HOUSTON, Sept 5 (Reuters) - Blue Water Acquisition Corp

said on Friday that it submitted an offer valued at $10 billion

for the parent of Venezuela-owned refiner Citgo Petroleum, which

includes a $3.2 billion settlement proposal to holders of a

defaulted Venezuelan bond.

A U.S. court-organized bidding round for PDV Holding to pay

up to 15 creditors closed last month after improved bids were

received by an officer overseeing the auction, but the court

said it would allow unsolicited bids after the deadline.

Blue Water Acquisition Corp is a special purpose

acquisition company formed to identify and complete businesses

with high-potential companies across diverse sectors, especially

healthcare.

The company is offering cash or stock distributions to

creditors, and a settlement for holders of the PDVSA 2020 bond

to be paid either in cash or in shares of the publicly listed

entity to own Citgo.

"Our $10 billion proposal would provide creditors with both

immediate recovery and the opportunity to participate in the

future of Citgo as a U.S. public company," Joseph Hernandez,

Blue Water's chief executive, said in a release.

Court officer Robert Pincus last month changed his

recommended winner to Elliott Investment Management's affiliate

Amber Energy. In July, he had selected a subsidiary of miner

Gold Reserve ( GDRZF ) as frontrunner, which is now trying to

disqualify the Elliott affiliate's bid.

The Delaware court is expected to hold a procedural

conference next week ahead of a final sale hearing in

mid-September that would allow Judge Leonard Stark to make a

decision on the auction's winner.

As of Friday afternoon, the court had not released any

information about Blue Water's bid on public dockets.