President Rodrigo Chaves attacked the newspaper La Nación on Wednesday using distorted data on the bonds issued by La Nación SA in the stock market between 2013 and 2014. The Costa Rican Social Security Fund (CCSS) and its pension operator acquired part of the placement.
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These entities invested by their own decision in order to earn interest. The yields have always been received on time, admitted Álvaro Ramos himself, executive president of the CCSS. The rate is currently 8%.
The CCSS invested ¢2,950 million from the Disability, Old Age and Death (IVM) pension scheme, while the complementary pension operator acquired another ¢750 million.
At the time of placement, La Nación SA did not know who acquired the securitiessince the operation is carried out through a stock exchange, because that is how the stock market rules establish it.
However, Chaves used the press conference on Wednesday, after the session of the Governing Council, to publicly question whether the company could return the capital of the bonds that have not expired, which is planned, from a principle, for the years 2024 and 2025.
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Yes, we have a very serious issue with the bonds that previous governments bought, issued by La Nación
Hours before the press conference, reliable sources informed La Nación that the president had the attack on this outlet on the agenda. He would approach it before a query that one of the journalists would formulate. Finally, the question was asked by Richard Molina, from the site El Guardian.
Then, Chaves agreed: “Yes, we have a very serious issue with the bonds that previous governments bought, issued by La Nación, and that they financed with two sources: the pension of his mother, his grandmother, his uncle, the IVM; and the pensions of the employees of the Bank, in the Employees Retirement Fund (FRE)”, began the president.
In this regard, Pedro Abreu, executive director of Grupo Nación, said he did not understand the concern, since the interest has been paid on time: two bond issues have already been paid in full, they have the resources to pay off a third and are working on the of the latter, which expires in three years. In addition, he stated that the equity of the company far exceeds the value of the bonds.
Abreu explained that, at this time, the company’s debt-to-equity ratio is 1 (debt) to 2 (equity) and that, by 2024, it will be 1 to 4 after the maturity of that year’s bonds is cancelled.
Chaves gave the order to Álvaro Ramos
Chaves confirmed that he himself was the one who asked the president of the CCSS to pose questions to Sugeval to review the financial conditions of the media company. “I asked him for the obligation to do that (…) and well, he told me that he was already doing it,” said the president.
During periods of his speech, the president stared at the journalist from this medium who is in charge of the coverage of the Presidential House.
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The bonds of ‘The Nation’
Between 2013 and 2014, La Nación SA made four bond issuesthrough operations regulated by the General Superintendence of Securities (Sugeval), for a total of ¢39,000 million, mainly to finance the Parque Viva project, in La Guácima de Alajuela.
Various investors decided to accept the offer. Two issues, the one from 2013 and one from 2014, have already been completely canceled for a total of ¢18,000 million. As for the other two issues, the company already has the ¢10,000 million to pay the one that expires in 2024. The verification can be easily done by the CCSS or anyone capable of reading financial statements because the information is public given the participation of the company on the National Stock Exchange. To find it, just enter the La Nación website, then “shareholder information”, then “financial information” and, finally, choose the statement of financial position.
To pay the last issue, which expires in 2025, ¢9.015 million are missing.
According to Abreu, the company already has liquid resources to cover 72% of the pending obligation, with three years to go.
However, Rodrigo Chaves continued with his response: “We are very concerned about the payment capacity that this medium would have, which seems very, very slight, and, second, about some accounting actions and diversion of assets or contribution of assets to others, that weaken the probability that the people of Costa Rica, from our point of view, can recover the resources that are substantial”.
Actually, we have not transferred our properties to the trust
The unfounded insinuations of Chaves, who during the electoral campaign promised to harm the company for his information, refer to the decision of the business group to promote a real estate project in a property located in Llorente de Tibás, as had been made public by the company in 2020 through a significant event communicated to the Sugeval.
