Blue Water Acquisition made a U.S. $10 billion bid for the beleaguered ex-Venezuelan-owned refiner Citgo with the aim of returning it to ownership in the United States, Reuters reported. The bid offers financial recovery for PDV Holding’s creditors and a settlement for PdVSA 2020 bondholders.
In 2020, the company issued a bond backed by 51% of the company’s equity as collateral. If the bond defaults, institutional investors that bought the bonds will obtain ownership.
The deal was for PDV Holding, Citgo’s parent company, and included three U.S. refineries with combined capacity of more than 800,000 barrels per day and lubricant blending plants as well as a 4,000-station fuel retail network.
Blue Water Acquisition chairman and CEO Joseph Hernandez said, “Our $10 billion proposal would provide creditors with both immediate recovery and the opportunity to participate in the future of Citgo as a U.S. public company.”
The company began life 115 years ago and was taken over in 1986 by Petroleos de Venezuela S.A., Venezuela’s state-owned oil company.
Amber Energy, an affiliate of hedge fund Elliott Investment Management, was designated by a court-appointed auction official to be the preferred bidder in the PDV Holding auction based on its $5.89 billion offer.
The recommendation favored Amber’s bid despite a competing $7.4 billion proposal from Gold Reserve’s subsidiary, Dalinar Energy, primarily because Amber’s offer included a significant settlement component, particularly cash payments to bondholders.