U.S. court receives binding offers for control of Citgo, sale nears

A U.S. federal court is accepting binding offers through Tuesday for shares in Venezuela-owned Citgo Petroleum's parent, a crucial step in a protracted case where 18 creditors are seeking up to $21.3 billion for past expropriations and debt defaults.

The stock auction, organized in Delaware to pay creditors, including oil producer ConocoPhillips (COP.N), open new tab, and miners Rusoro (RML.V), open new tab, Crystallex and Gold Reserve (GRZ.V), open new tab, has attracted investors and companies with substantial resources, increasing the chances of an ownership change for the seventh-largest U.S. refiner.

Hedge fund Elliott Investment Management has been considering a bid, while a group of creditors represented by Centerview Partners is trying to entice Conoco to join another bid for control of Citgo PDV Holding, sources told Medios in April.

Citgo is the largest asset being pursued by creditors seeking compensation for the nationalizations of the late President Hugo Chávez two decades ago and the debt defaults of President Nicolás Maduro.

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 specially appointed court officer and investment bank Evercore Group are in charge of receiving and analyzing the bids. The deadline to complete the sale process, including the award to the winners of the round, is July 15.

Venezuela could press the court for a third round of bidding if bids do not come close to $10 billion, two sources said Monday.

Citgo Petroleum, controlled by supervisory boards since cutting 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.

Over the past two years, the company has generated $4.8 billion in combined net profits. Parties representing Venezuela in Delaware are hopeful that bids in this second round of bidding will be higher than the non-binding bids in the first round in January, which only reached $7.3 billion, compared to Citgo's valuation of $11 billion to $13 billion.

As the bidding deadline approached, politicians and envoys representing Venezuela redoubled efforts to halt the auction. This month, they called on the White House and the U.S. Congress to pause the judicial process until a presidential election in Venezuela is completed in July.

The boards overseeing Citgo also continue to try to reach payment agreements with some creditors, including Conoco and PDVSA 2020 bondholders, which are backed with another stake in Citgo's parent company.

Among the senior creditors expected to collect proceeds from the auction are shipbuilder Huntington Ingalls Industries (HII.N), marine services company Tidewater (TDW.N), conglomerate Koch Industries and glass container manufacturer O-I Glass (OI.N).

Collaboration: Grupo Auge | Reuters (International).