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Court gets an earful from firms opposing proposed bid

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Heated opposition to negotiating exclusivity, breakup fee

offer

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Final recommendation on sale could be stalled until

January

By Gary McWilliams and Marianna Parraga

HOUSTON, Oct 21 (Reuters) - Key terms of a proposed

court agreement with a U.S. hedge fund seeking to gain control

of oil refiner Citgo Petroleum from Venezuela would lock in the

fund's low-ball bid, the company's creditors said in new court

filings against the deal.

The backlash to Elliott Investment Management's wholly-owned

Amber Energy's offer ends any chance this year of a change to

Citgo's ownership to satisfy debt defaults and expropriations by

Venezuela.

The offer is not economically viable, deficient, and does

not comply with Delaware law, creditors, who are seeking cash

proceeds from a court auction, wrote in asking the court to

begin anew.

Amber, which a court officer had hailed last month as the

"successful bidder" in the auction's second round, threatened to

walk away if the court approved creditors' requests for more

details of its up to $7.286 billion bid to assemble rival bids.

Citgo called Amber a "weeks-old shell corporation with no assets

and no committed financing," in its court filing.

Terms of a sales agreement put together by a court officer

overseeing the auction unduly favor Elliott's Amber and violate

the court's rules governing the sale, creditors wrote in filings

late on Friday that went beyond their earlier criticisms.

The judge in the case asked the court officer to poll

creditors on their view of the offer.

Crystallex, the company that brought the lawsuit which found

Citgo's parent PDV Holding liable for Venezuela's debts,

described the auction as having "gone severely off course."

REOPEN DATA ROOM

It and ConocoPhillips ( COP ), which holds the largest

claims in the case, asked that Citgo financial information be

made available immediately to other bidders. Access has been

closed since August, when Elliott was chosen to exclusively

negotiate a deal.

Gold Reserve ( GDRZF ), a mining firm holding a $1 billion

claim against Venezuela, said it was prepared to finalize "a

materially superior" bid once it could review Citgo data.

Robert Pincus, the court officer overseeing the auction,

said in a filing he opposes reopening the Citgo financial data

until Dec. 9, and wants the judge in the case to restrict

information on Amber's financial terms and to approve a breakup

fee if a superior bid is accepted. The size of the potential fee

was redacted in court filings.

Pincus proposed a revised sale schedule that would allow him

to submit a final recommendation in late January, and give the

court until March 24 to begin a hearing on a definitive sale.

He disagreed with creditors' criticisms of the sales

process, their descriptions of the proposed Elliott agreement,

and offered to provide his own views in a future court hearing,

Pincus wrote.