U.S. Court Delays Citgo Share Auction Decision Until October
(Reuters) — A U.S. court on Thursday agreed to delay the selection of finalists in an auction that could change the ownership of Citgo Petroleum, pushing back any sale of the seventh-largest U.S. oil refiner until October.
A court officer overseeing the auction in Delaware on Wednesday requested three additional weeks to finalize an analysis of bids submitted in June, and set terms for the sale of shares in one of Citgo's parent companies, whose only asset is the Houston-based company.
The delay comes amid a fiercely disputed presidential election in Venezuela, which owns Citgo and considers the auction a theft of its prized foreign asset.
The court set Aug. 22 to disclose its recommendation on bids for the refiner's parent, and Oct. 15 as deadline to choose a winner. This is the second time judge Leonard Stark has delayed the process at court officer Robert Pincus' request.
"As the Citgo auction sale enters its final stage... ballooning procedural complexities and Venezuela's political turmoil are threatening to delay the process," lawyer Jose Ignacio Hernandez from advisory firm Aurora Macro Strategies wrote in a report earlier this week.
Offers have proven to be complex, with the court allowing creditors to combine credit bids with cash. Holders of a bond issued by state oil company PDVSA, collateralized with Citgo equity, also are claiming about $2 billion in a separate court case.
In total, 18 creditors including defaulted bondholders and oil producers, industrial conglomerates and mining firms whose assets were expropriated in Venezuela are trying to cash up to $21.3 billion in proceeds from the auction.
"We can anticipate technical challenges," Hernandez said, noting that the court would have to balance the bids with a plan to resolve all liabilities, including the PDVSA 2020 notes.
At least five groups of investors submitted binding bids and three secured financing commitments from banks and advisors including JPMorgan, Morgan Stanley, and Rothschild & Co., sources told Reuters in June.
U.S. oil refiner CVR Energy was working with investment bankers at Wells Fargo WFC.N to raise financing for a bid, Reuters reported in July. CVR has the support of Carl Icahn, the billionaire activist investor, in its offer, people familiar with the matter have said.
In the first bidding round in January, offers submitted reached $7.3 billion, well below an estimated market value of between $11 billion and $13 billion for the company.
Lawyers representing Citgo and Venezuela called the round's results disappointing and requested the sales process to be reorganized to better pay creditors.
The unprecedented court case has allowed Citgo parent PDV Holding to be found liable for the South American country's debts, and its shares seized by a U.S. court to pay creditors.
Citgo operates three U.S. refineries that can process up to 807,000 barrels per day of crude. In 2019, it severed ties with its ultimate parent, Caracas-headquartered state oil company PDVSA after the U.S. imposed sanctions on Venezuela.
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