Crystallex drafts Citgo auction, PdV presses appeal

Canadian gold mining company Crystallex says it is gearing up to auction Citgo, Venezuelan state-owned PdV's US refining subsidiary that the firm hopes to secure through a debt-related lien on its US parent, PdV Holding.

In a joint status report ordered by a US federal court in Delaware on 9 August, Crystallex calls for the "rapid issuance and service of the writ" of attachment on PDVH shares in order to avoid PdV actions that would hinder it. In addition, "given the number of creditors competing to collect on Venezuela's (and PDVSA's) assets, prompt issuance and service of the writ also is critical to establishing Crystallex's priority interest in the shares."

Crystallex is seeking to collect a $1.4bn arbitration award for the 2008 loss of its Venezuelan gold mining assets Las Cristinas.

The company says Venezuela or PdV can avoid the attachment by posting a bond for the amount of the judgment. In the meantime, it said it is "preparing to provide notice of the auction" to around 20 entities that expressed interest in Citgo when PdV was considering selling it as late as 2014. Crystallex says another 10-20 entities may also be interested.

For its part in the joint report, PdV says the attachment on the asset cannot be implemented until after an appeals court rules on its motion to dismiss based on sovereign immunity.

"Until the Third Circuit finally resolves PDVSA's appeal from this Court's denial of its sovereign immunity, this Court can take no further action with respect to issuance or enforcement of the Writ," PdV says in its section of the report.

Venezuela's many creditors holding an estimated $190bn in external debt are closely watching the Crystallex case. Citgo is Venezuela's most valuable overseas asset. Holders of a PdV 2020 bond which is collateralized with 50.1pc of Citgo shares are sensitive to the outcome.