Complex bids could extend Citgo auction evaluation, sources say
26/06/2024 18:19
(Repeats to add codes for wider readership)
By Marianna Parraga and Gary McWilliams
HOUSTON, June 26 (Reuters) - A U.S. federal court will
likely extend a period for reviewing bids submitted in an
auction of shares in the parent of Venezuela-owned refiner Citgo
Petroleum, three people close to the matter said, which would
delay a resolution to the seven-year-long case.
The court-organized auction of the seventh-largest U.S.
oil refiner aims to satisfy up to $21.3 billion in claims
against Venezuela for expropriations and debt defaults. The
process could lead to new owners of Venezuela's foreign crown
jewel.
The court had planned to finish the sale, after two bidding
rounds, on July 15, days before Venezuela's presidential
election on July 28, which Washington sees as a possible exit to
the South American country's long-standing political crisis.
But offers submitted in the second round have proven to be
more complex than expected, with several combining cash with
credit bids from some of the 18 creditors cleared by the court,
the sources said.
Bidders also were asked to disclose whether their bids
included plans to pay holders of a bond collateralized with
equity in a Citgo parent, adding another level of complexity.
"The investment bankers are trying to equalize – make apples
to apples comparisons. That might take a little longer than was
hoped," one of the people said.
Citgo operates three refineries that can process up to
807,000 barrels per day of crude oil into fuels and owns a
network of storage terminals and pipelines. In 2019, it severed
ties with its ultimate parent, Caracas-headquartered state oil
company PDVSA.
President Nicolas Maduro's administration and his political
opposition have requested the U.S. government to delay or halt
the auction, so its results do not alter the election outcome.
In a first bidding round in January, the highest offer
submitted was $7.3 billion, less than the market valuation of
$11 billion to $13 billion for the refiner.
Lawyers representing Venezuela called the bids
"disappointing" and recently have pressed the court to organize
a third round if offers in the second round that finished this
month do not approach a fair value for the company.
At least five groups of investors submitted binding bids in
the second round, and three secured financing commitments from
banks and advisors including JPMorgan JPM.N , Morgan Stanley
MS.N and Rothschild & Co PIEJF.PK , people close to the
matter told Reuters this month.
The court has yet to disclose the number of bids in the
second round or their amounts.
Citgo, boards supervising the refiner and a court officer
appointed to oversee the auction did not immediately respond to
requests for comment.
"There are 100 reasons why this auction should not be in a
hurry," said a person familiar with the sale process, noting the
proximity of Venezuela's presidential election.
"There is the possibility of a new government coming along
that will honor its obligations ... and it doesn't want this
asset to be sold. The court could exhibit a little
judiciousness, a little restraint, and see what happens," the
person added.
(Reporting by Marianna Parraga and Gary McWilliams; Editing by
Richard Chang)
((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))