A Delaware judge has granted approval for Elliott Management to move forward with its bid for Citgo, the U.S. refining subsidiary of Venezuela’s state oil company, PDVSA. Judge Leonard Stark announced the decision on a recent date, allowing parties involved until Monday to finalize a sale order, which includes the Venezuelan government.
In his ruling, Judge Stark highlighted that the Amber Bid, associated with Elliott Management, presents the best combination of price and certainty among the bids submitted. According to Reuters, he stated, “The Amber Bid offers the best overall combination of price and certainty of closing of any bid submitted.”
The auction for Citgo began in August, when Amber Energy, an affiliate of Elliott, proposed a bid of $5.86 billion to creditors of PDV Holding, along with an additional $2.86 billion to settle claims from bondholders linked to PDV Holding’s default on a bond. This offer positioned Amber Energy as the leading contender for Citgo.
Meanwhile, a rival bid led by mining company Gold Reserve sought to challenge Elliott’s offer. Gold Reserve proposed a significantly higher bid of $7.4 billion, exceeding both Amber Energy’s offer and the court’s established floor price of $3.7 billion. Gold Reserve’s legal team criticized the Elliott bid, describing it as a “back-room carve-up” that would redirect billions from legitimate creditors to bondholders entangled in ongoing disputes in a New York court.
In response to the auction proceedings, Gold Reserve previously requested a stay on the process, expressing concerns over potential conflicts of interest. They pointed to the $170 million in fees reportedly collected by advisors connected to Elliott and the bondholders involved in the bidding.
The legal representatives for PDV Holding, the parent company of Citgo, expressed their discontent with Judge Stark’s approval of the Amber bid, arguing that the amount was “so low it shocks the conscience.” They indicated their intention to challenge the ruling, emphasizing the significant financial implications for creditors seeking recourse.
The sale of Citgo is crucial for approximately 15 creditors who are pursuing compensation for losses incurred due to Venezuela’s nationalization policies under former President Hugo Chavez and subsequent debt defaults since 2017. The total claims from these creditors amount to $19 billion, underscoring the high stakes involved in the auction process.
As the situation develops, stakeholders are poised to see how the final sale order will unfold and what impact it will have on the future of Citgo and its creditors.
