Financial Alliances Build as Citgo Share Auction Enters Last Mile

By Marianna Parraga

HOUSTON (Reuters) – At least five investor groups submitted binding bids this month in a U.S. court-ordered auction of shares in the parent company of Citgo Petroleum, and three secured financing commitments for Venezuela’s foreign crown jewel, they said people close to the subject.

In the latest stage of an unprecedented auction to pay off up to $21.3 billion in past expropriations and debt defaults in Venezuela, a federal court official overseeing the auction is working to evaluate bids from major investors and creditors.

Wall Street banks JPMorgan and Morgan Stanley, and advisers and investors Rothschild & Co and Elliott Investment Management have secured financing for several offerings, the people said.

The involvement of prominent investors and banks increases the chances of the auction producing a significant bid for the seventh-largest U.S. oil refinery, following a first round in January criticized as “disappointing” by parties representing Venezuela in the Delaware case, already that the highest bid was $7.3. billion.

The auction is expected to be the culmination of a historic case that opened new legal paths in the enforcement of international arbitration awards and the breach of sovereign and corporate immunity.

“We reject the Citgo theft…Venezuela will not recognize any fraudulent transactions,” Venezuelan Vice President Delcy Rodriguez said on X on Monday.

On Friday, Venezuelan Oil Minister Pedro Tellechea appealed to the US court to suspend the auction.

The sale attracted major investors and energy and trading companies, including Vitol, ConocoPhillips and Koch Industries.

JPMorgan, Morgan Stanley, Rothschild, Vitol and ConocoPhillips declined to comment. Koch, Citgo and the boards that oversee the refinery did not respond to requests for comment.

LAST MILE

Citgo has operated under US protection since 2019, when it severed relations with its parent company, the Caracas-based state oil company PDVSA. Its three U.S. refineries process up to 807,000 barrels of oil per day and the company has generated $5.26 billion in combined net profits over the past nine quarters.

The legal process now underway allows bidders to continue structuring financing, “topping off” credit proposals and potentially increasing their bids by at least $100 million to beat a competing bid.

The results are expected to be released in mid-July, according to the court’s auction schedule. A July 2 update from the court official overseeing the auction, Robert Pincus, could provide new details about the bids and investors.

Pincus’ lawyer declined to comment on the procedures and results of the second round bidding.

The story continues

Some bidding groups seek financing to submit 100% cash bids, while some lenders combine credit bids with cash. The court allowed the creditors to use the full value of their claims in the bidding.

Miner Gold Reserve has asserted a $1 billion claim against Venezuela as part of its bid, the company said.

Rusoro Mining said it hired banker Rothschild as a financial advisor to maximize the value of its $1.3 billion claim. A spokesperson declined to comment on its participation in the auction.

Venezuelan officials could request a third round of bidding if second-round offers are too low, people familiar with their thinking said earlier this month.

(Reporting by Marianna Parraga in Houston, additional reporting by Deisy Buitrago in Caracas, Ron Bousso in London and Gary McWilliams in Houston; Editing by Marguerita Choy)