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Will Venezuela’s Opposition Retain Control of Citgo?

Venezuela’s opposition-controlled National Assembly appointed a new Citgo board of directors (pictured above) earlier this year. // Photo: Citgo.

A U.S. appeals court last month lifted an impediment that had frozen efforts by defunct Canadian gold miner Crystallex to take control of Citgo, Venezuelan state oil company PDVSA’s U.S.-based refiner. The ruling marks a defeat for opposition leader Juan Guaidó and his allies, who have been fighting to prevent creditors from seizing Citgo since taking effective control of the company from President Nicolás Maduro’s government. Moreover, if the opposition fails to make a $913 million payment on a 2020 PDVSA bond due on Oct. 27, creditors reportedly could attempt to seize the company. What does the court’s ruling mean for Citgo and for Venezuela? How likely is Crystallex to successfully take control of the U.S.-based refiner, and is it expected to put the Citgo shares up for sale, as it has stated it would do? Is the opposition likely to complete the upcoming payment, and what would happen if it fails to do so?

Luisa Palacios, chairwoman of Citgo: “In terms of Crystallex, we believe the lifting of the stay by the Third Circuit does not change the underlying situation with Crystallex’s claims, which remain stayed by an order of the United States District Court. More importantly, Crystallex does not presently have a license from OFAC, without which it cannot seize or sell the stock in question, and we do not expect that to change. This case continues to work through the appeals process, which means it can still be reversed. The Third Circuit just requested a briefing from Crystallex on why it should not rehear the case en banc. For those reasons and others, we do not see any near-term impact to Citgo’s operations or outlook. As to the PDVSA 2020 bonds, it is hard to imagine that the Guaidó administration should be expected to…”

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