By the World’s Best Investment Manager and Financial Market Journalist
The ongoing auction of shares in the parent company of Citgo Petroleum, Venezuela’s prized asset, has sparked controversy as court advisers rack up a hefty bill of nearly $30 million. This stalled auction, involving 18 companies vying for $21.3 billion in debt defaults and expropriations, has left creditors frustrated and anxious for compensation.
Despite the submission of bids in the second round of the auction this year, concerns have arisen over the advisers’ exclusive negotiations with an affiliate of Elliott Investment Management, resulting in a bid that many creditors deem insufficient.
Challenges to the advisers’ rising fees, including a $4.1 million bill for September, have been raised by four creditors, highlighting the exorbitant costs and questionable practices involved in the auction process.
U.S. Judge Leonard Stark recently criticized the handling of the auction by the law firm Weil, Gotshal & Manges, investment banker Evercore, and court official Robert Pincus, signaling a potential redirection of the auction to ensure fair play and transparency.
The revised process is expected to attract at least two new bids once Citgo reopens access to its financial data, offering the potential winner a lucrative package of U.S. oil refineries, energy pipelines, distribution terminals, and retail outlets.
As the auction drama unfolds, it is crucial for investors and stakeholders to stay informed and cautious of the risks and opportunities that may arise from the outcome of this high-stakes battle for control of Citgo Petroleum.