UPDATE 1-U.S. judge to set auction schedule for shares in parent company Citgo

(Adds Koch, Gold Reserve looking to grab stock)

By Marianna Parraga and Gary McWilliams

HOUSTON, Oct 7 (Reuters) – A U.S. judge may soon rule on a final auction schedule that could force the dissolution of Venezuela-owned Citgo Petroleum, the seventh-largest U.S. oil refiner by capacity, court documents show. .

Last year, U.S. District Judge Leonard P. Stark approved the sale of shares in parent company Citgo to pay Canadian miner Crystallex $970 million owed following a judgment expropriating its active in Venezuela. Citgo is the crown jewel of Venezuela’s overseas assets.

The US Treasury Department’s Office of Foreign Assets Control (OFAC) has so far blocked any transfer of ownership or control of Venezuelan assets to the United States and it is unclear whether an auction would proceed. with his acceptance.

The judge said he would allow a period of up to six months for the special master overseeing the stock sale to obtain OFAC’s consent. The captain could offer to go ahead even without OFAC’s approval. But the uncertainty would likely prevent some investors from considering an offer.

The marketing and sale process proposed by the judge allows for a harassment offer – an initial offer on the assets that acts as an effective reserve offer – and the sale of all or part of the shares of Citgo’s parent company. The number of shares sold would be sufficient to cover the judgment of $970 million.

Citgo Petroleum was valued at around $10 billion in 2014.

Many companies owe money following a wave of expropriations and nationalizations under late President Hugo Chavez and encircle Citgo, Venezuela’s most valuable foreign asset.

On Friday, Koch Minerals and Koch Nitrogen jointly asked Stark for an order to seize shares of parent company Citgo to satisfy their $387 million judgment against Venezuela. Miner Gold Reserve Inc also filed its $713 million price with the court on Wednesday, signaling it hopes to piggyback on a Crystallex auction.

Venezuelan 2020 bondholders and lawyers for ConocoPhillips, which has a $1.2 billion judgment against Venezuela, were included in court deliberations over the sale process.

Stark revised the proposals establishing the sales and bidding process six times. There was no order posted on Friday; a lawyer involved in the case said we could come any day.

On Sept. 29, Stark said, “The Court expects to execute an updated Proposed Sale Pleading Order on or about October 7.”

If approved, the timeline could see formal bids due in seven months and a court hearing to accept the highest bid within nine months of the court-set launch date, according to a court filing. . The entire process includes marketing, auctions and party notifications.

Stark previously approved hiring investment banker Evercore Group to conduct the auction.

Spokespersons for Citgo and Crystallex did not immediately comment. Conoco declined to comment. (Reporting by Marianna Parraga and Gary McWilliams; Editing by Marguerita Choy and Ana Nicolaci da Costa)

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