Crystallex International has sued Venezuelan state-owned oil company PdV
OREANDA-NEWS. Canadian mining company Crystallex International has sued Venezuelan state-owned oil company PdV in a US court for fraudulently transferring assets out of the US to prevent creditors from seizing them.
The federal suit, filed in Delaware federal court on 28 October, alleges that PdV's recent bond swap operation in which 50.1pc of the equity in its US downstream subsidiary Citgo Holding was pledged as collateral was intended "to hinder and delay its creditors."
The action mirrors a separate suit filed in Delaware by US oil company ConocoPhillips for the 2007 seizure of its upstream assets in Venezuela.
In the partial restructuring carried out last month, PdV exchanged $2.8bn of maturing PdV 2017 bond debt for about $3.34bn in a new PdV 2020 bond.
Crystallex's suit says PdV's offering prospectus for the swap of two PdV 2017 bonds totaling $7.1bn of outstanding principal for the new bond included a warning to investors stating that "PdV cannot guarantee that a creditor of the Bolivarian Republic of Venezuela will not be able to interfere with the exchange offers, the collateral or payments made under the new notes, through an attachment of assets, injunction, temporary restraining order or otherwise."
The mining company's suit says "if the lien on PdV's shares of Citgo Holding is ever called, it will destroy the value of (its) largest asset."
The suit asks the court for an injunction to block PdV Holding, the parent company of Citgo Holding and both based in Delaware, from transferring more assets out of the US.
Citgo Holding's assets include full ownership of three US refineries and associated midstream interests.
Crystallex was awarded $1.4bn in compensation in April 2016 by an arbitration panel of the World Bank's International Center for Settlement of Investment Disputes (Icsid), which ruled that Venezuela's government in 2011 illegally expropriated the company's operations at the Las Cristinas gold mine in Bolivar state.
Crystallex previously filed a similar fraudulent transfer suit in 2015 against PdV, PdV Holding and Citgo Holding accusing the government of siphoning $2.8bn from the US to Venezuela to avoid creditors seeking to collect billions of dollars in arbitration awards related to expropriations.
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