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Yahoo
5 days ago
- Business
- Yahoo
US judge extends Citgo auction's schedule, moves final hearing to August
By Marianna Parraga HOUSTON (Reuters) -A U.S. judge in Delaware has extended the schedule for a court-organized auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, moving the sales process's final hearing to August 18, according to a filing on Wednesday. The eight-year court case, aimed at compensating creditors for debt defaults and asset expropriations in Venezuela, has endured multiple delays. A first bidding round last year failed to satisfy most of the companies expecting to cash proceeds. Houston-based Citgo, ultimately owned by Venezuela's state oil company PDVSA, is the seventh-largest U.S. refiner. Earlier this year, a $3.7-billion offer by Contrarian Funds' affiliate Red Tree Investments was selected by the court as a starting bid in the second bidding round. The offer includes an agreement to pay holders of a Venezuelan defaulted bond. Red Tree and rival bidders have until June 18 to submit improved offers. A court officer overseeing the auction last month said new bidders were expected to emerge. The new calendar, approved after lawyers representing Venezuela requested more time for due diligence and to secure robust bids, sets July 2 as the deadline for a judge to recommend the auction's winner, with a period for submitting objections through July 9. Judge Leonard Stark is trying to avoid long delays in the last part of the sales process by moving deadlines only at bidders' request. Once confirmed, the auction's winner will need approval by the U.S. Treasury Department, which has been protecting Citgo from creditors since 2019. "While heightened investor engagement may marginally delay the auction hearing, Judge Stark remains on course to finalize proceedings by late Q3 2025," said consultancy Aurora Macro Strategies in a report last week. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-04-2025
- Business
- Yahoo
US judge to decide on starting bid in Citgo parent auction following hearing
HOUSTON (Reuters) - A U.S. court is expected to confirm or reject in coming days a $3.7 billion offer by an affiliate of Contrarian Funds aimed at setting a floor for a new bidding round for shares in the parent of Venezuela-owned refiner Citgo Petroleum, following a hearing where creditors made their arguments on Thursday. Contrarian Funds' bid, recommended by a court officer overseeing the auction last month, has unleashed a battle among the 16 creditors that remain in the 8-year court case, aimed at compensating companies and bondholders for debt defaults and expropriations in Venezuela. Delaware judge Leonard Stark filed a document earlier this week saying he was "inclined" to accept the court officer's recommendation of the bid by Contrarian's affiliate Red Tree Investments, which was selected due to its certainty of closing. However, several creditors and lawyers representing Venezuela said in the hearing that starting with such a 'low' bid would make it difficult to approach a targeted $7 billion to $8 billion value for Citgo. Sign in to access your portfolio
Reuters
17-04-2025
- Business
- Reuters
US judge to decide on starting bid in Citgo parent auction following hearing
HOUSTON, April 17 (Reuters) - A U.S. court is expected to confirm or reject in coming days a $3.7 billion offer by an affiliate of Contrarian Funds aimed at setting a floor for a new bidding round for shares in the parent of Venezuela-owned refiner Citgo Petroleum, following a hearing where creditors made their arguments on Thursday. Contrarian Funds' bid, recommended by a court officer overseeing the auction last month, has unleashed a battle among the 16 creditors that remain in the 8-year court case, aimed at compensating companies and bondholders for debt defaults and expropriations in Venezuela. Delaware judge Leonard Stark filed a document earlier this week saying he was "inclined" to accept the court officer's recommendation of the bid by Contrarian's affiliate Red Tree Investments, which was selected due to its certainty of closing. However, several creditors and lawyers representing Venezuela said in the hearing that starting with such a 'low' bid would make it difficult to approach a targeted $7 billion to $8 billion value for Citgo.
