In a landmark decision that concludes an eight-year legal battle, an affiliate of Elliott Investment Management has emerged victorious in the court-ordered auction for control of Citgo Petroleum Corporation's parent company, Venezuela's most valuable foreign asset.
The Winning Bid and Court Approval
US District Judge Leonard Stark in Wilmington, Delaware announced on Tuesday that he would adopt a special master's recommendation approving Amber Energy's $5.89 billion bid as the highest and best offer generated by the lengthy auction process. The decision moves the complex case closer to conclusion after years of litigation involving numerous creditors seeking compensation from Venezuela.
In his comprehensive 162-page decision, Judge Stark stated that "the Amber bid offers the best overall combination of price and certainty of closing of any bid submitted." He further emphasized that the bid was "neither grossly inadequate nor manifestly unjust" and therefore deserved approval.
Financial Implications and Bondholder Settlement
The immediate market reaction saw PDVSA bonds due in 2020, which are backed by shares in a PDV Holding affiliate, trading higher slightly above par. According to court filings, holders of this debt will be paid off through a deal with Amber, where investors will release their pledge against the company in exchange for $1.68 billion in cash at the closing of the sale.
Amber Energy expressed its commitment to Citgo's future in an official statement, noting its intention to "partner with CITGO team members to build on its historic foundation and further strengthen CITGO as a leader in the refining, transportation, and marketing of products vital to the US economy."
Competing Bids and Legal Controversies
The auction process wasn't without competition or controversy. Gold Reserve Ltd., a Venezuelan creditor suing the country for expropriation of its mining assets, made a revised offer of $7.9 billion but excluded bondholders from their proposal. However, a New York federal judge had previously confirmed the validity of the PDVSA bonds, strengthening Amber's position as the likely winner.
Gold Reserve attempted to challenge the auction process by seeking to disqualify both Judge Stark and Special Master Robert Pincus, claiming they unfairly favored Amber. The company argued that advisers to the special master—law firm Weil, Gotshal & Manges and investment bank Evercore Inc.—had previously acted for Elliott and its affiliates in other matters, creating potential conflicts of interest. Both Amber and the special master denied any conflicts or favoritism, and Stark refused to disqualify himself or Pincus.
Despite approving Amber's bid, Judge Stark provided other bidders until November 28 to submit any final objections before issuing a definitive sale order.
Broader Context and Political Dimensions
This development represents the latest chapter in the years-long legal battle over Venezuela's largest foreign asset. Citgo operates extensive refineries, pipelines, terminals, and fuel-distribution channels across the United States. The situation is complicated by Venezuela's political divide—while PDV Holding falls under the control of the South American nation's political opposition, PDVSA within Venezuela remains under the authority of President Nicolas Maduro's government.
The opposition represents PDVSA in US courts because the United States government does not recognize Maduro's administration. Numerous creditors, including Canadian miner Crystallex International Corp. and US driller ConocoPhillips Co., have been seeking compensation from a Citgo sale for years. Many are attempting to recover losses stemming from asset nationalizations during the presidency of Hugo Chávez, whom Maduro succeeded in 2013.
The case, officially known as Crystallex International Corp. v. Bolivarian Republic of Venezuela (17-mc-00151, US District Court, District of Delaware), now moves toward final resolution, potentially setting significant precedents for international asset disputes involving state-owned enterprises.
