Citgo Bidding Open to Others to Try for Elliott’s Top Company

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(Bloomberg) – A U.S. judge has restructured the bidding process for parent company Citgo Petroleum Corp. late Tuesday, a move ready to create competition for Elliott Investment Management’s pursuit of an oil refining company.

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Judge Leonard Stark ordered the reopening of the company’s bid, allowing new bids to be submitted. Any offer would have to top the $7.3 billion bid made by an Elliott affiliate earlier this year.

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Stark, who heard arguments on the matter on Dec. 13 in Wilmington, Delaware, has now cleared the way for other creditors – including Gold Reserve, Crystallex International Corp. and Red Tree Investments LLC.

The ruling marks a new twist in a years-long legal battle for control of Citgo’s parent, a Venezuelan-owned foreign asset that operates three US refineries, pipelines, terminals and fuel distribution channels. The proceeds from the sale will repay a long list of creditors owed an estimated $20 billion by the Venezuelan government and its state-owned oil company, Petroleos de Venezuela SA, for confiscation of assets in the country.

Crystallex, which saw its Venezuelan gold mines seized by the late President Hugo Chávez, is the first in line to receive a large share of the proceeds. Others include Exxon Mobil Corp., ConocoPhillips Co. and Siemens AG.

Stark, who approved the auction last year, hoped that the sale of the parent company, PDV Holding, would be completed by the end of the year.

In his decision Tuesday, he filed a new lawsuit in connection with the sale in late July in Wilmington.

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Creditor Pushback

Stark asked for an extended marketing period, to start as soon as possible. Evercore Inc will review and evaluate “whether to contact other parties that may be interested in participating in the sale process,” Stark wrote in Tuesday’s decision.

The changes come after Special Master Robert Pincus, whom Stark tapped to oversee the auction, urged a judge to amend the plan after some creditors criticized it as lacking transparency and unfairly favoring the bid of Elliott’s subsidiary, Amber Energy Inc. . Pincus suggested doing this. rescheduled, as the debtor increases.

Stark found that court officials improperly withheld access to information about Amber Energy’s bid and Citgo’s financial health from lenders evaluating the bid. He also expressed that he was disappointed with the figures created by the tender, which will leave the debtors’ requests unsatisfied.

The sale process is in flux, as Stark seeks to maximize revenue for creditors, some of whom have filed separate lawsuits seeking recovery in courts outside of Delaware. Those cases add another layer of legal risk to any potential buyer.

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Chávez, who was first elected in the late 1990s, nationalized large-scale industries as part of a social agenda during his 14-year rule. He died in 2013 and was succeeded by Nicolás Maduro. Affected companies, including holders of other types of debt, have obtained judgments and filed in Delaware in hopes of obtaining restitution.

The Great Refiner

A World Bank arbitration panel in 2016 found that Venezuela owes Crystallex $1.4 billion, and is seeking to recover about $1 billion. A pair of Exxon oil projects were liquidated in 2007, and the company wants to receive $984 million in accepted claims.

Citgo processes more than 800,000 barrels of oil per day and is the seventh largest in the US.

The case is Crystallex International Corp. v. Bolivarian Republic of Venezuela, 17-mc-00151, US District Court, District of Delaware (Wilmington).

(Reviews details beginning in section eight.)

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