Yahoo
29-03-2025
- Business
- Yahoo
New creditors' battle emerges in Citgo auction reboot
By Marianna Parraga HOUSTON (Reuters) -A U.S. federal judge trying to move ahead with an auction of shares in the parent of Venezuela-owned U.S. refiner Citgo Petroleum is dealing with a fresh dispute between creditors after a lowball starting bid was recommended in a reboot of the sale. The complex auction meant to repay 18 creditors for debt defaults and expropriations by Venezuela and state oil company PDVSA was relaunched in January after a year-long bidding process ended in shambles amid arguments over Citgo's worth and parallel legal cases. Lawyers representing Venezuela have also objected to the method of deciding the fate of the country's most-prized foreign asset, while claims of some $21 billion are higher than expected proceeds. The court decided this time to set a minimum bid for shares in PDV Holding, a U.S. subsidiary of PDVSA and the parent of Houston-based Citgo, following the creditors' rejection of a higher winning offer of about $7.3 billion last year by an affiliate of hedge fund Elliott Investment Management due to conditions included. A court officer overseeing the auction last week recommended a $3.7 billion bid by Contrarian Funds' affiliate Red Tree Investment as a "stalking horse" bid or a minimum offer to Delaware judge Leonard Stark. A stalking horse bid, which could secure a higher value for the shares, had not been used in previous rounds. "The base bid is lower than expected, reflecting the zigzag of this process and political risks associated to dealing with Citgo," said Jose Ignacio Hernandez from consultancy Aurora Macro Strategies. However, the group that submitted the highest bid, about $7 billion, immediately protested the court officer's choice, making an emergency request for relief to have access to a sealed pact to pay holders of a Venezuelan bond. That consortium includes miners Gold Reserve and Rusoro and units of conglomerate Koch, all of which are creditors in the auction. The request to have the agreement unsealed was granted by the judge on Wednesday, according to court documents. A redacted version of the pact was released on Thursday, and a hearing previously set up for Thursday to listen to the creditors' arguments was canceled. Objections to Red Tree's bid will be received through April 4 before the judge makes a decision on the recommended offer. Two other consortia including creditors and companies such as trading house Vitol also submitted bids, according to court filings. CREDITORS' SWIRL The 18 creditors include holders of defaulted bonds and companies whose assets were expropriated or contracts broken in Venezuela more than a decade ago during an expropriation wave by late President Hugo Chavez. The government of his successor, President Nicolas Maduro, has called the auction "the theft of the century." The case overseen by Stark was first introduced by Canadian gold miner Crystallex in 2017 after winning an arbitration case, allowing other creditors in similar situations to join. Each creditor is taking a different road to secure payment, with some companies introducing parallel lawsuits pursuing the same assets and others crafting financial moves to maximize proceeds, which has turned the auction into a creditors' game. ConocoPhillips, which holds the largest claims for almost $12 billion, last year filed a court motion to preserve the U.S. oil producer's almost top priority among the creditors and moved to seize payments to Venezuela from an offshore natural gas in neighboring Trinidad. Creditors are collectively seeking up to $21.3 billion, but Citgo was valued at up to $13 billion by experts. Bids have been even lower mainly because of the risks that competing lawsuits could prevent proceeds from being distributed. Citgo, the U.S. seventh-largest refiner, also saw profit plummet last year by nearly $2 billion to $305 million. BONDHOLDER ISSUES The Red Tree $3.7 billion bid was selected because it includes a payment provision to holders of a bond issued by Citgo's ultimate parent, PDVSA, according to a court filing, which would remove a key obstacle from the auction's way. The holders can file injunctions preventing the proceeds to be paid if their case, discussed in a New York court, is resolved. But some creditors want to make sure that Red Tree's agreement with the bondholders constitutes a firm commitment. A decision on how to proceed with the bond's default requires holders representing no less than 75% of the debt. "The failure to make public critical components of Red Tree's bid is a clear violation of the court's December 31, 2024 order," lawyers of Gold Reserve said in a filing last week. Red Tree's bid includes $3.24 billion in cash and $458 million in non-cash consideration. The group would also issue new convertible notes to some creditors junior in the priority list for a potential $1.5 billion value. Other bidders have unsuccessfully tried to reach a pact with holders of the PDVSA 2020 bond, which is collateralized with Citgo equity. The agreement, which is expected to require some $2.5 billion in payments, is seen as pivotal to get access to Citgo parent PDV Holding and its assets in the long run.
