By Marianna Parraga
HOUSTON, May 14 (Reuters) – Lawyers representing Venezuela told a U.S. court this week that the value of Venezuela-owned U.S. refiner Citgo Petroleum has increased since the sale of its parent company was ordered late last year, which should prevent the execution of the process.
A Delaware judge in November approved a $5.9 billion bid for Citgo’s parent company PDV Holding from Amber Energy, an affiliate of hedge fund Elliott Investment Management, following a court-organized auction of shares to pay creditors.
The sale is still awaiting approval from the U.S. Treasury Department, and a U.S. appeals court is weighing a request by Venezuela and some rival bidders to suspend the sale over the company’s valuation and an alleged conflict of interest involving firms advising the Delaware court.
“In the months since the sale hearing, the value of publicly traded refiners has increased significantly,” lawyer Alexandra Cumings said in a May 12 letter submitted to Delaware Judge Leonard Stark, which was unsealed on Thursday.
Using the most conservative valuation discussed in court, Citgo should now be valued at $15.1 billion, Cumings wrote, saying the sale should not be executed at the $5.9 billion price now. “Such an outcome is plainly unfair – to CITGO, to the Venezuelan people, and to the out-of-the-money creditors,” she said.
Oil assets are being valued more expensively in part because of a 50% surge in prices since the U.S.-Israeli joint attacks on Iran kicked off a war – now in its third month – that has restricted global energy supplies.
In an opinion article published last month by the Wall Street Journal, Gregory Goff, the chief executive of Elliott’s affiliate Amber Energy, said the company had an $11 billion investment plan for Citgo and added the U.S. government should allow the sale to close as soon as possible.
Lawyers representing Venezuela say Citgo should play a key role in the restructuring of the country’s $150 billion debt, recently announced by interim President Delcy Rodriguez, instead of being auctioned to pay a handful of creditors.
Cumings said Goff’s opinion article violated a confidentiality agreement under which Citgo shared strategic information with bidders during the auction process. Her letter also raised conflict-of-interest issues, saying some of the firms that advised court-appointed special master Robert Pincus, who oversaw the auction, also worked for Elliott.
Elliott has denied the accusations.
Pincus and Judge Stark have not weighed in on the back-and-forth between the parties.
(Reporting by Marianna Parraga; Editing by Luc Cohen and David Gaffen)
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