“Daughter” of “Rosneft” became a defendant in the suit in the United States: canadian Crystallex accuses her of involvement in the illegal transfer of assets. Talking about the transfer of Rosneft as collateral for 49.9% of oil refiner Citgo
Credit under the American refinery
Canadian gold mining company Crystallex has filed a lawsuit against a Swiss trading company, Rosneft Trading sa (controlled by Rosneft), accusing it of involvement in the scheme “fraudulent transfer of assets” (fraudulent transfer under the laws of the state of Delaware, where the claim is made). In November 2016, Rosneft Trading received a lien on a 49.9% stake in us operator Citgo, the Venezuelan-controlled oil company Petróleos de Venezuela S. A. (PDVSA). The shares might be providing the loan to $1.5 bn from Rosneft in favor of PDVSA, says in the lawsuit Crystallex, citing media reports. Crystallex is seeking from Venezuela payment of $1.4 billion by the decision of the international arbitration over the nationalization of the gold mining project in 2011, and Citgo, whose price analysts estimate at $3 billion — asset, which can potentially recover.
A defendant in a suit filed January 4 in the district court of Delaware, held PDVSA, its subsidiary PDV Holding and Glas Americas — collateral agent on the remaining 50,1%, which were also pledged (all at PDVSA 100% of Citgo).
In November 2016, PDVSA laid a 49.9% stake in the American operator of refineries and pipelines Citgo Holding Swiss Rosneft Trading sa, financial statement (financing statement), filed on 30 November the authorities of Delaware with the law firm Norton Rose on behalf of Rosneft Trading (a copy of the document published in Latin American Herald Tribune). “Daughter” of “Rosneft” has received the lien in exchange for a loan to PDVSA, the loan amount could be $1.5 billion, says one of the leading investigative journalists in Latin America Steven Bodzin, the first published information about the security of the online REDD Intelligence. PDVSA confirmed in the press release of 23 December that “used the remaining 49.9% of [Citgo] to attract new funding”, not specifying from whom received funding.
In favor of the version of the loan can also talk to the Central Bank of Venezuela foreign exchange reserves, which November 30 jumped to $891 million, the sharpest increase in nearly a year. “It is difficult to verify information when there is so little official data, but it would be a logical explanation for the sudden jump in foreign currency reserves”, — talked in December, Siobhan Morden, head of strategy for Latin American debt capital markets at Nomura Securities in new York (quoted by Bloomberg). Submitted to the Central Bank the amount may be the balance provided by “Rosneft” of the loan also allows for a strategic Advisor to the hedge Fund Opportunity Fund Venezuela Russ Dallen.
The total capacity of the three refineries owned by Citgo — 749 thousand Barr./day. Refinery in lake Charles, Louisiana, is the largest with a capacity 427,8 thousand Barr./day (the sixth place among American refinery). Power plants in Lemont (Il) and Corpus Christi (TX) is 176 thousand and 158 thousand barrels./day respectively. A distinctive feature of the refinery capacity to process heavy sour crude oil, which accounts for 57% of their raw materials. In addition, full and partial ownership of Citgo located oil terminals and pipelines throughout the country. According to the results of 2013, revenue Citro Petroleum (controlled by Citgo Holding) amounted to $42 billion, profit — $1.8 billion, follows from the materials of the court of Delaware. The company is not public, so the public information about its financial performance a bit.
Previously laid PDV Holding a 50.1% Citgo PDVSA other creditors who have agreed to exchange $2.8 billion of bonds maturing in 2017 at $3.4 billion with maturity in 2020 year, written by Latin American Herald Tribune.
According to Crystallex, the purpose of the transactions, the collateral for which was 100% of Citgo, to lay all of the assets of the American company to protect PDVH to PDVSA and subject to the rights of Crystallex and other creditors through the conclusion of these assets beyond the jurisdiction of the United States, follows from the claim. The canadian company asks the court to declare the laying of 49.9% of the shares of Citgo “Rosneft” “fraudulent transfer”, to issue a decree abolishing the collateral, and to prevent possible further transmission of bail from “Rosneft” to anyone else.
Deal of Rosneft and PDVSA could theoretically become the subject of an investigation of the Committee on foreign investment U.S. (CFIUS), says RBC Dallen from Brazil Opportunity Fund. CFIUS reviews all transactions in which the buyer is acting in the interests of foreign authorities. However, it is unlikely the case will reach of us regulators, as “Rosneft” owns 49.9% in the Citgo is the only collateral for a possible loan.
But even if it comes to the transfer of the pledge in the property “Rosneft” and administration of Donald trump approves the transaction, Congress likely will block, said Dallen. Such precedents have already been — in 2006, lawmakers did not allow Dubai Ports World (DPW) to acquire the oldest British port operator P&O assets in the United States.
Among the potential obstacles to the transaction is valid in respect of Rosneft and its CEO Igor Sechin American sanctions, adds Dallen.
“Rosneft” will not become owner of the shares of Citgo, while PDVSA will not announce default on its obligations, explained RBC Professor of Finance, University of Houston Craig Pirrong. But even if that happens, Rosneft will become the controlling shareholder of Citgo as its share is less than 50%, the expert concludes. CFIUS will not check the deal for Citgo, as in this case the shares will not be transferred to a foreign company from the us — they are owned Venezuelan PDVSA, said RBC Brandon Barnes, an analyst at Bloomberg Intelligence.
Representatives of “Rosneft” was unavailable for comment the evening of 5 January. Rosneft did not respond to a request RBC.