Memorandum of Conversation, by the Chief of the Division of Latin American Affairs (Duggan)

Mr. Fred Lavis of the Protective Committee for holders of bonds of the Republic of Salvador called to say that negotiations with the Salvadoran Government regarding the external debt situation have been satisfactorily completed. The Salvadoran Congress has approved the central features of the new proposal and the Minister of Finance is coming to New York, arriving April 7, to sign the agreement. Mr. Lavis said the agreement would probably have to be ratified by the Salvadoran Congress.

Mr. Lavis said that at the last moment there were difficulties revolving around redemption of the scrip and certain expenses of the Committee. The Salvadoran Government had agreed to redeem the scrip at 20 percent of its par value. In the final stages of the negotiations it brought up the question of whether the $68,000.00 to $75,000.00 retained by the Committee did not in fact belong to the Government. A compromise was arrived at to the effect that the Government would drop any claim against the Committee for the $68,000.00 to $75,000.00, [Page 579] but would only redeem the scrip at 15 percent of its par value. I asked Mr. Lavis what the status of non-assenting bond holders would be. Mr. Lavis stated that the agreement merely provided that non-assenting bond holders were not to receive treatment any more favorable than assenting bond holders. He said that the Committee represented 95 percent of the bonds and that of the remaining 5 percent at least 2 percent would never be heard from owing to loss of bonds, etc.

L[aurence] D[uggan]