Venezuela halted Citgo sale on low bids, creditor worry -source

lunes 27 de octubre de 2014 18:02 GYT

By Marianna Parraga

HOUSTON Oct 27 (Reuters) - Venezuela's surprise move to scrap the sale of its U.S. refining unit Citgo was prompted when bids came in well below its $10 billion asking price, and sovereign and corporate bondholders criticized selling a reliable source of cash during a liquidity crunch, a source familiar with the situation said on Monday.

While Petroleum Minister Asdrubal Chavez was in charge of the sale, Finance Minister Rodolfo Marco announced the halt in a local newspaper on Sunday following weeks of mixed messages from the government.

"The fact that it was the finance minister ... indicates the government is trying to send signals to foreign bankers and bondholders who see the potential Citgo sale as a negative," the source said. "It is also true that the offers received so far weren't as attractive as they were expecting."

Speculation over the possible sale of Citgo has circulated for years, but this time it seemed real. Citgo runs three refineries in the United States.

State oil company PDVSA had hired investment bank Lazard to run the sale, and was in the process of selecting a shortlist of bidders for a second round.

Instead, potential buyers on Monday were scrambling to figure out if the deal was dead. Lazard has yet to inform them of any official cancellation, according to another source involved, but few expected the sale to move forward.

"We are looking for more information about this. We don't know if the bidding process is still ongoing, but many companies will not want to continue with the due diligence, revealing information if the sale is not going to be made," the source said.

The auction process was "well run," one of the participants said last week. An initial round of bids was tabled at the end of September, attracting both strategic bidders and private equity players, and Lazard later requested a new offer round, the people added.   Continuación...