Venezuela Creditors Seek JPMorgan Help for $7 Billion Citgo Bid

(Bloomberg) -- A group of Venezuela creditors is seeking funding from JPMorgan Chase & Co. in a $7 billion bid for the parent of Citgo Petroleum Corp., according to people familiar with the process.

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The group, which includes Canadian miner Gold Reserve Inc., are among a list of claimants that between them have more than $20 billion in judgments against Venezuela for arbitration awards, unpaid debts and defaulted bonds.

A district judge in Delaware is leading a process to sell PDV Holding, which controls Venezuela’s most important foreign asset, refiner Citgo Petroleum Corp., in an auction to pay off creditors.

PDV is itself a subsidiary of state-controlled oil giant Petróleos de Venezuela S.A., or PDVSA.

Final bids are due on Tuesday, June 11, with the sale hearing scheduled for July 15, less than two weeks before of presidential elections in Venezuela.

JPMorgan agreed to help arrange debt and equity financing, one of the people said.

Lobbying Congress

PDVSA is being represented in US courts by an ad hoc board appointed by the country’s opposition. In an effort to keep the asset, it has been lobbying legislators to pressure the Biden administration to intervene and potentially stop the sale.

JPMorgan declined to comment. PDVSA ad-hoc board didn’t immediately respond to a request for information.

PDVSA’s ad-hoc board has also mulled the option of filing for Chapter 11 bankruptcy proceedings, which would delay the sale. JPMorgan is also engaging with creditors to put out an offer for the shares in case the opposition-appointed executives decide to pursue that course, two of the people said.

JPMorgan was hired by Citgo in 2021 as adviser in their dealings with creditors. PDVSA’s ad-hoc board has tried, unsuccessfully, to settle the most pressing claims.

Gold Mine

Gold Reserve has an attachment judgment for over $1 billion, one of the largest in the list of claims, for the expropriation of its gold and copper mine in 2008. The company won an arbitration case against Venezuela in 2014. The company had signed a settlement with Venezuela, but payments were halted after the US imposed sanctions on the country.

The company issued a statement this week saying it was hiring advisers to finance a creditor bid. It didn’t respond to a request for comment.

Leading the list to collect on the sale is another Canadian mining company, Crystallex, which had its assets in Venezuela attached by late President Hugo Chavez, and US oil giant ConocoPhillips, according to court filings.

--With assistance from Crystal Tse.

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