Elliott affiliate ups Citgo parent bid to $8.82 billion in heated Delaware auction

Elliott Investment Management's affiliate has boosted its offer for PDV Holding, the Venezuelan parent company of US refiner Citgo Petroleum, to $8.82 billion.

The move, announced in a court document, is the latest twist in a long-running, court-supervised auction to repay creditors owed billions by Venezuela and its national oil giant PDVSA.

The Delaware-based auction has been ongoing for more than a year, first established to pay claims from 15 creditors resulting from loan defaults and expropriations by the South American country and PDVSA.

The process halted last year due to disagreements over Citgo's valuation and overlapping legal matters, prompting a relaunch in January.

Rival offers gain momentum

Last month, a Delaware Court of Chancery master recommended a $7.4 billion bid from a consortium that includes mining company Gold Reserve. That appeared to establish the framework for a head, until the stakes of the contest increased.

A subsidiary of commodities trader Vitol made an $8.45 billion offer shortly after, outperforming the Gold Reserve-led group.

Then, Elliott's affiliate, Amber Energy, entered with an enhanced $8.82 billion proposal, the biggest figure announced in the auction thus far.

The bid from Amber Energy even incorporates a plan to settle those who hold a defaulted Venezuelan bond, according to a letter from creditor Red Tree Investments that was filed on Tuesday.

Creditor support for Elliott’s affiliate

"Red Tree believes that Amber Energy is the highest bidder for the PDVH shares under Delaware law and should be selected as the winning bidder," the business stated in a court filing. The declaration underlines some creditors' growing support for Elliott's offer.

Amber Energy has not made any public comments in response to the filing, according to Reuters.

The stakes around Citgo

Citgo is one of the Venezuelan state-owned PDV Holdings' largest foreign assets. PDV Holding and its subsidiary Citgo are units of Venezuela's state oil conglomerate, PDVSA.

PDV Holding was the sole party liable for Venezuela's debts. This created a clear path for creditors to take Citgo's US operations in satisfaction of their claims, the Delaware court ruled.

The court's ruling created a rare legal bridge, allowing creditors to pursue a foreign state's valued commercial asset on US territory. For creditors, acquiring PDV Holding might provide a clear path to monetising Citgo's refinery and fuel distribution network.

Decision looms

The court will convene a hearing next week to determine which proposal will succeed. With billions of dollars at stake and numerous well-capitalised bidders competing, the decision could change ownership of one of Venezuela's most prominent assets outside the country.

The competition among mining, commodities trading, and hedge fund interests underscores Citgo's strategic and financial appeal. It also emphasises the extensive legal and financial manoeuvring that has surrounded Venezuela's unpaid loans for years.

The Delaware lawsuit is still one of the most keenly watched sovereign debt enforcement cases in recent memory, not only because of the magnitude of the claims, but also because of the precedent-setting implications for other conflicts involving state-owned enterprises.

As the hearing approaches, creditors, bidders, and Venezuelan officials all await a decision that may end — or worsen — years of litigation and political conflict.