Vitol group submits bid above $10 bln for Citgo's parent, sources say (updated)

Gold Reserve

02/07/2025 14:44

Vitol's offer includes cash, credit bids and a payment provision to bondholders

Vitol competing with Gold Reserve consortium, Red Tree Investments and Black Lion Capital Advisors group

Last-minute competition might raise price tag for Citgo

Adds Vitol declined to comment in paragraph 5, details and context on bids and Vitol in paragraphs 2 and 4-13

By Marianna Parraga

HOUSTON, July 2 (Reuters) - A group led by commodities trading house Vitol submitted a bid exceeding $10 billion for the parent of Venezuela-owned U.S. refiner Citgo Petroleum during the final hours of a U.S. court-organized auction, two sources with knowledge of the offer told Reuters on Wednesday.

The bid reflects intensifying competition for Venezuela's most prized foreign asset and the seventh biggest U.S. refiner. A Delaware court officer overseeing the auction is expected to recommend a winner on Wednesday unless he requests more time to evaluate bids submitted in the last minute.

Proceeds from the auction of Citgo's parent PDV Holding are meant to compensate at least a handful of the 15 creditors fighting since 2017 to recover nearly $19 billion in U.S. courts after Venezuela expropriated assets and defaulted on debt.

Citgo's 807,000-barrel-per-day U.S. refining network and associated facilities are PDV Holding's only assets.

     The Vitol-led group's offer includes about $5 billion in cash and the remaining amount in credit bids covering up to 14 claims. It also includes a separate provision to pay about $2 billion to holders of a defaulted Venezuelan bond, one of the sources said.

Vitol declined to comment.

 Vitol's bid is the highest known offer, but that does not necessarily make it the front-runner in the auction since robust financing and certainty of closure also are in consideration.

Privately-held Vitol, controlled mainly by its employee-traders, is flush with cash, having made over $35 billion in net profits in the last three years on extreme market volatility following Russia's invasion of Ukraine.

 Like other trading houses, Vitol, the world's biggest oil trader, has used record profits to snap up assets around the globe including refineries, storage tanks and wind farms.

Vitol had participated in a first bidding round for PDV Holding last year, but lost to a $7.3 billion bid by an affiliate of hedge fund Elliott Investment Management. Elliott's bid was ultimately rejected by most creditors.

 The Vitol group made a new offer earlier this year to compete in a starting bid round, which was won by
Red Tree Investments
 with a $3.7 billion offer plus an agreement to pay bondholders.

 New
bidders
 and improved offers emerged in the last hours of the current bidding round, which went through July 1, following recent court decisions in parallel legal cases, clearing the way to pursue PDV Holding.

An all-cash offer of about $8 billion by a consortium led by Chicago-based Black Lion Capital Advisors was also submitted in recent days, while a group led by a subsidiary of miner Gold Reserve GRZ.V said it submitted two revised offers.

 Citgo was
valued
 between $11 billion and $13 billion as part of the Delaware case. Despite a rising price tag due to the last-minute competition among bidders, the refiner's recent weak
performance
, including a profit that plummeted to
$305 million last year
 from $2 billion in 2023, could affect its valuation.

The judge and parties in the case are expected to attend a final hearing about the sale process on
August 18
.

 (Reporting by Marianna Parraga; Editing by Julia Symmes-Cobb,and Chizu Nomiyama and Marguerita Choy)

 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters Messaging: @mariannaparraga))