Elliott Contemplating Citgo Bid; Creditor Group Looks at Conoco for Its Own Offer
Hedge fund Elliott Investment Management is considering bidding for shares in the parent company of Citgo Petroleum as part of a court-ordered auction, according to sources familiar with the matter. At the same time, a group of creditors represented by Centerview Partners is aiming to involve ConocoPhillips in another bid.
Centerview Partners, an investment banker, has been tasked with crafting a potential bid in federal court on behalf of investors and creditors pursuing Venezuela’s foreign assets. The group aims to recoup claims for expropriations and debt defaults. The Centerview group hopes to persuade ConocoPhillips, which holds significant claims in the court case, to join its effort before the final bidding round closes in June.
Meanwhile, Elliott Investment Management, known for its investments in U.S. oil refining companies, has engaged with Citgo managers to gather financial and operational information in preparation for the bidding round.
The involvement of these two groups, which have substantial resources and experience in corporate restructurings, has heightened the possibility of a change in ownership for Citgo, a prominent refiner considered the crown jewel of Venezuela’s foreign assets.
The auction of shares in Citgo’s parent company, PDV Holding, follows a trial that found the company liable for Venezuela’s past debt defaults and expropriations. PDV Holding’s sole asset is Citgo, which is based in Houston.
18 creditors collectively claiming $21.3 billion have been authorized to receive proceeds from the auction, which is expected to conclude in July after seven years of litigation.
ConocoPhillips was among 12 groups that submitted indications of interest during the initial bidding round in January. The Centerview group, however, does not intend to retain ownership of Citgo in the long term and is considering forming a holding company to allow participants to recoup claims and profits by selling stakes in the future.
Other potential bidders include oil refiners Koch Industries and PBF Energy. The highest bid in the first round was $7.3 billion, below the company’s estimated value of $13 billion to $14 billion. Any buyer would need approval from the U.S. Treasury to complete the purchase, as Citgo operates under a U.S. license that protects it from creditors.
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