US Court Might Delay Hearing on Citgo Bids Until September, Reports Reuters

By Marianna Parraga

HOUSTON (Reuters) – A U.S. court has requested to postpone a hearing until September 19 to present the winning bid from an auction of shares in the parent company of Venezuela-owned Citgo Petroleum, as stated in a motion filed with the court on Friday.

The court official in Delaware, overseeing the evaluation of bids in this unprecedented auction, has sought a two-month extension to finalize his assessment and complete negotiations with bidders. The judge must approve this motion for it to take effect.

This case is pioneering in its approach to enforcing international arbitration awards, as well as addressing issues of sovereign and corporate immunity. The auction aims to facilitate a change in ownership of Venezuela’s valuable asset to settle $21.3 billion in claims against the country.

Initially, the court had aimed to conclude the sale process, which included two rounds of bidding, by July 15, just days ahead of Venezuela’s presidential election scheduled for July 28. This election is viewed by Washington as a potential resolution point for Venezuela’s long-standing political turmoil.

COMPETITIVE BIDS

Within the range of competitive offers received, multiple bids were deemed actionable, according to Robert Pincus, the court officer managing the auction. He indicated that more time is necessary to clarify certain bid terms and negotiate a final sales agreement.

Pincus has also requested permission from the court to consider unsolicited bids, should he find one to be “higher or better” than those submitted by the June 11 deadline.

Sources familiar with the proceedings revealed that none of the bids submitted this month reached the total claims made in court, leading to expectations of the delay. The motion did not specify the total number of bids received or their respective amounts.

Citgo ranks as the seventh largest oil refiner in the U.S. and operates storage terminals, pipeline interests, and three refineries capable of processing up to 807,000 barrels per day into fuel. The company severed ties with its parent entity, the Caracas-based state oil firm PDVSA, in 2019.

Both the administration of Venezuelan President Nicolas Maduro and the political opposition have urged the U.S. government to delay or suspend the auction, fearing that its outcome could influence the electoral process.

In a previous bidding round in January, investors submitted offers totaling $7.3 billion, falling short of the Houston-based refiner’s market valuation, estimated between $11 billion and $13 billion. Legal representatives for Venezuela labeled these offers as “disappointing” and have recently urged the court to facilitate a third round of bidding if the outcomes from the second round do not meet a fair valuation for the company.

At least five investor groups made binding bids in the second round, with three securing financing commitments from major financial institutions. A hearing is set for July 2 to provide the court with an update on the evaluation progress, where the judge may address the request for a delay.