(Bloomberg) — A US judge reset the bidding process for the parent company of Citgo Petroleum Corp. late Tuesday, a move that is poised to create competition for Elliott Investment Management’s pursuit of the oil refiner.
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Judge Leonard Stark ordered the bidding for the company to be reopened, allowing for new offers to be submitted. Any proposal would have to top the $7.3 billion bid made by an affiliate of Elliott earlier this year.
Stark, who heard arguments on the matter on Dec. 13 in Wilmington, Delaware, has now cleared the way for other creditors — including Gold Reserve, Crystallex International Corp. and Red Tree Investments LLC.
The decision puts a new twist on a years-long legal battle over control of the parent of Citgo, a Venezuela-owned foreign asset that operates three refineries in the US, pipelines, terminals and fuel distribution channels. The proceeds of the sale will pay back a long list of creditors that are collectively owed around $20 billion by the Venezuelan government and its state-owned oil company, Petroleos de Venezuela SA, over asset seizures in the country.
Crystallex, which saw its Venezuelan gold mines seized by the late President Hugo Chávez, is first in line for a hefty slice of the proceeds. Others include Exxon Mobil Corp., ConocoPhillips Co. and Siemens AG.
Stark, who authorized the auction last year, had hoped to have the sale of the parent company, PDV Holding, finished by the end of the year.
In his ruling Tuesday, he set a new hearing on the sale for late July in Wilmington.
Creditor Pushback
Stark ordered an additional marketing period, to begin as soon as possible. Evercore Inc shall review and evaluate “as to whether other parties that might be interested in participating in the sale process should be contacted,” Stark wrote in the Tuesday ruling.
The changes come after Special Master Robert Pincus, whom Stark tapped to manage the auction, urged the judge to overhaul the process after some creditors criticized it as lacking transparency and unfairly favoring the bid by the Elliott affiliate, Amber Energy Inc. Pincus suggested that it be restructured, as that creditor pushback mounted.
Stark had found that court officials improperly cut off access to information about Amber Energy’s bid and Citgo’s financial health to creditors weighing a bid. He also indicated he was disappointed with the sums generated by the bidding, which would leave many creditors’ claims unsatisfied.
