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

said on Friday it submitted an offer valued in $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 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.

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," said Joseph

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