Swordsmyth
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Venezuela could lose its largest U.S. asset after a court allowed a Canadian gold miner to seize shares of Citgo Petroleum Corp.’s parent to satisfy an arbitration award.A U.S. appeals court ruled on Monday that Crystallex International Corp. may seize U.S.-based stock of Citgo’s parent, which is part of Venezuela’s state-owned oil company, to cover a $1.4 billion award over the nationalization of gold fields.
Unless reversed on appeal or blocked by the Trump administration, the decision would allow Crystallex to auction the shares to satisfy Venezuela’s unpaid debt to the Canadian company. That means the country, in the grip of its worst recession, could lose control of the refiner that processes Venezuelan crude into desperately needed hard currency.
It also complicates efforts by interim President Juan Guaido to retain control of Venezuelan assets including Citgo while waging a power struggle with current leader Nicolas Maduro for leadership of the country. Guaido has asked U.S. President Donald Trump to bar creditors from seizing the country’s assets.
Crystallex’s gold mining operations near Las Cristinas, Venezuela, were seized without compensation in 2011 when Chavez nationalized the country’s gold-mining industry. The company pursued arbitration and won a $1.2 billion award plus interest in 2016.
Last year, Venezuela officials handed over $425 million as partial payment of the arbitration award, but the company couldn’t cut a deal to satisfy the rest of the debt. So Crystallex pushed ahead with efforts to seize shares of Citgo’s parent.
Crystallex officials waged a three-year battle to seize shares of PDV Holding Inc., which owns Citgo. PDVSA owns the holding company. A federal judge in Delaware concluded last year that since Venezuela controls PDVSA, shares of Citgo’s parent were fair game to be seized for the debt.
The Philadelphia-based appeals court upheld the trial judge’s finding that PDVSA is Venezuela’s alter ego in part because its run by the country’s military and all profits flow to the country’s coffers.|
“It has the potential to be a big blow to Venezuela,” Russ Dallen, managing partner of Caracas Capital, said in an interview. “The pool of creditors that can now attack and go after PDVSA is greatly expanded.”
Crystallex isn’t the only company that has sued Venezuela over unpaid debts. Investors have sued over $65 billion in defaulted bonds while rival ConocoPhillips sued Venezuela over seizure of its oil assets in the country. The U.S. oil giant won a $2 billion arbitration award over the nationalized assets. Last year, ConocoPhillips executives got $345 million in cash and commodities in settlement after the U.S. company seized some PDVSA assets in the Caribbean.
The case is Crystallex International Corp. v. Bolivarian Republic of Venezuela, No. 18-2797, U.S. Court of Appeals for the Third Circuit
More at: https://news.yahoo.com/venezuela-faces-loss-citgo-desperately-183123270.html
Unless reversed on appeal or blocked by the Trump administration, the decision would allow Crystallex to auction the shares to satisfy Venezuela’s unpaid debt to the Canadian company. That means the country, in the grip of its worst recession, could lose control of the refiner that processes Venezuelan crude into desperately needed hard currency.
It also complicates efforts by interim President Juan Guaido to retain control of Venezuelan assets including Citgo while waging a power struggle with current leader Nicolas Maduro for leadership of the country. Guaido has asked U.S. President Donald Trump to bar creditors from seizing the country’s assets.
Crystallex’s gold mining operations near Las Cristinas, Venezuela, were seized without compensation in 2011 when Chavez nationalized the country’s gold-mining industry. The company pursued arbitration and won a $1.2 billion award plus interest in 2016.
Last year, Venezuela officials handed over $425 million as partial payment of the arbitration award, but the company couldn’t cut a deal to satisfy the rest of the debt. So Crystallex pushed ahead with efforts to seize shares of Citgo’s parent.
Crystallex officials waged a three-year battle to seize shares of PDV Holding Inc., which owns Citgo. PDVSA owns the holding company. A federal judge in Delaware concluded last year that since Venezuela controls PDVSA, shares of Citgo’s parent were fair game to be seized for the debt.
The Philadelphia-based appeals court upheld the trial judge’s finding that PDVSA is Venezuela’s alter ego in part because its run by the country’s military and all profits flow to the country’s coffers.|
“It has the potential to be a big blow to Venezuela,” Russ Dallen, managing partner of Caracas Capital, said in an interview. “The pool of creditors that can now attack and go after PDVSA is greatly expanded.”
Crystallex isn’t the only company that has sued Venezuela over unpaid debts. Investors have sued over $65 billion in defaulted bonds while rival ConocoPhillips sued Venezuela over seizure of its oil assets in the country. The U.S. oil giant won a $2 billion arbitration award over the nationalized assets. Last year, ConocoPhillips executives got $345 million in cash and commodities in settlement after the U.S. company seized some PDVSA assets in the Caribbean.
The case is Crystallex International Corp. v. Bolivarian Republic of Venezuela, No. 18-2797, U.S. Court of Appeals for the Third Circuit
More at: https://news.yahoo.com/venezuela-faces-loss-citgo-desperately-183123270.html
