Citgo Under Threat Again After Ruling


A United States appeals court lifted a hold Monday on Crystallex International Corp.’s efforts to seize shares of refiner Citgo as part of a grievance with Venezuela’s Petroleos de Venezuela S.A.

Crystallex filed grievances against the government of Venezuela in 2011 over lost mining rights to a Venezuelan gold mine and argued it could seize PdVSA assets as compensation for a $1.4 billion debt.

The defunct Canadian gold miner had its motion to seize shares of PDV Holding Inc., a Delaware-based subsidiary of PdVSA, which owns Citgo, granted in August 2018, the ruling made by the U.S. District Court in Wilmington, Delaware. Citgo is the seventh-largest lubricant supplier in the United States.

On Monday, the U.S. Court of Appeals for the Third Circuit lifted a decision by a lower court to put a stay on the sale of Citgo shares, opening the door for Crystallex to sell those shares and recoup its losses from the disputed mining rights.

With no appeals remaining, “Venezuela and PdVSA can only petition for discretionary review … and any further review is disfavored. There is no legitimate basis on which to extend an unbonded stay of enforcement and cause irreparable harm to Crystallex – the prevailing party,” Crystallex’s legal representation said in its motion to lift the stay.

“Lacking any tenable legal arguments, Venezuela and PdVSA resort to endless delay tactics,” it continued.

The two sides had settled on the debt toward the end of 2018, with PdVSA agreeing to make an initial $425 million payment toward the $1.4 billion total. Crystallex later alleged the struggling oil company had violated the terms of the settlement and resumed its efforts to seize shares.

Venezuelan opposition leader Juan Guaido, recognized by the U.S. as Venezuela’s rightful leader, has made concerted efforts to retain the countries assets threatened by creditors. In July, two of Guaido’s advisers claimed U.S. sanctions on PdVSA prevent Crystallex from taking shares of Citgo, according to a Reuters report.

Opposition leaders have lobbied U.S. President Donald Trump to issue an executive order to protect Citgo from seizure.

Half of Citgo’s shares are already pledged as collateral to holders of a 2020 PdVSA bond, with a $913 million payment due later this month. The remaining shares are pledged to Russia-owned Rosneft.

Crystallex isn’t the only company to attempt a seizure of Citgo. ConocoPhillips Co., U.S. glassmaker Owens-Illinois Inc. and Rusoro Mining Ltd. have all targeted Citgo as compensation for debts against PdVSA.

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