September 30, 2019 / 6:48 PM / 19 days ago

U.S. court allows Crystallex to advance in case against refiner Citgo

(Reuters) - A U.S. appeals court on Monday ruled that Canadian gold mining company Crystallex can move ahead with efforts to seize shares in oil refining firm Citgo as part of a dispute with Venezuela, Citgo’s ultimate owner.

Crystallex International Corp had won a $1.4 billion judgment for expropriation of its assets under late socialist leader Hugo Chavez, and later won court rulings in the United States allowing it to auction Citgo shares for compensation.

The decision by the 3rd U.S. Circuit Court of Appeals lifted a decision by a lower court that had put a stay, or a temporary halt, on the sale of Citgo [PDVSAC.UL] shares at the request of Venezuelan state oil company PDVSA.

“The foregoing motion to lift the stay of the District Court proceedings is granted,” wrote judge Thomas L. Ambro.

Crystallex declined comment.

Allies of Juan Guaido, the head of Venezuela’s opposition-controlled National Assembly, have repeatedly vowed to prevent Citgo from falling into the hands of creditors.

Guaido in January invoked Venezuela’s constitution to assume an interim presidency, arguing the 2018 re-election of President Nicolas Maduro was illegitimate.

He 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.

Jose Ignacio Hernandez, Guaido’s overseas legal representative, did not immediately respond to a request for comment.

Venezuela’s information ministry, which handles media inquiries for Maduro’s government, did not respond to an email seeking comment.

The majority of Citgo shares are pledged to holders of PDVSA’s 2020 bond for which the company had pledged half of Citgo shares as collateral. The remaining shares in Citgo are pledged to Russian state oil company Rosneft as collateral.

The opposition in May made a $71 million interest payment on the 2020 bond to stave off seizure, but another $913 million payment comes due on Oct. 27.

Guaido did not specifically mention the decision during a Monday press conference, but said his allies were evaluating a variety of mechanisms to protect Venezuela’s foreign assets including a U.S. executive order.

“We’re going to need help, and the first thing is to seek an (executive) order to protect Venezuela’s assets abroad,” he said.

Reporting by Brian Ellsworth and Mayela Armas; Editing by Marguerita Choy

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