Bondholders Move to Block Gold Reserve’s $7.4 Billion Citgo Bid

Bondholders holding a defaulted 2020 Venezuelan note and several other creditors are challenging the court-recommended $7.4 billion offer led by Gold Reserve Ltd.’s subsidiary Dalinar Energy to acquire PDV Holding, the parent of Houston-based refiner Citgo Petroleum Corp. In filings unsealed on Monday, the opponents argued that the proposal omits any arrangement to satisfy their collateralised bond claim, potentially stripping them of repayment rights. The objections, which must be submitted to Delaware District Judge Leonard Stark by 9 July, could derail the second court-run auction of Citgo’s parent in as many years. Proceeds from the sale are intended to distribute up to $19 billion to roughly 15 creditors, including Gold Reserve’s own $1.18 billion arbitration award for expropriated mining assets. Creditors also fault what they call unclear evaluation criteria used by court-appointed special master Robert Pincus when he selected the bid. Legal wrangling now spans two courts. Stark has set a final hearing on the sale for 18 August, while U.S. District Judge Katherine Polk Failla in New York will hold a 10 July session at which bondholders may seek an injunction to preserve their claim. Energy producer ConocoPhillips warned the Delaware court that blocking the Dalinar bid could leave insufficient time to structure alternative financing, underscoring the risk of further delays to the long-running effort to monetise Venezuela’s highest-profile foreign asset.