PE firm Elliott bids $7.3bn for Citgo assets: Update

Adds reaction from Amber, details throughout.

An affiliate of private equity group Elliott Investment Management has been selected as the top bidder in an auction for US refiner Citgo, with a bid of $7.286bn.

The special master for the auction, being held in the US District Court for the District of Delaware, will need to make a final formal recommendation for the court to choose the Elliott affiliate, Amber Energy, pending a 1 October hearing with parties disputing the auction. But a final hearing to ratify the sale of over 800,000 b/d of refining capacity could be held in November.

Final bids for Citgo's US refineries, lubricant plants, midstream and retail assets were submitted on 11 June, with the auction aiming to satisfy debts owed by the company's parent firm, Venezuelan state-owned PdV.

If the sale to Amber moves forward following a successful November hearing, it will mark the largest purchase of US refining assets since Andeavor's acquisition by Marathon Petroleum in 2018.

"Amber Energy's strategy for growth includes plans to reinvest in the business and potentially pursue strategic investments that enhance the profitability of Citgo," the company said.

Citgo was not immediately available for comment.

Amber is lead by chief executive Gregory Goff, who was previously chairman, president, and chief executive officer of Andeavor. Company president Jeff Stevens is currently president of Franklin Mountain Energy, which is focused on the Permian basin. He has also been an executive officer of independent refiner and marketer Western Refining.

The company plans to keep the Citgo brand, and expects the deal to close by mid-2025.

Conditions of the deal include the buyer applying for and acquiring a license from the US Treasury's Office of Foreign Assets Control, because the ultimate owner of Citgo is Venezuelan state-owned PdV, which is subject to US sanctions.

"We look forward to partnering with the people of Citgo to ensure that the company continues to operate with the highest standards of safety and reliability," Amber said.

Even though it is owned by PdV, Citgo since 2019 has operated under a board appointed by the Venezuelan opposition and vetted by the US government after the US rejected Venezuela's 2018 presidential election as illegitimate. PdV remains under control of President Nicolas Maduro's government.

Maduro has rejected the US court proceedings on selling Citgo as "theft" and the issue is likely to feature in his protracted battle with the US-backed opposition, which claims to have defeated Maduro in the July presidential election.

The court earlier this year approved a ranking order in which debtors will be paid out of proceeds, rather than allocating them on a pro rata basis. The first in line is defunct Canadian mining firm Crystallex, now owned by New York hedge fund Tenor Capital, with a $990mn claim. ConocoPhillips has a total of three claims approved by court, but only two of those are likely to be satisfied, potentially netting $1.4bn.

The next largest is a $1.5bn claim by Russian-Canadian gold miner Rusoro, while energy company Koch's minerals arm is chasing a $457mn claim.

Separate US court proceedings involve holders of $3.4bn in PdV 2020 bonds guaranteed by 50.1pc in Citgo Holding — a PdVH-owned legal entity that directly owns Citgo. In theory, the bondholders have the right to be paid first before other claimants are satisfied. The US government has blocked the bondholders' ability to pursue the claim, most recently issuing a ban that is valid until mid-October.