By Shubham Kalia
(Reuters) -A U.S. court officer overseeing the auction for PDV Holdings, the parent of Venezuela-owned U.S. refiner Citgo Petroleum, has recommended a $7.38 billion bid from Dalinar Energy, a unit of Gold Reserve, according to a court filing and a company statement.
The auction stems from an eight-year-old case that Canadian miner Crystallex initiated in Delaware against Venezuela. The court found Citgo’s parent, PDV Holding, liable for Venezuela’s debts and expropriations, paving the way for over a dozen other creditors to pursue compensation of nearly $19 billion.
Citgo cut ties with its ultimate parent, Caracas-based PDVSA, in 2019.
The Delaware court officer’s recommendation follows the expiry of the auction process that saw bids from Contrarian Funds’ affiliate Red Tree Investment and Gold Reserve’s Dalinar.
A group led by commodities trading house Vitol also submitted a bid exceeding $10 billion in the final hours of the auction, Reuters reported on Wednesday, citing two sources with knowledge of the offer.
Earlier this year, the court had selected Red Tree’s $3.7-billion offer as the starting bid for PDV. The offer included an agreement to pay holders of a Venezuelan defaulted bond.
Court officer Robert Pincus said bid prices as well as the certainty of closing of the deal were taken into consideration, and only Dalinar’s and a revised $3.81 billion bid from Red Tree met their requirements.
Pincus “is reasonably satisfied that Dalinar is likely to attain the requisite regulatory approvals,” the filing said, adding that Dalinar’s was “the highest bid that meets the bid requirements”.
Dalinar’s $7.38 billion bid is a revised one, relying on a combination of equity and debt financing, and is supported by a consortium including Rusoro Mining, two units of U.S. conglomerate Koch and Germany’s Siemens Energy, Gold Reserve said in a statement. Dalinar had initially made a $7.1 billion bid for PDV.
“Our bid satisfies creditors further down the waterfall than was ever contemplated by any prior bid since the inception of the Delaware sale process,” said Paul Rivett, Gold Reserve’s executive vice chairman.
The sale requires approval of a judge. The Delaware federal court is scheduled to hold the sale hearing on August 18, according to Gold Reserve.
(Reporting by Shubham Kalia in Bengaluru; Editing by Janane Venkatraman and Mrigank Dhaniwala)
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