Citgo creditors attack Elliott bid in auction, seeking rival offers

Creditors of the company said that the key terms of an agreement proposed by a U.S. court with a hedge fund to control Venezuelan oil refiner Citgo Petroleum would lock in its low-ball offer.

The reaction to Elliott Investment Management’s Amber Energy, a wholly owned company by Elliott Investment Management, has ended any hope of changing Citgo's ownership this year to satisfy Venezuela's debt defaults or expropriation.

Creditors, who were seeking cash proceeds at a court auction and wanted to know if the offer was viable or not, asked that it be re-opened. They claimed that this offer was not economic, deficient, nor did it comply with Delaware Law.

Amber, which was hailed by a court official last month as "the successful bidder" of the second round auction, has threatened to leave if creditors are allowed to request more information about its bid up to $7.286 Billion to gather rival bids. Citgo described Amber as a "weeks old shell corporation without assets or committed financing" in its court filing.

Creditors wrote late Friday in filings that they went beyond the criticisms of their previous critics. They said the terms of the sales agreement drafted by the court officer overseeing this auction unfairly favor Elliott's Amber.

The court officer asked the judge to survey creditors about their opinion of the offer.

Crystallex, which brought the lawsuit that found Citgo Holding's parent PDV Holding responsible for Venezuela's debts and arose the claim, said the auction had "gone off course".

REOPEN DATA ROOM

It and ConocoPhillips - which has the biggest claims in this case - asked for Citgo's financial information to be immediately made available to other bidders. Since August, when Elliott's exclusive negotiation of a deal was selected, access has been restricted.

Gold Reserve, which holds a claim of $1 billion against Venezuela, has said that it is ready to make a "materially superior" offer once Citgo data are reviewed.

Robert Pincus is the court officer who oversees the auction. He said that he opposed reopening Citgo's financial data until December 9, and he wants the judge to limit information about Amber's financial conditions and approve a breakup charge if an accepted superior bid. In court documents, the amount of a potential fee has been redacted.

Pincus proposed an amended sale schedule which would have allowed him to make a final recommendation by the end of January and allow the court to start hearings on a sale definitive until March 24.

Pincus wrote that Pincus disagreed with the creditors' criticisms about the sales process and their description of the proposed Elliott Agreement, but offered to give his own opinion at a future hearing.

(source: Reuters)