Venezuela: CITGO Auction Enters Final Stage as Court Picks ‘Stalking Horse’ Offer
Caracas, April 24, 2025 (venezuelanalysis.com) – The court-ordered sale of Venezuela’s US-based refiner CITGO has moved forward with the selection of an initial bid.
On Monday, Delaware Judge Leonard Stark approved a US $3.7 billion “stalking horse” bid from Red Tree Investments, setting a minimum price for CITGO in the ongoing auction process.
“Red Tree’s bid constitutes the best balance of the evaluation criteria, which may be fairly summarized as price and certainty of closing,” Stark argued.
The judge tasked Special Master Robert Pincus, with overseeing a 30-day topping period for rival bids, urging “greater emphasis on price and lesser emphasis on certainty” in the final choice presented to the court. A final hearing to conclude the sale is scheduled for July 22.
In late 2022, Stark launched the auction of shares belonging to CITGO’s parent company, PDV Holding (PDVH), to satisfy creditor claims against Venezuela. Most of the debt stemmed from international arbitration awards granting compensation to corporations that had assets nationalized by the Venezuelan state in the 2000s.
The court accepted 18 claims totaling US $21.3 billion, with firms set to be compensated on a “first come, first served” basis. Crystallex ($1.0 billion), Tidewater ($80 million), ConocoPhillips ($1.3 billion) and O-I Glass ($700 million) are the first on the list.
The bidding process restarted in January following Pincus’ recommendation of a controversial bid from vulture fund Elliott Management in late 2024. The $7.3 billion offer drew blowback from creditors over its amount and sale terms. Judge Stark agreed to scrap the offer and relaunch the auction.
Red Tree, a subsidiary of Contrarian Capital Management, submitted an offer last month of $3.24 billion in cash and $458 million in non-cash considerations. CITGO is presently valued at $11-13 billion.
Gold Reserve, which headed a consortium with fellow creditors Rusoro Mining and Koch Industries, had put forward a rival $7.1 billion bid and protested the court’s decision in choosing a much lower offer, which would only repay the first six claimants on the list. Stark overruled the consortium’s objections. Trading giant Vitol reportedly submitted a stalking horse proposal as well.
Pincus and Stark ultimately saw an advantage in Red Tree’s reported agreement with holders of the defaulted PDVSA 2020 bond for which half of CITGO’s shares were pledged as collateral. PDVSA 2020 bondholders, who are owed over $2 billion, have been stopped from executing the collateral by successive US Treasury protections.
Under the proposed settlement, Red Tree would offer debt at CITGO and convertible notes to the bondholders in order to eliminate the main legal obstacle to the conclusion of the Delaware auction. The PDVSA 2020 bond’s legal standing is currently the subject of litigation in New York courts.
Crystallex and ConocoPhillips, which are confident of collecting on their claims, voiced approval of the stalking horse bid. ConocoPhillips tagged an additional ICSID arbitration award worth over $11 billion to the Delaware proceedings and has taken steps to recoup debt in other jurisdictions.
For its part, the Nicolás Maduro government decried the court-ordered sale of the Caribbean country’s most important foreign asset as “the theft of the century” and vowed to challenge the loss of the refiner.
CITGO was placed under the US-backed opposition’s control in 2019 following the Trump administration’s recognition of the self-proclaimed “interim government” led by Juan Guaidó. Guaidó and associates have been accused of collusion and malpractice over decisions that ballooned the company’s liabilities.
A subsidiary of Venezuela’s state oil company PDVSA, CITGO owns refineries in Illinois, Louisiana and Texas with a combined processing capacity of 769,000 barrels per day (bpd). The firm’s portfolio also includes a pipeline network and over 4,000 service stations, mostly on the US East Coast.
Edited by Cira Pascual Marquina in Caracas.