US Court to Allow Citgo Share-Auction Bidders to Raise Offers

A U.S. court overseeing the auction of shares in Venezuela-owned Citgo Petroleum's parent has told bidders seeking to acquire the seventh-largest U.S. oil refiner they may raise their offers after Tuesday's filing deadline, one of the groups said.

Tuesday was the court's deadline for submitting bids in the second and final round in a years-long court process to pay creditors for past expropriations and debt defaults in Venezuela. At least one credit bid was received by the court.

An ability to raise offers after the deadline increases the court's chances of approaching a fair value for Citgo in a sale process that has attracted big name investors, including Elliott Investment Management, Centerview Partners and U.S. energy companies such as ConocoPhillips (COP.N) and Koch Industries.

The highest offer received in a first bidding round in January was $7.3 billion, below Citgo's value of between $11 billion and $13 billion. The 18 creditors registered in Delaware seek to cash $21.3 billion in claims from the auction.

An attorney for the court official hired to oversee the auction, Robert Pincus, did not immediately reply to a request for comment on the bidding process and offers submitted. Boards supervising Citgo, which severed ties with PDVSA in 2019, did not reply to requests for comment.

"TOP OFF" BIDS

The bids are being reviewed by Pincus and investment banking firm Evercore Group. The winner is scheduled to be confirmed on July 15, under the court's schedule. Representatives of Venezuela in the case could request a third round if the second round's offers are too low, sources said this week.

Bidders have been told they can "top off" their offers, according to a spokesperson for Gold Reserve (GRZ.V), one of the groups that submitted offers this month.

"Whoever submits the winning bid, that bid can be topped off," to allow a credit offer submitted by a group with a claim against Venezuela to recoup its full claim, said Jean-Charles Potvin, a spokesperson for Gold Reserve.

The firm used its $1 billion claim against Venezuela to submit a credit bid. The court also will allow other bidders to trump the ostensible winner by offering at least $100 million more, Potvin said.

The $100 million minimum for a higher offer was only presented to bidders in recent weeks. The amount would prevent an investor group from submitting slightly higher offer at the last minute, he said.

Venezuela and some U.S. lawmakers are asking the U.S. government to pause the auction for at least 60 days until a presidential election is completed in the South American country, which could lead to a wider debt restructuring process.

(Reporting by Gary McWilliams and Marianna Parraga; Editing by Chizu Nomiyama)