Amber Energy, an affiliate of New York-based investment firm Elliott Investment Management, has submitted a last-minute bid of $8.82 billion in the court-ordered auction for Citgo Petroleum Corp.’s parent, PDV Holding Inc., according to a letter filed in Delaware legal proceedings cited by Bloomberg News.
PDV Holding, a U.S. subsidiary of the Venezuelan national oil and gas company Petróleos de Venezuela S.A. (PDVSA), is a nonoperating stockholding company incorporated in Delaware and based in Houston. PDV Holding is the indirect sole stockholder of CITGO Petroleum Corp. through ownership of 100% of the shares of its direct subsidiary CITGO Holding Inc., the sole stockholder of CITGO Petroleum.
CITGO owns and operates refineries in Lake Charles, Louisiana, Lemont, Illinois, and Corpus Christi, Texas, with a combined crude oil capacity of approximately 807,000 barrels per day (bpd), making it the fifth largest independent refiners in the United States. Wholly or jointly, it also owns 42 terminals, eight pipelines and three lubricants plants. The company has approximately 3,600 employees.
CITGO supplies fuel to more than 4,300 independently operated branded gas stations with convenience stores in 31 U.S. states, all east of the Rocky Mountains.
Cities Service Co. created the CITGO brand in 1965. It was acquired by Occidental Petroleum in 1982. Southland Corp., the founding company of 7-Eleven, acquired the CITGO brand in 1983. 7-Eleven sold half of CITGO to PDVSA in 1985, which acquired full ownership in 1990.
In 2020, Venezuela put CITGO on the market. Political and economic unrest and corruption under presidents Hugo Chavez and Nicholás Maduro and the possibility of Russia gaining control of CITGO led to U.S. sanctions. The company also faced legal action by creditors, leading to the court-designated auction.
Although CITGO is owned by Venezuela, in 2019 it severed ties with PDVSA. It is since operating under a U.S. license that protects it from creditors. Any buyer needs U.S. Treasury approval to acquire CITGO.
Houston-based Amber Energy filed the competing bid for the Venezuelan refiner last weekend, according to the letter from Red Tree Investments LLC, a Venezuela creditor and former bidder. The proposal would include a settlement with bondholders who have a pending claim on a controlling stake in a subsidiary of CITGO’s parent company, PDV Holding, said the report.
The move complicates a years-long legal battle led by creditors of Venezuela to seize PDV Holding and collect more than $20 billion in claims, the news agency said. Amber Energy’s first attempt to buy the company failed in a previous bidding process last year. The Elliott affiliate originally decided to stay out of the latest round, but by June it was considering rejoining the process, said the report.
An Amber Energy spokesperson did not respond to Bloomberg’s request for comment.
According to Red Tree’s filing, the new bid offers $5.86 billion to creditors, while resolving $2.86 billion in claims against PDVSA. Red Tree asked the court to be allowed to call two expert witnesses in support of Amber Energy’s bid.
“When the $105 million of break fees paid to writ holders is added, the bid provides total value of $8.821 billion,” Red Tree said. “Thus, 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 terms of the new bid have not been made public. A sale hearing is set for Aug. 18. Robert B. Pincus, the auction’s court-appointed adviser, introduced the schedule Monday for that hearing, after which Delaware Judge Leonard Stark is expected to decide on the winner. It’s unclear whether Amber Energy’s proposal will be considered, Bloomberg said.
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