The recent U.S. auction of shares determining the future of Venezuela-owned oil refiner Citgo Petroleum yielded a highest bid of $7.3 billion, falling significantly short of covering court-approved claims. Creditors, seeking to recover $21.3 billion in debts and expropriations, faced a lackluster outcome in the bidding process, raising concerns among analysts and sources.
The federal court in Delaware overseeing the auction of Citgo’s parent company, held liable for Venezuela’s debt defaults, is confronted with a challenging scenario where the bids received may leave numerous claims unresolved. As the court navigates this complex situation, Venezuela is exploring an alternative payment plan to offer creditors a larger payout spread over several years while maintaining a stake in the company.
While Judge Leonard Stark has initially rejected Venezuela’s payment proposals, the underwhelming bids from the auction may prompt a reconsideration. With the highest offer covering only a portion of accepted claims, totaling 14 out of 26 from 18 creditors, the court faces critical decisions ahead.
The disappointing bids, falling short of court-appointed specialists’ valuations, have prompted Citgo’s parent companies to revisit an earlier $10 billion payment proposal funded through Citgo’s profits, equity, and borrowings. Major players like ConocoPhillips and Koch Industries have expressed interest in acquiring Citgo’s assets through credit bids, underscoring the significance of this auction in the energy sector.
Despite Citgo’s profitability in recent years, concerns over its environmental impact and ties with Venezuela’s state oil firm PDVSA have cast a shadow over its future value. With the auction process entering a crucial phase, stakeholders are bracing for further negotiations and potential revisions to ensure a viable outcome for all parties involved.