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(Bloomberg) — A federal judge in New York confirmed the validity of several bonds issued by Venezuela’s state-owned oil company, removing a major uncertainty in the court-ordered auction of Citgo’s parent.
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US District Judge Katherine Polk Failla ruled Thursday that the notes, which matured in 2020, and their governing documents are valid under Venezuelan law. The decision comes as Citgo’s parent, PDV Holding, which is currently being auctioned off by a Delaware court to satisfy over $20 billion in claims.
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Citgo runs a group refineries, pipelines, terminals and fuel-distribution channels in the US. Its parent, PDV, was previously the US subsidiary of Petroleos de Venezuela SA, but they are now under separate control. PDVSA remains under the the government of Venezuelan President Nicolas Maduro, while PDV is under the US-backed opposition.
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The bonds Failla ruled valid were issued by PDVSA but backed by a controlling stake in the Citgo holding company.
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Currently, bids by an affiliate of Elliott Investment Management, Amber Energy Inc., and a consortium led by Gold Reserve are being discussed in court. The Special Master appointed by the judge to oversee the sale, Robert B. Pincus, had recommended Amber’s offer as it includes a settlement with the bondholders even before the validity dispute was settled in New York, making the deal the most likely to close in his opinion.
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“This likely ensures that Amber will be named the winning bidder for Citgo,” said Jason Keene, a strategist at Barclays, said of Failla’s ruling.
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