Factbox: Venezuela creditors with top priority in Citgo share auction

Rusoro Mining

10/06/2024 12:00

(Adds bondholders case, updates dates and details)
    By Marianna Parraga
       HOUSTON, June 10 (Reuters) - 
    Companies submitting bids through Tuesday in a U.S.
court-ordered auction of shares in Citgo Petroleum parent PDV
Holding must 
    present proposals
     to pay holders of 2020 bonds issued by Venezuela state oil
firm PDVSA.    
  
    The court is auctioning shares in a parent of Venezuela's
foreign crown jewel, Houston-based Citgo, that it found liable
for the South American country's debts. The auction has drawn
interest by several energy companies and investors and could
result in a change of ownership of the refiner. 
        The bondholders' claim adds a new twist to the
long-running case in Delaware, first introduced by miner
Crystallex against Venezuela, which has allowed 18 creditors to
jointly seek $21.3 billion in compensation for expropriations
and defaults.
  
    The holders, whose bonds were collateralized with a
50.1%-stake in one of Citgo's parents, PDV Holding, have been
fighting in separate U.S. courts to have the bonds declared
valid. They are seeking $1.9 billion in compensation.
        Their claim is poised to reduce the auction proceeds
available to creditors, while securing the holders a
compensation, even if not immediately. The bids will decide the
fate of the seventh-largest U.S. refiner as soon as this summer.
  
        Proceeds from the auction may cover only about a third
of claims cleared by the court, based on the highest offer in a
first round in January. The judge's bidding instructions,
updated in May, ask potential buyers using 
    credit bids
     to say whether their offers include cash provisions to pay
the 2020 bondholders, a filing showed. 
  
        
  
        PRIORITY CLAIMS
  
        Citgo, ultimately owned by Caracas-headquartered state
firm Petroleos de Venezuela  PDVSA.UL , has been valued at
between $11 billion and $13 billion. But the highest offer in
the first bidding round was $7.3 billion. 
    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.
    Judge Leonard Stark has said the sale process might be
completed in July, but an authorization from the U.S. Treasury
Department will be needed to award the winner. Venezuela has
asked the U.S. to pause the auction until elections in that
country next month.  
    
    The judge last year gave priority to miner Crystallex, who
introduced its claim in Delaware in 2017, to cash some $990
million. A $72 million claim by offshore service provider
Tidewater  TDW.N  has second-highest ranking.
    Oil producer ConocoPhillips  COP.N  secured a position near
the front of the line to cash a $1.33-billion claim, one of the
three awards totaling more than $10 billion the company has
registered.
    Also near the top of the list 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.
        
    BIDDERS AND MARKETERS
        The U.S. court has kept most of the bidding rounds'
details confidential, including bidder names. It last year hired
investment banker Evercore Group  EVR.N  to market Citgo's
assets, which include three refineries, terminals and pipelines.
    Evercore and court official Robert Pincus are expected to
begin reviewing and ranking the bids as soon as Wednesday,
people close to the process said. They may seek clarification
from bidders before presenting them to the court. 
    Bidders are expected to include top investors and energy
companies. Activist investor Elliott Investment Management has
been weighing a bid for the shares, while a group of creditors
represented by financial firm Centerview Partners was aiming to
lure Conoco to join another offer, sources told Reuters in
April.
        Conoco and Elliott were among 12 groups that submitted
indications of interest during a first round in January.
Refiners Koch Industries and PBF Energy  PBF.N  also are
weighing offers.
  
        The arrival of at least two groups with substantial
resources and experience in corporate restructurings has
increased the likelihood of an ownership change for the
century-old refiner.
  
        Citgo's smallest and least profitable refinery, in
Corpus Christi, Texas, recently has been thrust into the
spotlight as a potential breakout candidate ahead of the final
bidding round. Producers, refiners and investment funds
increasingly 
    have shown interest
     in that asset.
  

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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 and Gary McWilliams; Editing by
David Gregorio)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))