Norwest Corporation and Subsidiaries - Page 37

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         outside of Brazil's debt-restructuring process; (2) increase the             
         probability of repayment of a portion of its outstanding Brazilian           
         loans; and (3) reduce petitioner's obligation to make new loans to           
         Brazil sufficient to pay at least part of the interest due on old            
         loans.                                                                       
              At this time (and until July 1987), Brazil's policies favored           
         debt-equity conversion transactions.  Creditors were permitted to            
         use 1986 deposits to invest in Brazilian companies.  If a creditor           
         decided to make such an investment, the Central Bank converted 100           
         percent of the face value21 of the deposits, plus accrued interest,          
         into cruzados at the official exchange rate. Pursuant to Central             
         Bank Circular 1.492 (the implementing measure concerning debt-equity         
         conversions), the creditor and the company in which it was investing         
         pledged "to keep the converted sums in Brazil for the minimum period         
         that may be established."  The debt-equity conversion policies               
         benefited Brazil by allowing it to extinguish its foreign debt by            
         the amount of the debt converted, thereby eliminating its foreign            
         exchange obligation with respect to that portion of its debt.                
              The equity investment acquired as a result of a debt-equity             
         conversion was registered at the Central Bank as registered foreign          
         capital in the currency originally brought into Brazil by the                
         creditor.  The amount registered could be increased annually by the          
         amount of retained earnings.  Registration entitled the creditor to          

               21   In July 1987, the Central Bank ended the practice of              
          converting blocked deposits at full face value.                             




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