US Treasury to allow auction of shares in Citgo Petroleum’s parent

US Treasury to Allow Auction of Citgo Shares

The US Justice Department has informed a federal court that it will not block a court auction of shares in oil refiner Citgo Petroleum Corp’s parent, PDV Holding. This paves the way for a potential seizure by creditors of Venezuela’s most-prized foreign asset. Citgo is PDV Holding’s only asset and is the seventh-largest US oil refiner. It has plants in Louisiana, Illinois, and Texas, and energy pipelines and a gasoline distribution network supplying 4,200 outlets in the eastern half of the United States. Citgo reported a record $2.8 billion profit last year and could be valued at $13 billion.

US Treasury Changes Stance

The US Treasury Department has protected Citgo from creditors with claims against Venezuela since 2020. However, its change of heart will allow claims to be settled by negotiation or through an auction of shares in Citgo parent PDV Holding. The Treasury, which has blocked transactions involving Venezuela’s US assets, “will not take enforcement action” to halt the auction or a negotiated settlement, the Justice Department wrote in a letter filed on Friday in US District Court in Delaware. The Treasury would have to issue a license to complete any sale.

Court Auction Proposed

Canadian miner Crystallex International has a $970 million claim against PDV Holding that spawned the proposed court auction. Other creditors with at least $2.6 billion in claims against Venezuela have received conditional approvals to join the case. Robert Pincus, a court-appointed official who met with the Justice Department and Treasury, urged the court to move quickly “to take advantage of CITGO’s recent financial and operational performance and the current state of the refining industry…” Pincus proposed starting the sales process on September 5, with the highest bid reviewed by the court in June 2024. The court has retained investment banker Evercore to assess market demand and conduct the sale.

Citgo Declines to Comment

A Citgo spokesperson declined to comment. A representative for Crystallex also declined to comment.

• The US Justice Department will not block a court auction of shares in Citgo Petroleum Corp’s parent, PDV Holding.
• The change of heart will allow claims to be settled by negotiation or through an auction of shares in Citgo parent PDV Holding.
• Canadian miner Crystallex International has a $970 million claim against PDV Holding that spawned the proposed court auction.
• Other creditors with at least $2.6 billion in claims against Venezuela have received conditional approvals to join the case.
• Robert Pincus, a court-appointed official, urged the court to move quickly “to take advantage of CITGO’s recent financial and operational performance and the current state of the refining industry…”
• Pincus proposed starting the sales process on September 5, with the highest bid reviewed by the court in June 2024.
• The court has retained investment banker Evercore to assess market demand and conduct the sale.