Elliott Investment Management has emerged as the presumptive winner in the auction for shares in PDV Holding, the parent company of Citgo Petroleum. The winning bid, valued at up to $7.286 billion, includes a combination of cash and credit, and is subject to the resolution of outstanding claims by bondholders against Venezuela's state-owned oil company, PDVSA. The U.S. District Court in Delaware is overseeing the auction, aimed at addressing $21.3 billion in claims related to expropriations and defaults by Venezuela.
Despite Elliott's notable gains from previous investments in Marathon Petroleum and Phillips 66, the investment firm has never operated a refinery, which complicates its bid for Citgo, the seventh-largest oil refiner in the United States. The bid is also contingent on ongoing legal disputes involving PDVSA bondholders, including a group led by Gramercy Distressed Opportunity Fund, which could delay the final sale. U.S. court officer Robert Pincus selected Elliott's unit, Amber Energy, as the successful bidder but emphasized that the recommendation would require further legal resolutions before moving forward.
Market Overview:- Elliott Investment Management named presumptive winner of Citgo share auction with a bid valued at $7.286 billion.
- U.S. District Court in Delaware is auctioning shares of Citgo parent PDV Holding to settle $21.3 billion in claims.
- Legal disputes involving PDVSA bondholders could delay the final approval of Elliott's bid.
- Elliott's bid is a mix of cash and credit, subject to the resolution of competing claims by Venezuelan bondholders.
- The court officer's recommendation is pending court approval, with a November hearing scheduled for sale approval.
- Elliott's interest in Citgo follows successful investments in Marathon Petroleum (MPC) and Phillips 66(PSX).
- Legal disputes involving PDVSA bondholders could delay the completion of the Citgo sale beyond November.
- Venezuela's creditors are challenging the conditional nature of Elliott's bid, citing prior requirements for a binding offer.
- Elliott's success in acquiring Citgo may impact the broader refining sector, given its track record of successful energy investments.
While Elliott's emergence as the presumptive winner in the auction for Citgo is notable, the investment firm's lack of experience in operating refineries may present challenges. Moreover, the legal hurdles posed by ongoing disputes with bondholders could further delay the final decision, making the proposed mid-November completion unlikely.
The coming months will be critical for Elliott as it seeks to finalize the acquisition and navigate the complex web of claims against PDVSA. The outcome could reshape Venezuela's creditors' strategies and the U.S. refining sector, particularly if Elliott leverages its past successes with Marathon Petroleum and Phillips 66.
