*

Lawsuits, unease with Elliott affiliate's bid stall

auction

*

US judge to hold hearing on Dec 13 to decide how to

proceed

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Creditors want Citgo's financial documents reopened to

bidders,

Amber's period of exclusivity terminated

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Gold Reserve ( GDRZF ), Venezuela signal potential bids if

restrictions

lifted

By Marianna Parraga and Gary McWilliams

HOUSTON, Nov 18 (Reuters) - Companies seeking to claim

proceeds from a court auction of shares in a parent of

Venezuela-owned Citgo Petroleum are pressing a U.S. court to

lift an exclusivity deal with an affiliate of Elliott Investment

Management, which could pave the way for at least two new bids,

sources close to the matter said.

The auction of shares in the U.S. oil refiner's parent PDV

Holding, aimed at paying 18 creditors up to $21.3 billion in

awards against Venezuela, has become stalled.

A conditional $7.3 billion

bid

in September by Elliott's wholly-owned Amber Energy for

Venezuela's foreign crown jewel has been criticized by many of

the creditors as inadequate and lawsuits by holders of

Venezuelan bonds and notes are threatening to upend the

seven-year-long court process.

Judge Leonard Stark, who is overseeing the case in a federal

court in Delaware, this month said he would soon set a path for

the auction to move ahead, and set a Dec. 13 hearing to listen

to arguments.

Stark has been asked by creditors to reopen a data room to

provide access to Citgo's financial documents to bidders, and

terminate a period of exclusivity held by Amber Energy,

according to court filings.

At least two companies have told the court they could

present new bids once restrictions are lifted.

Canadian miner Gold Reserve ( GDRZF ), which submitted bids in

the auction's first and second rounds, wants to revive a

proposal that was set aside in August by a court officer

managing the process. The officer had asked Gold Reserve ( GDRZF ) to

partner with U.S. oil refiner CVR Energy ( CVI ), which had

separately bid, but gave Amber exclusive negotiating rights

shortly after.

Lawyers representing Venezuela also told the court they

wanted to reserve the right to make a future bid to purchase the

shares or to submit "more effective and equitable" proposals

than a sale.

Amber did not reply to written questions. The company has

told the court in recent weeks its bid would deliver the highest

value for the shares, given the many challenges surrounding the

process.

Its $7.3 billion bid values Citgo at 5.9 times Citgo's last

12-month pre-tax earnings plus cash and debt, below the market's

6.9 times earnings average multiple for three big,

publicly-traded rivals, according to financial firm Tudor,

Pickering, Holt.

"I can see why the creditors want a better number," said

Tudor, Pickering refining analyst Matthew Blair.

The auction is expected to be the culmination of a

long-standing case first introduced by Canadian miner Crystallex

in Delaware in 2017 that made Citgo's parent liable for

Venezuela's debts. The judge wants to maximize sale proceeds to

pay off as many creditors as possible.

NEW BIDS?

Stark first must decide on two proposals - one by a court

officer appointed to oversee the auction and another by creditor

ConocoPhillips ( COP ) - that would both essentially block

creditors from resorting to other courts in pursuit of the same

assets. He is expected to rule on those motions in the coming

weeks.

If the proposals are rejected, Amber can walk away from the

process, according to an agreement it reached with the court

officer, Robert Pincus.

Amber's original bid has not been accepted by the judge. In

response to criticisms, Pincus last month presented a second bid

by Amber modifying the structure of the payment waterfall, which

would free about $5 billion for creditor payouts after the

process is completed.

Amber's bid was being treated as "a stalking horse bid" -

one that generally sets a minimum price in bankruptcy auctions -

a person close to the matter said, adding that the lack of

details provided about the bid made it difficult to match.

Another source said payout restrictions in Amber's bid would

likely encourage other bids. Some companies say they can beat

the Amber bid.

"Assuming the data room is reopened immediately, there

should be no impediment to finalizing the terms of a materially

superior Gold Reserve ( GDRZF ) bid," an attorney for the mining firm told

the court in a filing in October.

The company's prior bid was and remains "demonstrably

superior to the Elliott bid in every material category," its

filing said.

CVR is not expected to continue bidding, according to a

person familiar with the matter. Neither Gold Reserve ( GDRZF ) nor CVR

Energy ( CVI ) responded to requests for comment.

CREDITORS PROTEST

Amber's bid includes set-asides and deductions that have

been criticized by many of the 18 creditors seeking proceeds.

"The Elliott bid is non-viable," said creditors Gold

Reserve ( GDRZF ), Rusoro, Tidewater, Red Tree, Contrarian and Valores

Mundiales in a joint argument.

Some parties protested that the bid's structure would not

guarantee payments to the highest-ranked creditors - Crystallex,

Tidewater and ConocoPhillips ( COP ).

Companies further down the creditors' list "would receive

interests in a trust that may not pay them for years - if ever,"

said lower-ranked creditors Red Tree and Contrarian.

Several questioned whether Amber's bid met conditions set by

the court. If Amber's bid included a credit bid from the

acquisition of claims by Koch Industries that are low in the

ranking, it would require the payment in cash of all claims

above it in the creditors' list.

If creditors continue opposing bids, the court could be

motivated to consider other alternatives, including a

bankruptcy-like restructuring plan that would keep Citgo intact

and provide a larger payout to creditors over time, analysts

said.