Abreu reported that the business is being prepared through a co-development using the trust model together with the company Portafolio Inmobiliario, which has executed huge and successful projects such as Avenida Escazú or Escazú Village. In this business model, La Nación SA contributes the land and the developer its experience in real estate development.
“We have been evaluating the project for many years and already, in 2020, we managed to sign the trust, which is like marking the field or setting the rules of the game. Actually, we have not transferred our properties to the trust. The agreement we have with Real Estate Portfolio is that this will be done until we have all the permits and we are ready to develop,” said Abreu.
“Now, if the concern is there, we have a lot of properties. We are talking about five hectares in Tibás, but we have 35 hectares in La Guácima and, on those 35 hectares, we have buildings worth $30 million. We are talking about the remaining debt, that 28%, could be between $8 million and $9 million right now, depending on the exchange rate; so, in terms of guarantees, we have more than enough”, said the executive director.
Payments are up to date
At the press conference, after giving his first response on this subject, the president Chaves gave the podium to Álvaro Ramos, executive president of the CCSS, so that he could expand on the subject.
The official stated that they raised a query with the Sugeval to know the financial reality of Grupo Nación to face the payments of the investments, scheduled for 2024 and 2025.
Unlike the president, Ramos stated: “In no way are we indicating that, a priori, they will not be able to repay; we just want to know how they are going to do it.” In addition, he insisted that the interest payments are up to date.
Years ago, in 2008, La Nación SA placed another two issues for ¢5.7 billion that were paid in full in 2015 and 2017. Only for interest, the company paid investors ¢13.13 billion for the placements already paid, and has paid ¢14,050 million for those due in 2024 and 2025.
Chaves to president of the Fund: “You are very diplomatic”
As soon as Ramos finished his speech, Chaves returned to the podium and indicated: “Let’s see, Mr. Álvaro is very diplomatic.” Immediately, he continued making his presentation on how, according to him, the repayments of the investments are in danger.
Every time the president gave a piece of information, he consulted the head of the CCSS if it was publicly accessible. During his intervention, Ramos indicated that “we at the Fund are not working with private information, we are working with public information and, based on public information, we cannot determine the effect of this trust.”
Chaves continued: “The profitability of La Nación is public, right? Yes, the profitability of La Nación is public, it is in free fall and that means that it is incurring constant, constant, constant losses.
“And then you wonder, I don’t know, maybe they have a magic wand and they can raise cash flow. What’s happening? It is the duty to take care of her grandmother’s pension, what happens if La Nación’s cash flow is cut off, and the property is not there, because it is somewhere else… that is the question”.
The properties that will eventually pass into the trust to develop the project will not vanish into thin air. The company’s participation in the trust will be incorporated into its assets and will contribute to responding for its obligations. On the other hand, 1.5 valuable hectares will not go to the trust because the newsroom and the industrial production area will continue to operate on them. All this without mentioning the 35 hectares in La Guácima with its buildings valued at $30 million that, by themselves, represent several times the total maturity of 2025 and not only the fraction of that maturity that corresponds to the bonds purchased by the Caja.
Regarding the results, Abreu stated: “There is talk that La Nación is only losing money. It is very important to distinguish between accounting loss and cash flow generation. We are carrying accounting losses, true, but we are generating cash flow. This means that, between the operation and the financial investments, we are generating enough cash flow to pay the debt, to pay all the interest, to pay all the investments and, in addition, we are saving to face future maturities. That can be seen in our financial statements that are public”
The executive director of Grupo Nación recalled that Parque Viva returned to activity, starting in March 2022, after spending two years without events as a result of the coronavirus pandemic. Likewise, he recalled that the health crisis caused a generalized affectation in the world. Despite this, he emphasized, the company managed to generate cash flow.
“This year’s numbers are going to be much better than last year’s and that’s going to be the trend between now and 2025,” he said. Abreu concluded by inviting the CCSS to directly review all the data and ask as many questions as it deems appropriate to the company representatives. La Nación regularly receives other investors and would be delighted to talk with Caja officials.
THE NATION (COSTA RICA-GDA)
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