Gold Reserve Ltd V.GRZ

Question

[mrmoribund]

Does anyone hear understand how the PDVSA 2020 bonds fit into this?

Those bonds were collateralized with 50.1% of Citgo common shares. I know the bondholders claim on that was successful in a New York State court decision a few years ago. But I think that's not done with appeals.

Also, I'm pretty sure it was only after that decision that it was established that PDVSA was/is an alter ego of the Venezuelan government. I would think that would strengthen the argument of the Guaido and post-Guaido opposition that those bonds are void because they were never approved by the National Assembly. (If PDVSA were simply an independent corporation then why should the National Assembly have any say in the matter? But National Assembly approval should be crucial if PDVSA is an arm of the government.)

I'd think this is hugely important because if those bondholders can grab 50.1% of Citgo then won't Crystallex and the other creditors be chasing after only 49.9% of Citgo?

If that were the case then GRZ's position would start to look a little scary. If Citgo is worth $13 billion then 49.9% of it is $6.5 billion. And GRZ is in line behind $5.5 billion in other claims.

Anyone here up on this?

[mrmoribund]

Bit of a disappointment that no one here has any insights on this. I've thought about it more and think I may have the correct answer. I suspect the possibility of PDVSA bondholders getting 50.1% of Citgo shares is now moot because, to those bondholders, the shares would be of zero value. Essentially. they would take the 50.1% place of the current owner, PDVSA. So instead of the company

[mrmoribund]

I've read a little more about the PDVSA 2020 bond situation and think that NOW I may understand it. The market's view seems to be that those bonds probably will get paid in full sometime AFTER Citgo is sold--i.e., whoever buys Citgo (leading to GRZ and othe creditors being paid) will ultimately have to make good on those bonds. I'm not convinced that the Venezuelan opposition won'

[RIDER1975]

Thanks for your thoughts. May I ask what is the total outstanding volume of these bonds? And that whether taking into considerstion and  calculation with that - assuming the way it might be payable - may have  affect.the bidding price ?

[mrmoribund]

If I understand the issue correctly then I would think any bidder for Citgo would want the issue resolved before making a final bid. I believe the bond issue adds up to about $3 billion. I suspect the $13 billion estimate of Citgo's value includes that $3 billion debt. So if the bonds were void then Citgo should be worth $16 billion. Or, if the 2020 bond was assumed to be invalid then a