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Home»Finance»Contrarian Funds’ $3.7 billion offer recommended as starting bid in Citgo parent auction
Finance

Contrarian Funds’ $3.7 billion offer recommended as starting bid in Citgo parent auction

March 23, 2025No Comments4 Mins Read
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Contrarian Funds' $3.7 billion offer recommended as starting bid in Citgo parent auction
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By Marianna Parraga

HOUSTON (Reuters) -A U.S. court docket officer overseeing an public sale of shares within the mother or father of Venezuela-owned refiner Citgo Petroleum is recommending a decide select a $3.7 billion provide by an affiliate of Contrarian Funds to set the ground for a brand new bidding spherical this 12 months, based on a court docket submitting on Friday.

A federal court docket in Delaware is auctioning shares in Citgo’s mother or father PDV Holding to pay as much as $21.3 billion to 18 collectors searching for compensation for debt defaults and expropriations in Venezuela.

The court docket determined this time to set a minimal bid for PDV Holding after most corporations within the public sale final 12 months rejected a $7.3 billion provide by an affiliate of hedge fund Elliott Funding Administration that was topic to the decision of parallel lawsuits introduced by a few of the similar collectors.

4 potential “stalking horse” bids for shares in PDV Holding have been obtained by a March 7 deadline, the submitting mentioned.

The provide by Contrarian Funds’ affiliate Crimson Tree Investments was beneficial by the particular grasp in control of the public sale. Decide Leonard Stark should settle for or reject it earlier than the public sale strikes on.

“Crimson Tree’s proposed transaction has the second highest buy worth, and the particular grasp believes it has the least conditionality,” the submitting mentioned.

“The particular grasp considers that the mixture of worth and the understanding of the proposed transaction ends in its being one of the best accessible stalking horse.”

Canadian miner Gold Reserve mentioned final week {that a} consortium together with its subsidiary Dalinar Power Company and items of U.S. conglomerate Koch had additionally submitted a suggestion.

Crimson Tree and one other affiliate of Contrarian are holders of Venezuelan defaulted bonds and a part of the 18 collectors searching for to money proceeds from the public sale, which implies that if the group’s provide wins they are going to get their claims paid.

They’re collectively claiming about $680 million plus pursuits and costs, based on court docket paperwork.

Crimson Tree’s preliminary bid was thought of low by analysts, bearing in mind that Citgo’s market valuation exceeds $10 billion, however a topping-off interval to comply with for rival bids to be submitted might enhance the ultimate provide, they mentioned.

“This provide would resolve the dispute with the holders of PDVSA’s 2020 bonds whereas elevating $1.5 billion to pay different collectors,” mentioned Jose Ignacio Hernandez from consultancy Aurora Macro Methods.

“For Crimson Tree, it is a monetary, not an operational deal. However Venezuela might object it, saying it is too low,” he added.

The sale course of’ closing listening to is ready for July, based on the court docket’s schedule.

By selecting a beginning bid, Stark hopes to maximise proceeds for collectors within the eight-year-long case, which beforehand discovered PDV Holding answerable for the nation’s money owed. Caracas-headquartered PDVSA is Citgo’s final mother or father.

If it wins the method, the stalking horse would purchase 100% of PDV Holding’s shares, with proceeds to be distributed to collectors at closing. Crimson Tree’s proposed transaction offers for $3.24 billion in money and $458 million in non-cash consideration, based on the court docket submitting.

Houston-based refiner Citgo Petroleum is the crown jewel of Venezuela’s abroad property. Venezuela’s President Nicolas Maduro has referred to as the public sale a “theft” of Venezuela’s property in the USA. His authorities has criticized U.S. oil sanctions on the nation, in drive since 2019.

(Reporting by Marianna Parraga; Modifying by Leslie Adler, Cynthia Osterman and Diane Craft)

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