A court advisor recommended Tuesday that the auction of shares in Citgo Petroleum's parent company to pay Venezuelan claims needs to be reworked. He acknowledged that a year-long process had been in disarray and needed a fresh start.
The U.S. District Court in Delaware auctions shares in PDV Holding in order to pay $21.3 billion in claims made against Venezuela and the state oil firm PDVSA due to expropriation and default on debt.
A court filing made the recommendation after a bid of up to $7.3bn by an Elliott Investment Management affiliate failed to gain support from creditors. Two groups told the court that they would make offers if permitted to enter the bidding competition again.
Robert Pincus, the court adviser, proposed to restart the auction after he was admonished for not having reached an agreement which met the terms agreed upon more than a month ago. The advisor had given Elliott exclusive negotiation rights and allowed it to defer payments. Creditors said that this favored Elliott unfairly.
Amber Energy, Elliott's fully owned affiliate that won the auction in September but never closed a deal, claimed in a filing to the court the proposed terms would "create a chaotic atmosphere which will negatively impact the price of the purchase."
Amber had said previously that it would leave the case if the court rejected its terms. A spokesperson refused to comment immediately on the next steps.
The plan of the adviser to restart the sale largely followed Judge Leonard Stark’s prescription on how to revive it. Robert Pincus, Special Master Robert's Pincus, advised against Stark’s suggestion to proceed with the cases that sought the same assets. He said other bidders would likely not accept the risks of competing claims.
Pincus suggested to reopen Citgo financial data to bidders and to formally relaunch the auction Dec. 18, and to accept bids for a period of three months. He proposed that a final recommendation could be made to the court in April, with Judge Stark conducting an hearing in late May to confirm the winner.
(source: Reuters)