The legal representatives of Venezuelan bondholders together with competing bidders are preparing to file objections against the $7.4 billion offer for Citgo Petroleum’s parent company shares which creates new doubts about the court-ordered sale process.
The recommended bid from Dalinar Energy which is a subsidiary of Gold Reserve faces scrutiny because it does not include repayment for creditors who hold the essential defaulted bond linked to Citgo equity. The bondholders have fought legal battles since 2017 to obtain compensation for their losses resulting from Venezuelan expropriations and defaults.
The auctioned shares belong to PDV Holding which operates as the U.S. parent company of Citgo. The court officer responsible for the second auction round accepted Dalinar’s offer but legal and procedural issues have led to new challenges.
Multiple bidders express concern about the unclear evaluation criteria while others believe the exclusion of bondholder payouts will prevent the successful transfer of shares.
The objections need to be submitted by July 9 before the final hearing takes place on August 18. Bidders who compete for the shares can choose to reveal their terms publicly while launching a challenge against the sale.
The outcome will extend the time needed to resolve creditor matters which hinders their ability to cash in on Venezuela’s most valuable overseas asset while creating additional complexities in this prolonged legal and political battle.
