Interest jumps in US auction of shares in parent of Venezuela-owned Citgo

O-I Glass

22/01/2024 10:00

By Marianna Parraga and Gary McWilliams
       HOUSTON, Jan 22 (Reuters) - Dozens of companies have
rushed in recent weeks to obtain data and join a U.S.
court-ordered auction of shares in a parent of Houston-based oil
refiner Citgo Petroleum, Venezuela's foreign crown jewel,
according to people familiar with the matter, as a first-round
bidding is set to close on Monday. 
        The sale, expected to be one of the largest U.S. court
auctions, was launched in October by a Delaware judge to settle
a long-running legal battle against Venezuela for expropriations
and mounting debt defaults since it nationalized foreign-owned
energy and mining assets more than a decade ago.   
        The judge found PDV Holding, one of Citgo's parent
companies, liable for the South American nation's foreign debt,
opening the door to some $20.8 billion in claims from 17
creditors. Both companies are owned ultimately by Caracas-based
state oil company Petroleos de Venezuela (PDVSA)  PDVSA.UL . 
        Investment banking firms and energy companies have
rushed in at the last minute to obtain and analyze Citgo's
financial and operational data following months of little
interest, four people involved in the process told Reuters. 
    Several dozen groups, including investors, oil and gas
companies, refiners and former energy executives, have requested
information compiled by Evercore Group, the investment bank
overseeing marketing efforts, the people said.
    "There is a very good level of interest," a person with
knowledge of the process said. "There are multiple pockets of
capital" looking at the company and its assets. 
    Canadian miner Crystallex, which first brought the case
before the Delaware court in 2017, U.S. oil producer
ConocoPhillips  COP.N  and units of Tidewater  TDW.N  were given
priority by the court for cashing any proceeds from the sale.  
    Representatives from Crystallex and the boards overseeing
Citgo did not reply to requests for comment. ConocoPhillips and
Citgo declined to comment. 
    
    
    CONFIDENTIAL OFFERS 
    Citgo  PDVSAC.UL  operates a 807,000-barrel-per-day oil
refining network, owns interests in pipelines and terminals, and
supplies fuel to 4,200 independent gasoline outlets in the U.S. 
    The seventh-largest U.S. refiner reported a $1.9 billion
profit for the first nine months of last year. 
    But it has not paid any dividends to Venezuela since 2019,
when Citgo severed ties with PDVSA following U.S. sanctions
designed to curb oil revenues to socialist President Nicolas
Maduro and support the nation's transition government.
    U.S. District Court filing on Friday accepted claims by 17
groups, including units of O-I Glass  OI.N , Tidewater, Koch
Industries, Pharo, Red Tree Investments and Contrarian Capital,
to receive proceeds from any auction. Any awards will require
U.S. Treasury approval.  
        Confidential offers can be submitted through Monday for
the first bidding round, the court ruled, with a second round
tentatively planned for May. Bidders' cash offers for shares in
PDV Holding, whose only asset is Citgo, are expected to be
turned over to creditors to satisfy court rulings and awards.   
    "Genuine interest will be quite low given the political and
legal risks," said Matthew Blair, head of refining research at
Perella Weinberg Partners' TPH&Co. "If they break it apart and
parties can bid on individual assets, then interest will
definitely pick up." 
    Boards overseeing Citgo continue to try and settle one or
more of the claims against Venezuela ahead of the auction, one
of the boards said earlier this month, a move that has been
tangled by U.S. protections preventing transactions involving
the refiner and a secretive process that has kept details of the
appraised value and bidders out of court records.
    "The board, advised by its legal team and institutions, will
analyze the current circumstances and will apply a proper legal
strategy to continue protecting PDVSA's U.S. assets," it said in
a release.    

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GRAPHIC-Creditors that will take part in share auction's first
biddding round    https://graphics.reuters.com/CITGO-AUCTION/CREDITORS/myvmknxyavr/
US judge clears way for more Venezuela creditors to join Citgo
auction    https://www.reuters.com/business/energy/us-judge-clears-way-more-venezuela-creditors-join-citgo-auction-2024-01-08/
A tale of setbacks as Venezuela's Citgo heads to US auction    https://www.reuters.com/business/energy/tale-setbacks-venezuelas-citgo-heads-us-auction-2023-10-22/
Creditors cleared to take part in Citgo parent's share auction  
 https://tmsnrt.rs/48V708R
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Gary McWilliams and Marianna Parraga
Editing by Marguerita Choy)
 ((Gary.McWilliams@thomsonreuters.com; +1 469-691-7668;))