(Adds bondholders case, updates dates and details)
By Marianna Parraga
HOUSTON, June 10 (Reuters) -
Companies submitting bids through Tuesday in a U.S. court-ordered auction of shares in Citgo Petroleum parent PDV Holding must
present proposals
to pay holders of 2020 bonds issued by Venezuela state oil firm PDVSA.
The court is auctioning shares in a parent of Venezuela's foreign crown jewel, Houston-based Citgo, that it found liable for the South American country's debts. The auction has drawn interest by several energy companies and investors and could result in a change of ownership of the refiner.
The bondholders' claim adds a new twist to the long-running case in Delaware, first introduced by miner Crystallex against Venezuela, which has allowed 18 creditors to jointly seek $21.3 billion in compensation for expropriations and defaults.
The holders, whose bonds were collateralized with a 50.1%-stake in one of Citgo's parents, PDV Holding, have been fighting in separate U.S. courts to have the bonds declared valid. They are seeking $1.9 billion in compensation.
Their claim is poised to reduce the auction proceeds available to creditors, while securing the holders a compensation, even if not immediately. The bids will decide the fate of the seventh-largest U.S. refiner as soon as this summer.
Proceeds from the auction may cover only about a third of claims cleared by the court, based on the highest offer in a first round in January. The judge's bidding instructions, updated in May, ask potential buyers using
credit bids
to say whether their offers include cash provisions to pay the 2020 bondholders, a filing showed.
PRIORITY CLAIMS
Citgo, ultimately owned by Caracas-headquartered state firm Petroleos de Venezuela , has been valued at between $11 billion and $13 billion. But the highest offer in the first bidding round was $7.3 billion.
The court years ago found Citgo parent, PDV Holding, liable for Venezuela's expropriations and debt defaults, bringing dozens of other creditors to press their claims.
Judge Leonard Stark has said the sale process might be completed in July, but an authorization from the U.S. Treasury Department will be needed to award the winner. Venezuela has asked the U.S. to pause the auction until elections in that country next month.
The judge last year gave priority to miner Crystallex, who introduced its claim in Delaware in 2017, to cash some $990 million. A $72 million claim by offshore service provider Tidewater has second-highest ranking.
Oil producer ConocoPhillips secured a position near the front of the line to cash a $1.33-billion claim, one of the three awards totaling more than $10 billion the company has registered.
Also near the top of the list are glass maker O-I Glass
, Huntington Ingalls Industries , ACL Investments, Red Tree Investments, Rusoro Mining , a second, $48.1 million claim by Conoco, and units of Koch Industries.
BIDDERS AND MARKETERS
The U.S. court has kept most of the bidding rounds' details confidential, including bidder names. It last year hired investment banker Evercore Group to market Citgo's assets, which include three refineries, terminals and pipelines.
Evercore and court official Robert Pincus are expected to begin reviewing and ranking the bids as soon as Wednesday, people close to the process said. They may seek clarification from bidders before presenting them to the court.
Bidders are expected to include top investors and energy companies. Activist investor Elliott Investment Management has been weighing a bid for the shares, while a group of creditors represented by financial firm Centerview Partners was aiming to lure Conoco to join another offer, sources told Reuters in April.
Conoco and Elliott were among 12 groups that submitted indications of interest during a first round in January. Refiners Koch Industries and PBF Energy also are weighing offers.
The arrival of at least two groups with substantial resources and experience in corporate restructurings has increased the likelihood of an ownership change for the century-old refiner.
Citgo's smallest and least profitable refinery, in Corpus Christi, Texas, recently has been thrust into the spotlight as a potential breakout candidate ahead of the final bidding round. Producers, refiners and investment funds increasingly
have shown interest
in that asset.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Venezuela pursues debt settlement with Crystallex, Conoco, bondholders Creditors cleared to take part in Citgo parent's share auction
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Marianna Parraga and Gary McWilliams; Editing by David Gregorio)
((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters Messaging: @mariannaparraga))
Comments