U.S. Court authorizes appropriation of Citgo assets
Venezuela
5 agosto 2019

On July 29, the U.S. Court of Appeals for the Third Circuit upheld a ruling by the U.S. Federal Court authorizing Canadian company Crystallex International Corp to appropriate Citgo’s assets to collect a US$ 1.4 billion debt owed by the Venezuelan government. Citgo is the U.S. subsidiary and refining unit of state-owned oil company Petróleos de Venezuela (PDVSA) and is a key source of income for the South American country. A Delaware court is expected to issue a new ruling on the payment of Venezuela’s debts in the coming weeks.

The conflict between the Canadian company and Venezuela began in 2008 when former President Hugo Chávez eliminated a concession allowing Crystallex to exploit gold mines in the country. The company claimed US$ 1.4 billion in compensation, which both the Chavez administration and Maduro refused to pay, prompting the company to file an appeal with the U.S. courts for compensation.

However, Venezuela is expected to cancel PDVSA bonds valued at US$ 913 million in October. In order to prevent the unpaid debt from triggering new requests for compensation using Citgo shares, the company’s ad hoc board of directors, appointed by Juan Guaidó, has begun a process to issue bonds maturing in 2024. The market has shown willing to purchase these instruments, which would allow the company to restructure part of its debt and reduce its interest burden.

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