Yahoo Finance Citgo share bidders can be asked how accommodate bondholder claims, judge rules
(Reuters) -Bidders in a U.S. court auction of shares that will decide the ownership of Venezuela-owned U.S. oil refiner Citgo Petroleum can be required to say if their binding offers cover claims by Venezuela bondholders in a separate court action, a U.S. District Court judge ruled on Friday.
The decision lets bidders seeking to place multi-billion dollar offers for a Citgo parent's shares to be asked if they plan to set aside cash or consider how they may accommodate Venezuela 2020 note holders seeking payment of $3 billion in principal debt.
The 2020 bondholders' claims are not part of the Delaware court case but their claims loom over the ongoing share auction to satisfy $21.3 billion in claims for debt defaults and expropriations.
There are 18 Venezuela creditors, including Crystallex, ConocoPhillips[COP.N], Huntington Ingalls , in the Delaware case. The court will accept binding second-round bids through June 11 and could choose a winner later this year.
The auction has drawn interest from Elliot Investment Management and a bidding group being organized by Centerview Partners, Reuters has reported. Some creditors, including ConocoPhillips, are considering using their claims against Venezuela as credit bids, people close to the matter have said.
A proposed instruction to bidders disclosed for the first time in a court filing disclosed the court officer handling the share sale has held discussions with the 2020 bondholders. Their claims are pending in a New York case.
Friday's ruling by US Judge Leonard Stark came after Venezuela objected to a court officer's revised bidding instructions that Venezuela and some creditors called unclear. Stark rejected the motion to delay the auction, saying the court officer could make changes he feels will maximize the value of bids received.
"The modifications are part of his efforts to encourage more bids and enhance his ability to fairly compare and evaluate the bids that are submitted," Stark said of the officer overseeing the auction of shares in PDV Holding, whose only asset is Citgo.
(Reporting by Gary McWilliamsEditing by Marguerita Choy)
