By Marianna Parraga and Gary McWilliams
HOUSTON (Reuters) -A federal court in Delaware set Oct. 23 as the start date for a long-expected auction of shares in Venezuela-owned refiner Citgo Petroleum’s parent to pay creditors with judgments against the South American nation.
The sale process, which lays out a schedule that could lead to formal approval of any sale of shares in PDV Holding, a U.S.-based unit of state company Petróleos de Venezuela, a year from now, could lead to a breakup of the seventh largest U.S. oil refiner.
U.S. Judge Leonard Stark in Delaware this week accepted a recommendation by a court official in charge of organizing the auction. Proceeds from any sale of PDV Holding shares would be used to pay off creditors previously cleared by the court. PDV Holding’s only asset is Citgo.
Horacio Medina, head of the ad-hoc board that since 2019 has overseen the refiner, was not immediately available for comment. A spokesperson for Citgo declined to comment.
Judge Stark dismissed Venezuela’s effort to stop the auction. Venezuela had argued that the auction’s conditions would not ensure the best value for the assets, and that the process should be delayed until other pending litigation is resolved.
“The Venezuela Parties’ objection is utterly unpersuasive, particularly in light of the lengthy history of this case,” he wrote. “There is simply no reason to further delay starting the sale process.”
Following a long wave of expropriations under late Venezuelan President Hugo Chavez and the default of bonds issued by PDVSA, the creditors flocked to U.S. courts to enforce arbitration awards against the country.
The creditors include miner Crystallex International, oil producer ConocoPhillips, Siemens Energy, and Red Tree Investments, which are trying to recoup some $2.7 billion over unpaid court and arbitration rulings.
Another group of six companies recently won at an appeals court their attempt to attach claims to the Delaware case. The companies are O-I Glass Inc, Huntington Ingalls Industries, ACL1 Investments, Rusoro Mining, Gold Reserve and two Koch Industries units, which will try to cash another $3.46 billion.
(Reporting by Marianna Parraga and Gary McWilliams; Editing by Richard Chang)
