By Gary McWilliams and Marianna Parraga
HOUSTON (Reuters) – An auction of shares in a Citgo Petroleum parent company to pay claims against Venezuela should be reviewed, a court adviser recommended on Tuesday, admitting a year-long sale process was in shambles and had to start over.
The US court in Delaware is auctioning shares in PDV Holding to repay $21.3 billion in claims against Venezuela and state oil company PDVSA for expropriations and defaults.
The recommendation in a lawsuit came after a bid of up to $7.3 billion by an affiliate of activist fund Elliott Investment Management failed to win support from creditors. At least two groups had told the court they could make offers if they were allowed to re-enter the bidding competition.
Court advisor Robert Pincus suggested relaunching the auction after being warned by the judge about the lack of an agreement that met the conditions set more than a year ago. The advisor had granted Elliott exclusive negotiating rights and allegedly delayed payments, terms that creditors said unfairly favored Elliott.
Elliott’s wholly owned subsidiary, Amber Energy, which was declared the winner of the original auction in September but never closed a deal, said in a court filing the proposed terms “will create a chaotic environment that will negatively impact the purchase price.”
Amber had previously said it would walk away if the judge in the case rejected the terms. A spokesperson declined to immediately comment on next steps.
The consultant’s plan to start over largely followed Judge Leonard Stark’s prescription for how to revive sales. But Special Master Robert Pincus advised against Stark’s suggestion that cases seeking the same assets should proceed, saying other bidders were unlikely to accept the risk of rival claims.
Pincus proposed reopening Citgo’s financial and operational data to bidders and formally relaunching the auction on December 18 and accepting bids for three months. A final recommendation to the court could come in April, with Judge Stark holding a hearing in late May to confirm an eventual winner, he suggested.
