A US federal court accepted binding offers through Tuesday for shares in the parent of Venezuela-owned refiner Citgo Petroleum, a crucial step in a long-running case where 18 creditors are seeking up to $21.3 billion for past expropriations and debt defaults.
The share auction, organized in Delaware to pay creditors including oil producer ConocoPhillips and several industrial and mining companies, has attracted investors and firms with substantial resources, boosting the chances of an ownership change for the seventh-largest US refiner.
At least one credit bid was submitted to the court. Gold Reserve said it presented an offer with FJ Management, a Utah-based private holding company that manages a portfolio of oil and travel-related assets, including an oil refinery.
A spokesperson for Canada-incorporated Gold Reserve was unavailable for immediate comment on the offer’s details. The company has a $1 billion claim against Venezuela it can use as part of its bid.
Credit bids are accepted in some auctions to allow creditors lining up for the proceeds to acquire the assets or shares up for auction in exchange for the debt owed. In this case, credit bids must be combined with cash offers, the court has said.
Another miner that is a creditor in the case, Rusoro Mining, presented a non-binding offer in January, and in April retained Rothschild & Co as financial advisor and Kirkland & Ellis as counsel in the case. The company has not said if it decided to submit a binding bid in the second round.
Hedge fund Elliott Investment Management has been weighing a bid, while a group of creditors represented by Centerview Partners aimed to lure ConocoPhillips to join another offer for Citgo parent PDV Holding, sources told Reuters in April.
ConocoPhillips declined to comment on whether it submitted a bid.
Citgo is the largest asset targeted by creditors trying to get compensation for late President Hugo Chavez’ nationalizations two decades ago and President Nicolas Maduro’s failed debt payments.
Maduro has rejected the auction and said Washington is trying to steal Venezuela’s foreign assets. But his government has made little effort to honor the country’s debts.
A court officer appointed for the case and investment bank Evercore Group are in charge of receiving and analyzing the bids. The deadline to complete the sales process, including awarding the round’s winners, is July 15.
Citgo Petroleum, controlled by supervising boards since it severed ties in 2019 with its ultimate parent, Caracas-based state oil company PDVSA, is the crown jewel of Venezuela’s foreign assets, processing up to 807,000 barrels of oil per day.
In the last two years, the company has generated $4.8 billion in combined net earnings.
Parties representing Venezuela in Delaware are hopeful that offers in this second bidding round will be higher than non-binding bids in the first round in January, which only reached $7.3 billion, compared with Citgo’s valuation of $11 billion to $13 billion.
Venezuela might press the court for a third bidding round if offers do not approach $10 billion, two sources said on Monday.
As the bidding deadline approached, politicians and envoys representing Venezuela began doubling down on efforts to halt the auction. This month, they asked the White House and US Congress to pause the court process until a presidential election is completed in Venezuela in July.
The boards supervising Citgo also continue trying to reach payment agreements with some creditors, including Conoco and the holders of PDVSA’s 2020 bonds, which are collateralized with another Citgo parent’s equity.
Among the highest-ranked creditors that stand to collect proceeds from the auction are shipbuilder Huntington Ingalls Industries, marine services firm Tidewater, conglomerate Koch Industries and glass container manufacturer O-I Glass.
(By Marianna Parraga, Gary McWilliams and Sourasis Bose; Editing by Jonathan Oatis, Rod Nickel and Lincoln Feast)
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gerald lohuis
If Gold Reserve wins the bidding auction GRZ will soar in Stock Price