Citgo Auction Heats Up as Bidder Sweetens Offer

The court-ordered auction for the parent company of Citgo just got more interesting as the former preferred bidder has to sweeten its offer to stay in the race after the emergence of a surprise rival.

Earlier this week, media reported that a company affiliated with hedge fund Elliott Management had emerged as the frontrunner in the bidding for PDV Holding, a PDVSA unit that owns U.S.-based Citgo.

The new bidder, Amber Energy, had beaten the offer of the consortium led by miner Gold Reserve, which had previously been considered the best one of all. That bid amounted to $7.38 billion, which was much higher than the floor price of $3.7 billion set by court officer Robert Pincus, who is in charge of the auction.

Amber Energy’s bid, on the other hand, offered $5.86 billion to PDV Holding creditors plus another $2.86 billion in settlements for claims made by the holders of a bond, on which PDV Holding’s parent, Venezuela’s PDVSA, defaulted.

This has prompted the Golden Reserve-led consortium to improve its own offer, Reuters reported, although the company did not provide any details about the size of the improvement. The company that represents the consortium, Dalinar Energy, had “materially increased its proposed purchase price, arranged for additional financial support, and increased the certainty of its bid in non-economic ways,” Golden Reserve said.

The company also issued a document earlier this week, in which it argued that the competing bid of Amber Energy was going to “short-change” PDV Holding’s creditors and that it was in fact contrary to the court’s orders because the sum offered for the company’s creditors was much smaller than the one that Dalinar Energy had offered.

Golden Reserve is seeking $1.8 billion in compensation for assets it had in Venezuela that go expropriated by the Hugo Chavez government.

By Irina Slav for Oilprice.com

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