Venezuela CANTV Upgrades Contingency Reserves To $332.6 Million

CARACAS -(Dow Jones)- Venezuela's largest telecommunications company, CA Nacional Telefonos de Venezuela (VNT), or CANTV, has decided to increase its contingency reserves to 715 billion bolivars ($332.6 million) for the third quarter to cover an adjustment in workers' pensions, the company said late Sunday.

The decision comes after the Venezuelan Supreme Court ruled in July that CANTV workers' pensions provided after Dec. 30, 1999, must be adjusted for a new minimum wage level, CANTV officials said in a statement.

The high court ruled in favor of 3,408 unionized CANTV workers in a long-running pension dispute with the company and ordered CANTV executives to adjust pensions to a new minimum wage level and include devaluations and inflation since 1999.

CANTV executives warned at the time that the court's decision would severely hurt its finances and vowed to launch an appeal.

Company spokespeople couldn't be immediately reached for further comment.

CANTV officials have so far declined to give a figure for what the pension adjustment could cost. Analysts have estimated the total cost at anywhere between $700 million and $1.2 billion, divided into two parts - the minimum wage adjustment and the increase for devaluations and inflation.

CANTV asked the supreme court for further clarification on its ruling, but the high court denied the request on Friday, the CANTV statement said.

The case has now moved to a new tribunal in charge of executing the high court's decision, according to the statement, but the company will continue to appeal the ruling.

Shares of CANTV traded in Caracas closed up 1.76% at VEB5,190, or $2.40 a share. Stock traded as American Depositary Receipts in New York closed at $12.85, up 3.55%, according to stock exchange data.

-By Raul Gallegos, Dow Jones Newswires; 58-414-288-7461; raul.gallegos@dowjones.com

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Posted to the site on 18th October 2005