Factbox: Venezuela creditors with top priority in Citgo share auction

Rusoro Mining

24/01/2024 17:06

(Updates with new creditors, judge's orders)
    By Marianna Parraga
       HOUSTON, Jan 24 (Reuters) - A federal judge in Delaware
on Wednesday allowed an additional creditor to seek proceeds
from an auction of shares in a parent of Citgo Petroleum, which
could lead to an ownership change of the seventh U.S. largest
oil refiner to pay for Venezuela's pending debts.    
    Judge Leonard Stark's decision clearing Altana Credit
Opportunities Fund's $530 million claim increases the total of
claims allowed by the court to some $21.3 billion from a cut of
$20.8 billion announced earlier this month. 
    Another creditor presenting a nearly $17 million claim,
Ricardo Devengoechea, will be given extra time to comply with
court requirements to attach his claim, Stark said.
    Citgo, ultimately owned by Caracas-headquartered state firm
Petroleos de Venezuela  PDVSA.UL , has been valued in between
$11 billion and $13 billion. The auction is not expected to
satisfy all claims allowed. 
    The court years ago found Citgo parent, PDV Holding, liable
for Venezuela's expropriations and debt defaults, bringing
dozens of other creditors to press their claims.
    The judge has said the whole sale process might be completed
in a year from its launch last October. 
    
    
    PRIORITY CLAIMS
    Stark last year gave priority to miner Crystallex to cash
some $990 million in proceeds from the auction, while granting
oil producer ConocoPhillips  COP.N  a position near the front of
the line to cash a $1.33-billion claim, one of the three awards
the company has registered with the court.
    Both companies remained among the top three creditors in a
list updated by the court last week. A $72 million claim by
offshore service provider Tidewater  TDW.N  has been moved to
second place.
    Near the top of the list to collect proceeds are glass maker
O-I Glass  OI.N , Huntington Ingalls Industries  HII.N , ACL
Investments, Red Tree Investments, Rusoro Mining  RML.V , a
second, $48.1 million claim by Conoco, and units of Koch
Industries.
    Stark has kept most of the bidding rounds' details
confidential, including bidder names. The court last year hired
investment banker Evercore Group  EVR.N  to market Citgo's
assets, which include three refineries, terminals and pipelines;
and so far has established a first-come-first-served priority
order.    
    Here is the court's participation criteria:
    
    CRYSTALLEX IS FIRST
    Miner Crystallex introduced its claim in Delaware in 2017,
becoming the first creditor with a confirmed arbitration award
against Venezuela and earning top priority. 
    The miner is the only company that has completed all
conditions set by the court to seize foreign property owned by
PDVSA. PDV Holding is a PDVSA subsidiary whose only asset is
Houston-based Citgo Petroleum.
    Other Venezuela creditors tried to follow the same path, but
had been prevented by U.S. sanctions on Venezuela. Stark has
awarded them conditional writs of attachment.
    
    BIDDING AND PAYMENT
    Potential investors and energy companies this month
submitted bids for shares in PDV Holding in a first bidding
round. There could be a second round in the second quarter. All
proceeds will be used to pay creditors. 
    Delaware law concerning the enforcement of money judgments
generally requires that sale proceeds be distributed according
to a "first in time, first in line" rule.  
    But in this case, the court also is taking into account the
unique factors of the Venezuela case, so that rule might not be
absolute, lawyers close to the sale process said.
    The court might decide to bifurcate the sale process to
avoid delays, allowing bidding for the shares to be separate
from any decision on ranking creditors who could participate in
the auction, one of the lawyers said.
   

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Venezuela pursues debt settlement with Crystallex, Conoco,
bondholders     urn:newsml:reuters.com:*:nL1N38K2FD
Creditors cleared to take part in Citgo parent's share auction  
 https://tmsnrt.rs/3vKQglY
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 (Reporting by Marianna Parraga; Editing by Daniel Wallis,
Leslie Adler, Alexandra Hudson)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))