How much is Citgo Holding worth?
If only we knew. Citgo is not a publicly traded company and its value is a matter of conjecture. In its bond swap offer, PDVSA claimed a valuation of $12.5bn.
PDVSA previously said Citgo’s three refineries alone were worth $7bn. Russ Dallen of Caracas Capital says that, based on the earlier sale of another Citgo refinery, they would come out closer to $1.3bn. Mr Dallen puts the value of Citgo Holding, which includes pipelines and other assets, at between $4bn and $5bn.
But PDVSA says Citgo Holding has debts of $4.2bn. In addition, Citgo’s assets are already at risk of seizure from creditors of PDVSA and the government, as the ultimate owner of both companies.
Crystallex, another Canadian gold miner, sued the government for $2.8bn over expropriation of its assets and was awarded $1.4bn by ICSID, the World Bank’s dispute settlement system, in March this year. Rusoro, a Canadian-Russian gold miner, won $1.2bn from ICSID in August.
ExxonMobil, the oil major, was awarded $1.6bn, also for nationalisation, in 2014. ConocoPhillips, the oil exploration company, is seeking as much as $5bn in a similar case in coming months.
There are other awards against Venezuela that would put Citgo’s assets at risk of seizure by its creditors. Just those listed above add up to $4.2bn, without ConocoPhillips. Add in $4.2bn of debt, and there is little left over even if PDVSA’s unattributed valuation can be believed.
What’s more, some of Citgo’s debts would become payable within days of a default on the new 2020 bonds, as they are accelerated by a change of control (which would happen if the collateral were called on). Mr Dallen says some $2bn would be affected immediately.