By Shubham Kalia and Marianna Parraga
(Reuters) -A $7.38 billion bid by a unit of Toronto-listed miner Gold Reserve was named preliminary winner of an auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, organized by a U.S. court to pay creditors for debt defaults and expropriations in the South American country.
If the recommended offer is approved by the court, proceeds from the auction of PDV Holding would be enough to compensate 11 of the 15 creditors fighting in U.S. courts since 2017 to recover billions of dollars after Venezuela’s wave of nationalizations, an officer overseeing the auction said in a filing.
The bid by Gold Reserve’s subsidiary Dalinar Energy Corporation, which will now be evaluated by Delaware Judge Leonard Stark before a final decision, is higher than a $3.7 billion offer by Contrarian Funds’ Red Tree Investments, selected in March as starting bid.
Even though the cash component of the Gold Reserve-led group’s bid seems lower than rival offers submitted, it covers a substantial number of creditors including oil producer ConocoPhillips, miners Rusoro and Crystallex and conglomerates Koch, OI Glass and Siemens.
The recommended bid also would allow Bermuda-based Gold Reserve to recover its own $1.78 billion claim for the expropriation of gold mining assets in Venezuela.
Contrary to rivals, the offer did not include an agreement to pay holders of a key defaulted Venezuela bond collateralized with Citgo equity, which implies “a degree of risk,” court officer Robert Pincus said in the filing. That claim has not been resolved in a separate case in New York.
“Dalinar’s proposed sale transaction is approximately $3.576 billion higher than the stalking horse transaction and is the highest bid that meets the bid requirements,” Pincus said.
The bid relies on a combination of equity and debt financing, and is supported by Rusoro, two units of Koch, and Siemens, Gold Reserve said in a statement. Dalinar had offered $7.1 billion for the shares earlier this year.
“Our bid satisfies creditors further down the waterfall than was ever contemplated by any prior bid since the inception of the Delaware sale process,” said Paul Rivett, Gold Reserve’s executive vice chairman.
In a case first introduced by Crystallex against Venezuela, PDV Holding was found liable for the country’s debt. The Delaware court has since then attempted to secure a deal to satisfy up to $19 billion in claims.
Houston-based refiner Citgo Petroleum, the crown jewel of Venezuela’s overseas assets, severed ties with PDVSA in 2019 following U.S. sanctions. An opposition-led Congress that year appointed a new board of directors for the refiner, which is now overseen by opposition-controlled supervising boards.
By Shubham Kalia and Marianna Parraga
(Reuters) -A $7.38 billion bid by a unit of Toronto-listed miner Gold Reserve was named preliminary winner of an auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, organized by a U.S. court to pay creditors for debt defaults and expropriations in the South American country.
If the recommended offer is approved by the court, proceeds from the auction of PDV Holding would be enough to compensate 11 of the 15 creditors fighting in U.S. courts since 2017 to recover billions of dollars after Venezuela’s wave of nationalizations, an officer overseeing the auction said in a filing.
The bid by Gold Reserve’s subsidiary Dalinar Energy Corporation, which will now be evaluated by Delaware Judge Leonard Stark before a final decision, is higher than a $3.7 billion offer by Contrarian Funds’ Red Tree Investments, selected in March as starting bid.
Even though the cash component of the Gold Reserve-led group’s bid seems lower than rival offers submitted, it covers a substantial number of creditors including oil producer ConocoPhillips, miners Rusoro and Crystallex and conglomerates Koch, OI Glass and Siemens.
The recommended bid also would allow Bermuda-based Gold Reserve to recover its own $1.78 billion claim for the expropriation of gold mining assets in Venezuela.
Contrary to rivals, the offer did not include an agreement to pay holders of a key defaulted Venezuela bond collateralized with Citgo equity, which implies “a degree of risk,” court officer Robert Pincus said in the filing. That claim has not been resolved in a separate case in New York.
“Dalinar’s proposed sale transaction is approximately $3.576 billion higher than the stalking horse transaction and is the highest bid that meets the bid requirements,” Pincus said.
The bid relies on a combination of equity and debt financing, and is supported by Rusoro, two units of Koch, and Siemens, Gold Reserve said in a statement. Dalinar had offered $7.1 billion for the shares earlier this year.
“Our bid satisfies creditors further down the waterfall than was ever contemplated by any prior bid since the inception of the Delaware sale process,” said Paul Rivett, Gold Reserve’s executive vice chairman.
In a case first introduced by Crystallex against Venezuela, PDV Holding was found liable for the country’s debt. The Delaware court has since then attempted to secure a deal to satisfy up to $19 billion in claims.
Houston-based refiner Citgo Petroleum, the crown jewel of Venezuela’s overseas assets, severed ties with PDVSA in 2019 following U.S. sanctions. An opposition-led Congress that year appointed a new board of directors for the refiner, which is now overseen by opposition-controlled supervising boards.
Leave feedback about this