Venezuela's Citgo Asset Auction Heats Up as Icahn and Creditors Compete

The auction battle over Citgo Petroleum continues to unfold, with a Carl Icahn-backed oil refiner and a group of creditors with claims against Venezuela clashing. This U.S. court auction, driven by debt defaults and expropriation claims against Venezuela, has attracted bids far below the total claims of $21.3 billion—meaning someone with legitimate claims against Venezuela may walk away from the process with far less than what they are due, if they receive anything at all.

A consortium led by miner Gold Reserve and a Koch Industries unit has put forward a $9 billion bid, combining cash and claims against Venezuela, anonymous sources told Reuters. Likewise, Icahn-controlled CVR Energy has submitted an $8 billion all-cash offer. These offers surpass the highest bid from the first round, although they still fall short of Citgo's estimated market value of $11-13 billion.

Robert Pincus, the court-appointed officer, has requested additional time to evaluate these complex proposals. The auction process allows creditors to use claims in place of cash, a critical factor for companies like Gold Reserve and Koch Industries. It also allows the parties to add other parties to their offers and to top off their bids after they are submitted. 

The competitive nature of the auction has seen at least five investor groups submit binding offers, with three securing financing from major banks like JPMorgan and Morgan Stanley. Despite this, some creditors are expected to receive nothing, given the substantial claims involved. 

Citgo, under supervisory boards appointed by Venezuela's opposition since 2019, has reported significant earnings in recent quarters. The U.S. judge overseeing the case, Leonard Stark, is pushing for a swift resolution, rejecting delays. A winner must be selected by August 22, with final approval by October 15, subject to the U.S. Treasury Department's consent.