Venezuela completed an initial payment to defunct Canadian gold miner Crystallex International Corp. last week as part of a $1.2 billion amended settlement reached in September. That followed a United States district courts approval in August of Crystallexs request to seize control of shares from a U.S. subsidiary of Petroleos de Venezuela, S.A. that owns Citgo.
Crystallex received the final portion of the $425 million initial payment from Venezuela on Nov. 23, and requested that a Delaware court temporarily stay further proceedings until Jan. 10, according to court documents obtained by Lube Report. The $425 million payment is in addition to $75 million in funds previously received by Crystallex.
The attorney representing Crystallex said in a Nov. 26 letter to the U.S. District Court judge in Delaware that the requested temporary stay is intended to provide time for the parties to finalize the full terms for payment of the remaining funds owed to Crystallex.
The temporary stay is also intended to provide time for Venezuela to meet certain additional conditions relating to security for those remaining funds - including the provision of security acceptable to Crystallex, Travis Hunter, a Delaware attorney representing Crystallex, stated in a letter, which is part of court records.
If these conditions are not met on or before January 10, 2019, then, as set forth in the amended settlement, enforcement proceedings may immediately recommence. We believe it is in the best interests of all parties to pause enforcement proceedings so as to allow Venezuela the opportunity to try to fully implement the parties agreement, the letter continued. Hunter noted that the amended settlement should remain confidential due to its commercially sensitive nature. The enforcement proceedings refers to Crystallexs effort to collect on a $1.2 billion plus interest arbitration award received against Venezuela. That was originally confirmed as a U.S. judgment by the U.S. District Court for the District of Columbia in March 2017, according to Hunters letter.
According to a Nov. 26 Bloomberg report based on Canadian court documents, Venezuela is now required to pay the remaining balance in installments by early 2021, and deliver an acceptable security interest or collateral to ensure payment of its outstanding obligations.
Crystallex filed grievances against Venezuelas government in 2011 over lost mining rights to a Venezuelan gold mine. In seeking to collect on the judgement, the company argued it should be allowed to seize assets of Venezuelan-run PDVSA because it was an alter ego of the Venezuelan government, an argument the judge agreed with.
A judge for the U.S. District Court in Wilmington, Delaware, had issued an opinion in August granting Crystallexs motion to seize shares of PDV Holding Inc., a Delaware-based subsidiary of PDVSA, which owns Citgo. At that time, legal analysts said the ruling casted doubt on the future of Citgo and its lubricant business.
Crystallex and Venezuela entered into an amended and restated settlement agreement on Sept. 10, according to Crystallexs attorneys letter. That stipulated, among other things, the $425 million initial upfront payment.