Gold Reserve Ltd V.GRZ

Elliott's bluster

[mrmoribund]

My sense is that investors have been rattled a bit by Elliott's defiant pronouncement that their bid is the best the court can hope for, that if they don't get everything they want then they'll walk and that will be a disaster for the creditors, etc.

Some of Elliott's points (or implied points) have some merit. The market for oil refineries (and their outputs) has definitely deteriorated over the past six months or so. You can see that in the decline in the 3-2-1 crack spread.

For graph plus explanation see:

https://rbnenergy.com/data-flow/404514#:~:text=The%203%2D2%2D1%20Crack%20spread%20approximates%20a%20theoretical%20refinery,is%20calculated%20in%20%24%2Fbbl.

Note that the spread peaked in mid-March 2024, hit bottom on September 16, and has recovered somewhat since then.

You can see this also reflected in the prices of publicly-traded refinery stocks. PBF Energy, for example, hit a high of $62 in April and is now trading a little over $32. That's quite a drop--though PBF looks to be more of a pure play refinery story (than Citgo) and, hence, might be expected to be more volatile than Citgo in its market value.

So, yeah, if Citgo was worth $11 to $14 billion early in 2024 then it's surely worth less than that now.

So Elliott has a point. And they ARE experts at valuing downstream energy assets.

But, that said, we should keep in mind that the people at Elliott are also experts at buying assets as cheaply as possible. And, of course, they are experts at playing hardball. Have no doubt their bluster was designed to frighten any potential partners to any competing bid.

And what perfect timing for Elliott that September 16, the day the 3-2-1 crack spread hit rock bottom, would have been just about the moment Elliott and the Special Master were finalizing the terms of this "great" deal that they now both love so much. As I say, the people at Elliott are really good at scraping the bottom.

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Note, the list of creditors that expressed dislike of the Elliott bid includes . . . get ready . . . ConocoPhillips. And they know every part of the oil business just as well as Elliott. If they thought it was a great deal then presumably they would have had no objections. Not only that, as #2 in line they would (I think) get paid in full even under the terms of the Elliott bid.

Makes me wonder if ConocoPhillips is thinking of themselves as part of a multi-creditor credit bid which would give them first dibs on some pieces of Citgo. Pure speculation on my part.

[ugluuak]

Thanks for your input it is appreciated.  Are we likely to hear some news in next few days or is the US election results likely to play a troll, yes troll ?

[mrmoribund]

It appears to me that Judge Stark heard two opposing positions: (1) the Special Master, who wants everything to stay on course with his choice of the Elliot bid + data room stays locked until December 9 + a big break fee for Elliott; (2) Pretty much all the creditors, who vigorously object to the Elliot bid, want it thrown out, and want the data room opened immediately. I assume Judge Stark

[Amadeus]

I agree moribund that it seems unlilely that Stark will side with Pincus. If he does, would it not be possible for all the disadvantaged companies to get together and take the case to the supreme court. Ok it wold take time and money but given the billions involved and the risk of insolvency for some of them with failure, I would like to know if this would be possible/realistic. Stark must be

[mrmoribund]

Tough question. My essential reason for thinking Stark won't side with the SM on this is that to do so seems to me un-Stark, it would just not fit with the way he's tended to be in this whole thing. He has long seemed to really want to get as much value for as many of these long-abused creditors as possible. If he sided with the SM anyways? Including giving Elliott a big break fee? My

[ugluuak]

Are we saying that bids that did not deal with nor mention the bonds were rejected. If GRZ had tended a higher bid that did not deal with the bonds and the bid was rejected by the SM shows the SM's tie in with Bond holders. Based on the SM's Elliot choice with the holdback walk away etc the BONDS were top of the consideration. There is legal process in the background dealing with the

[mrmoribund]

My best guess is that GRZ's bid was rejected because the SM was not convinced of their financing. Sort of like when you're selling a house and you reject the highest bid because it's conditional on the bidder getting financing (and you have doubts they'll be able to). Not inherently unreasonable except that one thing other creditors later complained about was that Amber Energy

[settoretire]

Clarification please  Your comment states no matter who wins, we are still (2) years from getting paid?

[mrmoribund]

With (1) the Gramercy situation and (2) the problems related to the Elliot bid the odds have definitely increased that getting paid could be two years away. Getting paid much sooner is still possible. Gramercy would have to be disposed of. Would help if the 2020 bonds could also be disposed of, though that won't happen fast. What's needed is for Judge Stark to get rid of Gramercy and

[ugluuak]

I think that the Elliot bid was recommended because of financial gains as well as time to get these funds for the SM. The creditors on file in my view were second fiddle by a considerable amount. There should be a "supreme court ruling" negating the bonds as to the auction of CITGO and have the bond holders go through the same process as did the current creditors with the appropriate

[helpful1]

Your Elliott's Bluster  & your most recent post  makes total sense to me.This has taken already too long & I am currently waiting for Judge Stark's next ruling. We, all knew we had to wait for U.S ELECTION RESULTS Trump got elected so he has already declared sanctions shall be restored fully on Venzuelua. Please give me your opinion on how this will affect the creditors

[mrmoribund]

The election result shouldn't matter all that much. Maybe the return of full sanctions will reduce the flow of Venezuelan crude to the US and thereby hurt Citgo (whose refineries are, I understand, fitted for Venezuelan crude) in terms of intrinsic value. But I think Chevron always had a licence to continue exporting from Venezuela (even with Trump) and I'd expect that to continue. (And

[Amadeus]

Thanks again moribund for your well reasoned post. Agree that OFAC unlikely to hold things up in the new political atmosphere,but as you suggest the whole process could be strung out much longer until the bondholder's position is clarified. Actually, Ive been in RML in varying amounts for 12 years, not GRZ but am looking to get in at current levels. Would you say that the current GRZ mcap is

[helpful1]

Thanks for your response to my questions. Trump stated Drill baby drill for more oil so U.S.A. is not rely on foreign oil like Venezuela. Mudro is a dictator so Trump will put it to him. Citgo will be sold & perhaps Valero as you said teams up & does a top up bid Citgo. I would like creditors be made whole & get to the finish line. Undoubted that we had to wait till U.S. Elections were