Are We There Yet?

We’ll get started with this week’s Venezuela : Down The Rabbit Hole segment in just a bit but first…Hart Energy reports that the US Treasury Department- OFAC (Office of Foreign Asset Control) extended protection to US refiner, Citgo Petroleum, from creditors for another three months.

This action prohibits transactions related to PDVSA (Venezuela government-owned oil company) 2020 bonds, in which shares of Citgo, owned by PDVSA, were put up as collateral for the bond offering.

The Venezuela government has defaulted on all it’s bonds (The first time in the country’s history), including the PDVSA 2020 bonds, and bondholders as well as other creditors holding judgements against Venezuela are eyeing Citgo as Venezuela’s only remaining foreign asset with any real value.

The Maduro regime failed to put forth a good faith effort to restructure it’s debt when Nicolas Maduro put Tareck El Aissami (You know, the guy with all the ties to drug trafficking and terrorists) in charge of debt negotiations. El Aissami is prohibited by sanctions from talking to bondholders (and is also wanted in the US on drug charges). You can’t make this stuff up! Well, at least they have another three months.

Then, as long as we;re on the topic of Citgo, we have Reuters reporting that a US court set October 23rd as the start date  for the long-awaited auction of shares in Venezuela-owned refiner, Citgo Petroleum.

US Judge, Leonard Stark, in Delaware accepted a recommendation by a court official in charge of organizing the auction. The sale process lays out a schedule that could lead to the formal approval of share sales a year from now.

The US Treasury license protecting Citgo for another three months does not freeze the auction and Treasury has previously stated it will not stand in the way of the process. Now the fun and games really begin.

Oil industry experts and financial analysts estimate Citgo’s NAV (Net Asset Value) to be approximately $8 billion to $10 billion. Between the bondholders and companies that had their assets expropriated by the Chavistas there are claims of about $60 billion and Venezuela’s total debt is estimated between $120 billion to $150 billion.

Those who have officially filed claims will be at the front of the line when the auction takes place but it’s pretty clear that when the music stops playing many will be left without a chair.

Now, lets head Down The Rabbit Hole…

Chapter 2/ Setting the record straight…

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