US judge clears way for more Venezuela creditors to join Citgo auction (updated)

Rusoro Mining

08/01/2024 17:48

(Adds details, background, U.S. Supreme Court decision, further
comments from judge and court officer and no comment by Citgo,
ConocoPhillips, paragraphs 8-19)
    By Marianna Parraga and Gary McWilliams
       HOUSTON, Jan 8 (Reuters) - A U.S. judge on Monday
granted a large group of Venezuela-linked creditors rights to
participate in a January auction of shares in the parent of
Houston-based refiner Citgo Petroleum. 
    A precedent-setting lawsuit by Canadian miner Crystallex
Corp formally tied Venezuela-owned Citgo to the South American
country's debts and opened the door to some $24 billion in
claims being applied to the refining firm through an auction of
shares in a Citgo parent whose only asset is the oil refiner.   
 
    The decision still requires the group, formed by 10
companies, to comply with a Jan 12 dateline to have writs of
attachments issued against shares in Citgo's parent, PDV
Holding. No extra time was granted, and a new auction schedule
issued on Monday is not planned to be modified, the court in
Delaware said. The U.S. Treasury also has reserved the right to
rule on any winning bid.  
    O-I Glass  OI.N , Huntington Ingalls  HII.N , ACL1
Investments, Rusoro Mining  RML.V , Koch Industries and Gold
Reserve  GRZ.V  can have claims considered as additional
judgments. Another group of four creditors including Siemens
Energy  ENR1n.DE  that had filed a similar motion to be
designated additional creditors were also green-lit, U.S. Judge
Leonard Stark ruled.   
    The companies had sought to participate "with full force and
effect" in the event two of the largest creditors in the
long-running case - miner Crystallex and oil firm ConocoPhillips
 COP.N  - reach settlements with Venezuela that could end the
lawsuit.     
    Talks have been on and off for months with holders of
billions of dollars due for asset expropriations and defaulted
Venezuelan bonds seeking to settle their claims. 
    The additional creditors had argued they needed to have
equal status to protect their interests in event of a deal and
to organize their own credit bids, using their claims against
the purchase price in any sale.  
    
    LAST-MINUTE SETTLEMENTS
        Settlement talks between Venezuela, Crystallex and
Conoco appear to have sparked a flurry of court filings by
companies hoping to improve their chances of receiving proceeds
from asset sales involving Citgo.     
  
        Citgo and Conoco declined to comment on settlement
talks. A representative for Crystallex and a board supervising
Citgo did not reply to requests.  
  
        "We remain committed to pursuing all available legal
avenues to protect our rights and obtain a full and fair
recovery," a Conoco spokesperson said in response to questions
about the talks. 
  
        The U.S. Supreme Court separately on Monday rejected
Venezuela's move to limit the number of companies that could
participate in the auction.
  
        Both Monday decisions open a window for any additional
creditors to get a slice of the auction's proceeds, especially
if the largest creditors settle with Venezuela, leaving room for
others.
  
        "In the event that any of the sale process parties
proposes to settle its differences with any of the Venezuela
parties, the six creditors, the four more creditors and any
other interested entity will have an opportunity to be heard on
whether the court should approve such a settlement and, if it
does, on how the potential resolution or settlement might affect
the sale process," Stark wrote in his order.
  
        Expectations of a settlement have climbed as the
court-auction of shares draws near. Any final negotiation must
be heard by the court.
  
        Last week, the court official designated for the case,
Robert Pincus, said claims should not be expedited or given
additional priority ahead of a deadline for claims to be
accepted, set for Jan. 12. 
  
        To do so "would disrupt a process carefully considered …
and months-ago approved by order of the court," Pincus wrote.
The rush to win approvals would allow claims to be considered in
first-round bids for the shares due ten days later.  
  
        Companies could use their higher status to organize
credit bids for the Citgo parent's shares and "approach the
market with proposals that commercial parties are comfortable
with," wrote hedge fund Pharo Management, which seeks $1.78
billion in claims.    
  
        Judge Stark has given priority to Crystallex's $970
million and Conoco's nearly $10 billion in claims. If they are
fully paid, it could leave little for others. Citgo has been
valued at between $11 billion and $13 billion in the past. 
  
        Bondholders seeking about $1.9 billion are pursuing
Venezuela in a case separate from the Delaware court and have
protested they could be shut out of proceeds.
  

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Venezuela pursues debt settlement with Crystallex, Conoco,
bondholders    https://www.reuters.com/markets/venezuela-pursues-debt-settlement-with-crystallex-conoco-bondholders-2023-06-30/
A tale of setbacks as Venezuela's Citgo heads to US auction    https://www.reuters.com/business/energy/tale-setbacks-venezuelas-citgo-heads-us-auction-2023-10-22/
Which creditors will have priority for Citgo share auction?    https://www.reuters.com/business/energy/which-creditors-will-have-priority-citgo-share-auction-2023-07-27/
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 (Reporting by Marianna Parraga and Gary McWilliams; Editing by
David Gregorio)
 ((Gary.McWilliams@thomsonreuters.com; +1 469-691-7668;))