Golden Takeover: Citgo’s Fate Hangs on a $7.38 Billion Courtroom Coup

In a historic victory in one of the largest sovereign debt enforcement cases in U.S. history, a U.S. court official has announced a $7.38 billion bid by Dalinar Energy Corporation, a subsidiary of Toronto-listed Gold Reserve, as the winning bid in the auction of PDV Holding, the parent company of Venezuela-owned Citgo Petroleum.

Main Points from the Auction

- Dalinar's bid beat Red Tree Investments' stalking horse bid of $3.7 billion and other competing bids from Vitol and Black Lion Capital.

- Funding is arranged in a mix of debt and equity capital, backed by JP Morgan, TD Bank, and Sumitomo Mitsui Banking Corp.

- The offer would satisfy 11 of 15 creditor claims in the event of its acceptance, considering Venezuela's defaults and expropriations.

Strategic and Legal Implications

- Citgo, the nation's seventh-largest refiner, has facilities strategically located in Louisiana, Texas, and Illinois.

- The offer does not cover payment to holders of defaulted Venezuelan debt backed by Citgo stock, and there are concerns of possible delays for the payments.

- Final approval rests with Delaware Judge Leonard Stark and the U.S. Treasury Office of Foreign Assets Control due to sanctions against Venezuela.

A Decade-Long Legal Saga Nears Closure

- Its own $1.18 billion arbitration award against Venezuela will be paid out of the proceeds.

- The last hearing in court is set for August 18, which may seal a 15-year-long legal battle for Venezuela's frozen assets.

Sources: Reuters, OilPrice, Invezz, BusinessWire, U.S. News.