**Elliott Investment Management Secures Control of Citgo Petroleum**
A subsidiary of Elliott Investment Management has successfully won a court-ordered auction for control of Citgo Petroleum Corp., the US oil refiner and Venezuela’s most valuable foreign asset. US District Judge Leonard Stark, based in Wilmington, Delaware, announced on Tuesday that he would accept a special master’s recommendation that Amber Energy’s bid of $5.89 billion was the highest and most favorable from the extensive auction process for shares held by Citgo’s US parent company. This decision brings the eight-year litigation closer to resolution.
Judge Stark stated, “The Amber bid offers the best overall combination of price and certainty of closing of any bid submitted.” He emphasized that the bid is neither grossly inadequate nor manifestly unjust, warranting its approval. Citgo operates as a subsidiary of PDV Holding, which is owned by Venezuela’s state oil company, Petroleos de Venezuela SA (PDVSA).
Following the announcement, PDVSA bonds due in 2020, which are secured by shares in a PDV Holding affiliate, saw a slight increase in trading, moving above par. The bondholders are set to be compensated through a deal with Amber, where investors will relinquish their claims against the company in exchange for $1.68 billion in cash upon the sale’s completion.
Amber expressed its commitment to collaborating with Citgo team members to enhance the company’s historic foundation and strengthen its position in refining, transportation, and marketing essential products for the US economy.
In contrast, Gold Reserve Ltd., a Venezuelan creditor pursuing legal action against the country for the expropriation of its mining assets, submitted a revised offer of $7.9 billion but excluded the bondholders from the proposal. Representatives from Gold Reserve did not immediately respond to requests for comments regarding Judge Stark’s ruling. A federal judge in New York has affirmed the validity of the PDVSA bonds, increasing the likelihood that Amber will emerge as the victor in this auction.
While Judge Stark endorsed Amber’s bid, he has allowed bidders until November 28 to present any final objections before issuing a definitive sale order. Citgo operates various refineries, pipelines, terminals, and fuel distribution networks across the US. PDV Holding is currently under the control of Venezuela’s political opposition, while PDVSA remains under the authority of President Nicolas Maduro. The opposition represents PDVSA in US courts due to the lack of US recognition of Maduro’s government.
The auction process has not been without its controversies. Gold Reserve attempted to disqualify both the judge and the special master, alleging bias in favor of Amber. They claimed that the process was compromised because the special master’s advisors, including the law firm Weil, Gotshal & Manges and investment bank Evercore Inc., had previously worked with Elliott and its affiliates. Both Amber and the special master have denied any conflicts of interest or favoritism.
**FAQ**
*What is the significance of the auction for Citgo Petroleum?*
The auction is crucial as it determines the future control of Citgo Petroleum, a key asset for Venezuela, and impacts the financial interests of various stakeholders, including bondholders and creditors.
