US to Permit Court-Ordered Auction of Citgo Parent’s Shares

image is BloomburgMedia_RTXYRRT0AFB401_02-05-2023_06-39-18_638185824000000000.jpg

The CITGO Petroleum Corp. Lake Charles Refinery ahead of Hurricane Laura in Lake Charles, Louisiana, U.S., on Wednesday, Aug. 26, 2020. Photographer: Bryan Tarnowski/Bloomberg

The US will not block the court-ordered sale of shares of Citgo Petroleum Corp.’s parent company, PDV Holding, to pay off creditors who have sought payment from the Venezuelan state.

US Justice Department officials said in a letter to a court-appointed representative that the government would not take enforcement actions, paving the way for creditors such as Canadian mining company Crystallex International Corp. to collect their legal claims on the refiner’s sale. 

On Monday, Venezuela’s President Nicolas Maduro said the US’s “repudiable and despicable” decision threatened the Venezuelan people and the country’s sovereignty, and called to reject it.

Houston-based Citgo is one of Venezuela’s most important overseas assets and sanctions had previously blocked any share transfer. The court official overseeing the sale, known as a special master, had sought clarification from the Treasury Department’s Office of Foreign Assets Control over the sale in the case pending in a US federal court in Delaware.

“Under these circumstances, OFAC will not take enforcement action against individuals or entities for participating in or complying with the Prefatory Steps set out in the Sales Order, as well as those who engage in transactions that are ordinarily incident and necessary to participation in and compliance with such steps,” the letter said.

Any ultimate sale will require additional authorization from Treasury’s OFAC, a US official said. Such a license will likely not be ready for consideration for many months, and will be issued only after due diligence concerning the potential purchaser and proposed transactions, the person, with direct knowledge of the situation, said.

Citgo is under the administration of the country’s opposition after control was taken away from state oil firm PDVSA. The company posted record net income of $2.8 billion last year. 

Toronto-based Crystallex had been seeking compensation after its gold mine was seized in Venezuela by late president Hugo Chavez. The mining company won an arbitration award in 2016. Oil driller ConocoPhillips is also seeking compensation for its seized assets, along with other creditors.

Representatives for the country’s opposition did not immediately reply to requests for comment.

(Adds Maduro’s comments in third paragraph, US official’s comments in sixth paragraph)

©2023 Bloomberg L.P.

By Maya Averbuch , Andreina Itriago Acosta


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