(Yahoo Finance) – An Elliott Investment Management affiliate won an auction for Citgo Petroleum Corp.’s parent company with a bid for $7.3 billion, clearing a key hurdle in the fund’s push to acquire an oil refiner that was once Venezuela’s largest foreign asset.
The affiliate, Amber Energy Inc., submitted the best bid for Citgo’s US parent, PDV Holding, Robert Pincus, the court-appointed special master who oversaw the process, said in a filing Friday. Pincus must still make a formal, final recommendation and then federal Judge Leonard Stark in Delaware must approve it.
Amber won out over other suitors interested in wresting control of Citgo from Petroleos de Venezuela SA, Venezuela’s state-owned oil company. The sale is intended to satisfy Venezuela creditors holding more than $20 billion in claims, but the sale price may leave many investors with no compensation.
“We thank the special master for selecting Amber Energy as the successful bidder and recommending that the court approve Amber Energy’s acquisition” of Citgo, Amber Chief Executive Officer Gregory Goff said in a statement. “We look forward to partnering with the people of Citgo to ensure that the company continues to operate with the highest standards of safety and reliability.”
After Pincus submits the final recommendation, other bidders may have the option to outbid Elliott during a 45-day period, the filing said. Elliott also has a right to terminate the agreement if the special master’s motion to block other creditors trying to attach the asset through lawsuits filed in different courts is denied.
Venezuela moved more than 20 years ago to nationalize foreign businesses operating in the country. Crystallex International Corp., a defunct Canadian miner whose rights to the Las Cristinas gold field were seized by former President Hugo Chávez, is first in line for a slice of the auction’s proceeds.
Chávez, first elected in the late 1990s, nationalized major industries as part of a socialist agenda during his 14-year reign. Chávez died in 2013 and was succeeded by Nicolás Maduro. Affected companies secured international arbitration awards over the seizures and filed them in Delaware in hopes of winning restitution.
Venezuela is represented in US courts by the country’s opposition as President Maduro is not recognized as the legitimate leader of the country under US law. Both Maduro and his opponents have opposed auctioning off control of Citgo and have considered filing for bankruptcy protection to halt the sale.
Other companies seeking to collect from the sale include Siemens AG, ConocoPhillips and Exxon Mobil Corp. Citgo processes more than 800,000 barrels of oil each day and is the seventh-largest US refiner behind Marathon Petroleum Corp. in the top spot.
Along with Judge Stark, the US Treasury Department’s Office of Foreign Assets Control must also approve the sale, as Citgo is protected by US sanctions on Venezuela in the wake of governmental unrest in the country.
The case is Crystallex International Corp. v. Bolivarian Republic of Venezuela, 17-mc-00151, US District Court, District of Delaware (Wilmington).
(Adds Amber Energy statement in fourth paragraph)
