Change of Heart for U.S. Treasury on Citgo Protection
Since 2020, the U.S. Treasury has protected Citgo from creditors with claims against Venezuela. However, its change of heart will enable claims to be settled either through negotiation or via an auction of shares in Citgo parent PDV Holding, which has Citgo as its only asset.
Citgo's Financial and Operational Performance
Houston-based Citgo, the seventh-largest U.S. oil refiner, has facilities in Louisiana, Illinois, and Texas, energy pipelines, and a gasoline distribution network supplying 4,200 outlets across the eastern U.S. The company reported a record $2.8 billion profit last year and is estimated to be worth $13 billion.
Treasury and Justice Department's Stance on Auction
The Treasury, which previously blocked transactions involving Venezuela's U.S. assets, will not interfere in the auction or a negotiated settlement, as stated in a letter filed by the Justice Department in a U.S. District Court in Delaware. To complete any sale, the Treasury would need to issue a license.
Court-Appointed Official Urges Quick Action
Robert Pincus, a court-appointed official who consulted with the Justice Department and Treasury, has advised the court to act swiftly, capitalizing on Citgo's recent financial and operational performance as well as the current state of the refining industry.
Crystallex International's $970 Million Claim
Canadian miner Crystallex International holds a $970 million claim against PDV Holding, which led to the proposed court auction. A representative for Crystallex declined to comment on the matter.
Other Creditors and Sales Process Timeline
Creditors with a combined $2.6 billion in claims against Venezuela have received conditional approvals to join the case. Pincus has suggested initiating the sales process on September 5, with the highest bid to be reviewed by the court in June 2024.
Evercore's Role in Assessing Market Demand and Sale
Investment banker Evercore has been retained by the court to evaluate market demand and oversee the sale of Citgo's parent company shares.