Reuters
27-03-2025
- Business
- Reuters
Explainer: New creditors' battle emerges in Citgo auction reboot
Summary Companies New bidding round starts after year-long auction ended in shambles Creditors' dispute over minimum bid to add more delays in 8-year-old case Bondholders pact released at Gold Reserve-consortium's request Bids by Venezuela-linked creditors turn auction into creditors game HOUSTON, March 27 (Reuters) - A U.S. federal judge trying to move ahead with an auction of shares in the parent of Venezuela-owned U.S. refiner Citgo Petroleum is dealing with a fresh dispute between creditors after a lowball starting bid was recommended in a reboot of the sale. The complex auction meant to repay 18 creditors for debt defaults and expropriations by Venezuela and state oil company PDVSA was relaunched in January after a year-long bidding process ended in shambles amid arguments over Citgo's worth and parallel legal cases. Lawyers representing Venezuela have also objected to the method of deciding the fate of the country's most-prized foreign asset, while claims of some $21 billion are higher than expected proceeds. The court decided this time to set a minimum bid for shares in PDV Holding, a U.S. subsidiary of PDVSA and the parent of Houston-based Citgo, following the creditors' rejection of a higher winning offer of about $7.3 billion last year by an affiliate of hedge fund Elliott Investment Management due to conditions included. A court officer overseeing the auction last week recommended a $3.7 billion bid by Contrarian Funds' affiliate Red Tree Investment as a "stalking horse" bid or a minimum offer to Delaware judge Leonard Stark. A stalking horse bid, which could secure a higher value for the shares, had not been used in previous rounds. "The base bid is lower than expected, reflecting the zigzag of this process and political risks associated to dealing with Citgo," said Jose Ignacio Hernandez from consultancy Aurora Macro Strategies. However, the group that submitted the highest bid, about $7 billion, immediately protested the court officer's choice, making an emergency request for relief to have access to a sealed pact to pay holders of a Venezuelan bond. That consortium includes miners Gold Reserve (GRZ.V), opens new tab and Rusoro (RML.V), opens new tab and units of conglomerate Koch, all of which are creditors in the auction. The request to have the agreement unsealed was granted by the judge on Wednesday, according to court documents. A redacted version of the pact was released on Thursday, and a hearing previously set up for Thursday to listen to the creditors' arguments was canceled. Objections to Red Tree's bid will be received through April 4 before the judge makes a decision on the recommended offer. Two other consortia including creditors and companies such as trading house Vitol ( also submitted bids, according to court filings. CREDITORS' SWIRL The 18 creditors include holders of defaulted bonds and companies whose assets were expropriated or contracts broken in Venezuela more than a decade ago during an expropriation wave by late President Hugo Chavez. The government of his successor, President Nicolas Maduro, has called the auction "the theft of the century." The case overseen by Stark was first introduced by Canadian gold miner Crystallex in 2017 after winning an arbitration case, allowing other creditors in similar situations to join. Each creditor is taking a different road to secure payment, with some companies introducing parallel lawsuits pursuing the same assets and others crafting financial moves to maximize proceeds, which has turned the auction into a creditors' game. ConocoPhillips (COP.N), opens new tab, which holds the largest claims for almost $12 billion, last year filed a court motion to preserve the U.S. oil producer's almost top priority among the creditors and moved to seize payments to Venezuela from an offshore natural gas in neighboring Trinidad. Creditors are collectively seeking up to $21.3 billion, but Citgo was valued at up to $13 billion by experts. Bids have been even lower mainly because of the risks that competing lawsuits could prevent proceeds from being distributed. Citgo, the U.S. seventh-largest refiner, also saw profit plummet last year by nearly $2 billion to $305 million. BONDHOLDER ISSUES The Red Tree $3.7 billion bid was selected because it includes a payment provision to holders of a bond issued by Citgo's ultimate parent, PDVSA, according to a court filing, which would remove a key obstacle from the auction's way. The holders can file injunctions preventing the proceeds to be paid if their case, discussed in a New York court, is resolved. But some creditors want to make sure that Red Tree's agreement with the bondholders constitutes a firm commitment. A decision on how to proceed with the bond's default requires holders representing no less than 75% of the debt. "The failure to make public critical components of Red Tree's bid is a clear violation of the court's December 31, 2024 order," lawyers of Gold Reserve said in a filing last week. Red Tree's bid includes $3.24 billion in cash and $458 million in non-cash consideration. The group would also issue new convertible notes to some creditors junior in the priority list for a potential $1.5 billion value. Other bidders have unsuccessfully tried to reach a pact with holders of the PDVSA 2020 bond, which is collateralized with Citgo equity. The agreement, which is expected to require some $2.5 billion in payments, is seen as pivotal to get access to Citgo parent PDV Holding and its assets in the long run.
