Mergers & Acquisitions

Hedge Funds Weighing Bids for CITGO: Report

Elliott, Centerview eyeing refiner with large, branded U.S. gas station supply network; bids due in June
Photograph courtesy of CITGO Petroleum

Hedge fund Elliott Investment Management is weighing a bid for shares in PDV Holding Inc., the parent of oil refiner and gas station brand CITGO Petroleum Corp., under a U.S. court-ordered auction, while a group of creditors represented by Centerview Partners wants oil company ConocoPhillips to join another offer, sources close to the matter told Reuters.

Although CITGO is owned by Venezuela, in 2019 it severed ties with its parent, Caracas-based state company Petróleos de Venezuela SA (PDVSA). It is since operating under a U.S. license that protects it from creditors. Any buyer would need U.S. Treasury approval to complete the purchase, Reuters said.

Houston-based CITGO operates three U.S. refineries, in Lake Charles, La.; Lemont, Ill.; and Corpus Christi, Texas, and wholly or jointly owns 38 active terminals, six pipelines and more. It is the fifth-largest independent refiner in the United States. CITGO transports and markets transportation fuels, lubricants, petrochemicals and other industrial products and supplies a network of approximately 4,400 locally owned and operated branded retail gas stations and convenience stores, all located east of the Rocky Mountains.

The court is auctioning shares in PDV Holding after finding the company liable for the South American country’s past debt defaults and expropriations. PDV Holding’s only asset is Houston-based CITGO.

The arrival of two groups with substantial resources and experience in corporate restructurings has increased the likelihood of an ownership change for the century-old refiner, said the news agency.

A total of 18 creditors collectively claiming $21.3 billion have been cleared to cash proceeds from the auction. The court’s sales process is set to be completed in July after seven years of litigation, said Reuters. Binding offers are due by June 11.

New York-based Elliott, which has billions of dollars in investments in U.S. oil refining companies, met with CITGO managers to obtain financial and operational information as part of its preparations for the bidding round, two of the sources told the news agency.

Investment banker Centerview, New York, has been retained to craft a potential bid on behalf of investors and creditors pursuing Venezuela’s foreign assets in federal court in Delaware to recoup claims for expropriations and debt defaults, three of the people told the news agency.

The Centerview group wants Houston-based ConocoPhillips, which holds the largest claims in the court case, to join its effort ahead of the final bidding round. Conoco has not decided if it will, a person familiar with its thinking told Reuters.

Elliott and Centerview declined comment to Reuters and CSP.

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