Pdvsa Recovers Citgo Stock Certificate Used as Collateral
The ad hoc board of directors of Pdvsa announced that after a lengthy legal process, it has recovered the stock certificate representing 49.9% of the share capital of Citgo, which was used as collateral in 2016 by the government of Nicolás Maduro for a loan negotiated with the Russian oil company Rosneft.
Maduro’s transaction involved using nearly half of Citgo’s shares as collateral for a $1.5 billion loan granted by Rosneft Trading, which would be repaid through oil shipments over a four-year period.
Since 2020, under the control of the interim government led by Juan Guaidó, Citgo had been attempting to regain possession of the certificate, which required navigating a maze that included negotiations with the Russians and obtaining a license from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.
“With the assistance of external lawyers, PDV Holding, Inc. embarked on a multi-year effort to recover the stock certificate, which included obtaining an OFAC license for the transfer of the certificate, invoking the procedures of the New York Uniform Commercial Code to demand information from Rosneft Trading and the Russian successor-in-interest under the prepayment agreement,” stated the ad hoc Pdvsa board in a press release.
Finally, last month, OFAC authorized “the transfer of the stock certificate and the termination of the guarantee in favor of Rosneft Trading, and shortly thereafter, in response to a request from PDV Holding, Inc., Rosneft Trading agreed to return the certificate, which had been held in custody in New York. The stock certificate was recovered on June 21, 2023, and is now in the possession of PDV Holding, Inc. at its corporate headquarters in Houston, Texas.”
In 2016, Maduro’s government carried out two operations that used the entire stake of Citgo as collateral for loans. The first operation was with Rosneft, and the second involved bondholders of the 2020 bonds, which defaulted in 2019 and are currently the subject of a legal dispute to challenge their validity.
