U.S. Court Accepts Elliott Investment's Conditional Bid for Citgo's Parent Company

Elliott Investment Management's conditional offer for shares in Citgo Petroleum's parent has been accepted by a U.S. court officer. The auction, overseen by a U.S. District Court in Delaware, aims to repay $21.3 billion in claims against Venezuela and its state-oil firm PDVSA. The bid faces opposition and potential legal challenges.

A conditional offer for shares in Citgo Petroleum's parent by financial firm Elliott Investment Management was accepted by a U.S. court officer overseeing an auction poised to determine the future control of the Venezuela-owned oil refiner, sources said.

A U.S. District Court in Delaware is auctioning shares in Citgo parent PDV Holding to settle up to $21.3 billion in claims against Venezuela and state-oil firm PDVSA for expropriations and debt defaults. A second and final bidding round concluded earlier this year, leading to negotiations on terms.

Elliott's offer for shares in Citgo parent, a mix of cash and credit, is contingent upon resolving claims by a group of holders of defaulted Venezuela bonds led by Gramercy Distress Opportunity Fund, sources reported. The exact value of Elliott's offer remains undisclosed.

The move to control Citgo follows Elliott's successful efforts to pressure U.S. oil refiners Marathon Petroleum and Phillips 66 to boost their results, earning billions in the process. Elliott participated in both bidding rounds, competing with rival bids from U.S. oil refiner CVR Energy and miner Gold Reserve.

Despite a court-established priority ranking for claims, some bondholders are pursuing separate court actions, threatening to derail the sales process, which has already faced five delays. The conditional nature of Elliott's offer is sparking opposition from Venezuelan parties involved in the case, as the federal judge initially required the bid to be binding and final.

On Friday, court officer Robert Pincus informed the judge that he had ended talks with holders of PDVSA's 2020 bonds without a resolution, a condition he imposed for considering offers in the second round. These bonds are collateralized with Citgo's equity.

Thomas Laryea, representing the Venezuela Creditor Committee, declined to comment on developments. Judge Leonard Stark plans to discuss next week a proposal to prevent bondholders from resorting to other courts and attempting to bypass Delaware's creditors list.

Should Stark approve this motion, the Gramercy-led group can still challenge the decision, potentially freezing Elliott's offer until the dispute is resolved.

(With inputs from agencies.)