The Ambassador in Chile (Bowers) to the Secretary of State

No. 13,107

The Ambassador has the honor to refer to the Department’s telegram no. 886 of November 19, 1945, and the Embassy’s telegram in reply no. 1456 of November 21, 1945,76 both sent in connection with the prospective renewal, on November 27, 1945, of the existing amortization agreement covering Chilean short term dollar notes for which the Guaranty Trust Company of New York and Kuhn, Loeb and Company act jointly as fiscal agents for the actual holders of these securities.

There is attached a transcript of Decree No. 4909 dated November 22, 1945,77 authorizing renewal of the present agreement for a period of three years as from November 27, 1945. The copy of the decree transmitted herewith has been received from Carlos Boetsch, local attorney who has been acting on behalf of the Guaranty Trust Company, who received it from the Finance Ministry. The enclosed text is accordingly believed to be correct but cannot be considered as official until the decree is published in the Diario Official.

As Decree No. 4909 is said by the Finance Ministry to be the same as the decrees which have authorized previous renewals of the amortization agreement, no translation has been made. Briefly, it authorizes Chile’s Ambassador in Washington to sign with the Guaranty Trust Company and Kuhn, Loeb an agreement extending the present agreement for three years, as noted above, and providing for payment of interest on outstanding balances at the rate of 1 percent per annum; amortization of principal at the rate of 2½ percent per annum on the original face value of the vales; and a service commission of ¼ of 1 percent on interest and amortization. Actual holders of the vales are [Page 824] authorized to exchange their securities, at any time during the life of the agreement, for Chilean internal debt 7 percent bonds calculated at par and converted at the rate of 6.458 paper pesos per dollar or 31.3 paper pesos per pound sterling. Article 4 of the decree extends the “equal treatment” clause which provides that if the Government redeems any of its external short term indebtedness, the terms extended in such an operation will likewise be made available to the holders of the vales mentioned in the decree.

The nominal value of the Chilean value covered by the decree, as of November 27, 1945, is as follows:

Series “A” US$ 54,223.50
“B” US$ 1,400,000.–
“C” US$ 182,790.65
“D’ £ 43,378–16–0

W. E. D[unn]
  1. Neither printed.
  2. Not printed.