Chavez orders takeover of Owens-Illinois branch

AP News
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Posted: Oct 26, 2010 12:12 PM
Chavez orders takeover of Owens-Illinois branch

Venezuelan President Hugo Chavez ordered the expropriation of U.S.-based glass container manufacturer Owens-Illinois Inc.'s subsidiary in the South American country.

Company spokeswoman Stephanie Johnston said Tuesday that "we were surprised to learn of this decision and we are prepared to work with government officials to better understand the situation."

Chavez announced plans to expropriate the company in a televised speech late Monday. The leftist leader criticized the company's practices in the country, saying it had been "taking away the money of Venezuelans" and exploiting local people.

Chavez did not detail his complaints about the Owens-Illinois, which is based in Perrysburg, Ohio.

"O-I has been supplying glass food and beverage containers to meet the needs of the Venezuelan people for more than 50 years," Johnston said. "Our two plants in Venezuela, located in Los Guayos and Valera, employ more than 1,000 people and represent less than 5 percent of our global segment operating profit."

Owens-Illinois is the world's largest glass container manufacturer, with operations in 22 countries.

The subsidiary Owens-Illinois de Venezuela CA counts among its clients Nestle, PepsiCo Inc. and Empresas Polar, which produces the local beer Polar.

It was unclear how the government would handle compensation for Owens-Illinois' assets in Venezuela, or how the takeover would affect supply agreements with the company's clients.

In Washington, U.S. State Department spokesman Charles Luoma-Overstreet said: "We would expect Venezuela to provide prompt, adequate, and effective compensation for any expropriation of the investments of Owens- Illinois in accordance with international law."

Chavez has nationalized or expropriated a wide range of companies, including cement makers, retail stores and a steel maker, while seeking to lead Venezuela toward a socialist system.

Government opponents and business leaders say the seizures are hobbling the economy and spooking investors.

Chavez said in his speech that more expropriations are planned.

"There's another list around here," Chavez said, but added that he would save additional announcements for later.

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Associated Press writer Luis Alonso Lugo in Washington contributed to this report.