(Reuters) - A U.S. federal appeals court on Monday rejected an appeal by Venezuela’s state-owned oil company to set aside an order allowing a Canadian gold mining company to seize shares in its U.S. refining unit, Citgo Petroleum Corp.
Crystallex International Corp had won the $1.4 billion judgment as compensation for the expropriation of its assets in Venezuela under late leftist President Hugo Chavez. The 3rd U.S. Circuit Court of Appeals in Philadelphia said a lower court was right to attach Petroleos de Venezuela’s shares of its U.S. unit, which owns Citgo.
“The District Court acted within its jurisdiction when it issued a writ of attachment on PDVSA’s shares of PDVH to satisfy Crystellex’s judgment against Venezuela, and the PDVH shares are not immune from attachment,” Judge Leonard Stark wrote, referring to PDVSA’s U.S. unit.
PDVSA did not respond to a request for comment. It was not immediately clear whether PDVSA will ask the court to reconsider the decision, or appeal to the U.S. Supreme Court.
In a statement, Crystallex Chief Executive Officer Bob Fung said the company was “pleased” by the decision” and looked forward to “proceeding with our lien to recover our expropriated investment in Venezuela.”
The court had allowed arguments from lawyers representing Juan Guaido, the head of Venezuela’s opposition-controlled National Assembly. In January, Guaido invoked Venezuela’s constitution to assume an interim presidency, arguing the 2018 re-election of President Nicolas Maduro, Chavez’s Socialist protege, was illegitimate.
Guaido has been recognized as Venezuela’s rightful leader by dozens of countries, including the United States, and has named ad-hoc boards of directors to Citgo and PDVSA. Maduro calls him a U.S. puppet seeking to oust him in a coup.
In a statement, PDVSA’s ad-hoc board said it would take “all legal measures necessary to challenge the decision.”
The ruling was also a blow to investors holding PDVSA’s 2020 bond, for which the company had pledged half of Citgo shares as collateral. Maduro’s government had remained current on that bond even as it defaulted on most other debt.
The opposition in May made a $71 million interest payment on the bond to stave off seizure, but there is another $913 million payment due on Oct. 27. The bond is now trading at just 68 cents on the dollar, down from nearly 90 cents as of early July, according to Refinitiv Eikon data.
Venezuela had pledged the remaining shares in Citgo to Russian state oil company Rosneft as collateral.
Reporting by Jonathan Stempel in New York and Luc Cohen in Caracas; additional reporting by Tom Hals in Wilmington, Delaware; editing by Paul Simao and Sandra Maler
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