US extends Citgo Petroleum's protection from Venezuela creditors to October (updated)

Rusoro Mining

19/07/2023 16:40

(Adds details on creditors, background in paragraphs 4-11)
    By Marianna Parraga
       HOUSTON, July 19 (Reuters) - The U.S. Treasury
Department on Wednesday renewed a license that protects
Venezuela-owned refiner Citgo Petroleum from creditors seeking
to seize the company's assets to recoup claims against the
country's state oil firm. 
    The renewal would allow the supervisory board that oversees
Citgo to continue efforts to reach settlements with nearly a
dozen firms seeking an auction of shares in the parent of the
seventh-largest U.S. oil refiner. 
    A negotiating team representing the South American country
has held settlement talks with some of those creditors and
holders of defaulted PDVSA bonds. 
    The U.S. has shielded Houston-based Citgo from creditors
since the company in 2019 severed ties with its ultimate parent,
Venezuela's state oil firm Petroleos de Venezuela  PDVSA.UL ,
which is controlled by President Nicolas Maduro.
    Wednesday's Treasury license bars transactions in PDVSA debt
through Oct. 19.  
    Horacio Medina, chief of the board that supervises Citgo,
did not immediately reply to a request for comment. Citgo
declined to comment. 
    A sales process for Citgo shares that could begin as soon as
September is under consideration by a U.S. judge in Delaware.
The proposed auction could be used to satisfy some $2.7 billion
in claims for expropriation of Venezuelan assets and judgments
from Crystallex International, ConocoPhillips  COP.N , Siemens
Energy  ENR1n.DE  and Red Tree Investments.
    Six other companies also have attachments contingent on
obtaining U.S. Treasury approval to seize assets. Their
judgments total $3.46 billion. The six companies are: O-I Glass 
 OI.N , Huntington Ingalls Industries  HII.N , ACL1 Investments,
Rusoro Mining  RML.V , Gold Reserve  GRZ.V  and two Koch
Industries units. 
    Citgo last year posted a record $2.8 billion annual profit,
and a $937 million profit in the first quarter, giving it room
to negotiate payments with some creditors, which in total are
claiming more than $20 billion.
    Holders of PDVSA's defaulted 2020 bonds, which are backed by
a 50.1% stake in a Citgo parent, in 2020 won a court judgment
allowing them to collect $1.9 billion in defaulted principal and
interest payments. The group is asking a New York court to
authorize the use of the company's U.S. oil pipeline and
refining assets to help settle debt restructuring negotiations.
    If PDVSA loses an appeal challenging the bonds' validity,
U.S. District Judge Katherine Polk Failla in Manhattan could
release a hold on that case. Venezuela this month lost a
separate appeal trying to block new creditors from attaching to
the Delaware case.
    

 (Reporting by Marianna Parraga in Houston
Writing by Gary McWilliams
Editing by Matthew Lewis)
 ((Gary.McWilliams@thomsonreuters.com; +1 469-691-7668;))