Elliott weighs Citgo bid as creditor group eyes Conoco for own offer

Rusoro Mining

18/04/2024 17:30

By Ron Bousso, David French and Marianna Parraga
       LONDON/HOUSTON, April 18 (Reuters) - Hedge fund Elliott
Investment Management is weighing a bid for shares in the parent
of oil refiner Citgo Petroleum under a U.S. court-ordered
auction, while a group of creditors represented by Centerview
Partners aims to lure ConocoPhillips to join another offer, five
people close to the matter said.
        Investment banker Centerview has been retained to craft
a potential bid on behalf of investors and creditors pursuing
Venezuela's foreign assets in federal court in Delaware to
recoup claims for expropriations and debt defaults, three of the
people said.  
    The Centerview group wants oil producer ConocoPhillips
 COP.N , which holds the largest claims in the court case, to
join its effort ahead of the final bidding round, which closes
in June. Conoco has not decided if it will, a person familiar
with its thinking said. 
    Elliott, which has billions of dollars in investments in
U.S. oil refining companies, separately met with Citgo managers
to obtain financial and operational information as part of its
preparations for the bidding round, two of the people said. 
    The arrival of two groups with substantial resources and
experience in corporate restructurings has increased the
likelihood of an ownership change for the century-old refiner,
which is the crown jewel of Venezuela's foreign assets.
    The court is auctioning shares in Citgo parent PDV Holding
after a trial that broke new legal ground in sovereign immunity
cases by finding the company liable for the South American
country's past debt defaults and expropriations. PDV Holding's
only asset is Houston-based Citgo. 
        A total of 18 creditors collectively claiming $21.3
billion have been cleared to cash proceeds from the auction. The
court's sales process is set to be completed in July after seven
years of litigation. 
    
    
    BUY AND SELL
    Conoco was among 12 groups that submitted indications of
interest during a first bidding round in January, Reuters has
reported. 
    Conoco could still join the Centerview group or team with
Elliott. Binding offers are due by June 11.
    The group represented by Centerview does not intend to own
the seventh-largest U.S. refiner in the long term. It is
considering forming a holding company that would allow
participants to recoup claims and profits by selling stakes in
the future, two of the people said. 
    Oil refiners Koch Industries and PBF Energy  PBF.N  also are
weighing binding offers, one of the people familiar with the
auction said. 
    Centerview and Elliott declined comment on the bidding.
Spokespeople for Koch and PBF did not immediately reply to
requests for comment. 
    A Conoco spokesperson declined comment on bidding, but said:
"We will pursue all legal avenues to obtain a full and fair
recovery."
    Citgo and boards supervising the refiners did not
immediately reply to requests for comment.  
    
    CREDIT BIDS
    The 18 creditors pursuing Venezuela's foreign assets include
Conoco, miners Crystallex, Rusoro Mining  RML.V  and Gold
Reserve  GRZ.V , oil services firm Tidewater  TDW.N  and units
of Koch and Huntington Ingalls  HII.N . 
    The court has ruled that the creditors can submit bids for
PDV Holding shares consisting partially or entirely in credit
offers using their claims. 
    Credit bids for the shares must include cash to cover
higher-ranked creditors, which could require Conoco or others to
pool their claims and submit a cash-and-credit bid, one of the
people said.  
    Elliott was one of the first parties to meet with Citgo
executives for details of the company's operations, one of the
people said. 
    The highest bid in the first round was $7.3 billion, below
the $13 billion to $14 billion value put on the company by
court-appointed specialists. That offer, called "disappointing"
by a Citgo lawyer, had raised the prospect that only a handful
of creditors would receive proceeds without a higher offer. 
    Citgo has been very profitable, generating $4.8 billion in
combined net earnings over the last two years from its three
U.S. refineries, a network of storage terminals and pipelines,
and distribution agreements with thousands of fuel retailers.
        Although Citgo is owned by Venezuela, in 2019 it severed
ties with its ultimate parent, Caracas-headquartered state
company PDVSA. It is since operating under a U.S. license that
protects it from creditors. Any buyer would need U.S. Treasury
approval to complete the purchase. 
    Both Venezuela's President Nicolas Maduro and the country's
political opposition have criticized the auction, saying it does
not represent a balanced process to pay off the largest possible
number of creditors. 
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Conoco emerges as surprise bidder in historic Citgo share
auction    https://www.reuters.com/markets/commodities/conoco-emerges-surprise-bidder-historic-citgo-share-auction-2024-02-09/
Weak bids in Citgo auction spur Venezuela to pitch alternative
pay plan    https://www.reuters.com/business/energy/weak-bids-citgo-auction-spurs-venezuela-pitch-alternative-pay-plan-2024-03-14/
Refiner Citgo set to open data room for bidders tied to court
auction    https://www.reuters.com/markets/commodities/refiner-citgo-set-open-data-room-bidders-tied-court-auction-2024-03-27/
GRAPHIC-Creditors cleared to take part in Citgo parent's share
auction     https://tmsnrt.rs/48NgAdq
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Ron Bousso in London, Marianna Parraga in
Houston, David French in New York, and Svea Herbst in Boston;
editing by Gary McWilliams and Nick Zieminski)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))