel that labor there now are safe and sound.

Good Luck, O-I. I've followed you in Venezuela since the times of Bill Niehous.

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