Citgo Petroleum sale update: Gold Reserve’s $7.38bn bid gets Delaware court nod

Gold Reserve Ltd. (TSX.V: GRZ, OTCQX: GDRZF), through its U.S. acquisition subsidiary Dalinar Energy Corporation, has emerged as the final recommended bidder for PDV Holding Inc.—the indirect parent of Citgo Petroleum Corporation—with a proposed acquisition offer valued at US$7.382 billion, according to documents filed with the U.S. District Court for the District of Delaware on July 2, 2025.

This recommendation by Special Master Robert B. Pincus marks a pivotal moment in a years-long court-supervised asset sale designed to satisfy multi-billion-dollar judgments against the Bolivarian Republic of Venezuela. If approved at the sale hearing set for August 18, 2025, the transaction will become one of the most complex sovereign enforcement actions in U.S. history, with implications for global sovereign debt recovery precedents.

What does Gold Reserve’s $7.382B offer through Dalinar Energy actually include—and who gets paid?

According to the Special Master’s 49-page recommendation and attached bid documentation, the Dalinar bid proposes to satisfy over a dozen attached judgments, including claims from Gold Reserve itself, Rusoro Mining, Koch Minerals, Siemens Energy, and Red Tree Investments. Of the total $7.382 billion valuation, around $3.854 billion will be paid in cash, while $3.528 billion will be fulfilled via non-cash consideration, such as preferred equity instruments and structured deferred obligations.

The priority waterfall structure, approved by the Delaware court in 2024, ensures that creditors such as Crystallex International, Tidewater, and ConocoPhillips will receive their full claim value before junior creditors, including Siemens and Gold Reserve itself.

This mix of cash and court-validated non-cash instruments allowed Dalinar’s bid to surpass the US$3.7 billion stalking horse bid submitted by Red Tree Investments, which failed to secure key creditor consents like Rusoro’s. The bid terms also specify that Gold Reserve will own 44% of Dalinar’s common equity and hold at least $150 million of the proposed $1.5 billion in preferred equity securities.

How did the Delaware court structure the sale—and what was the bidding process timeline?

The asset sale of PDV Holding Inc., which owns 100% of Citgo Petroleum through CITGO Holding Inc., was initiated by the Delaware court as part of enforcement actions to satisfy judgments totaling over $10 billion against Venezuela and its state oil company Petróleos de Venezuela, S.A. (PDVSA).

The Special Master launched a multi-phase marketing process in October 2023, following extensive OFAC consultation and structured sale procedures. Initial bids were received in early 2024, but a reboot of the process occurred after Elliott Investment Management’s affiliate bid (Amber Energy) in September 2024 was criticized by stakeholders for valuation and execution risk. This prompted a new “stalking horse” bid process, eventually designating Red Tree Investments in April 2025.

The Topping Period, launched on April 28 and extended through June 18, 2025, yielded only two conforming bids—Dalinar and Red Tree—with Dalinar offering both a higher purchase price and greater creditor support.

Why did the Special Master choose Dalinar over the Red Tree stalking horse bid?

In the final evaluation, the Special Master gave precedence to price over marginal improvements in deal certainty. Dalinar’s bid not only exceeded the Red Tree bid by nearly US$3.6 billion, but it also secured written creditor consents for all non-cash elements—meeting the court’s procedural strictures and avoiding potential closing hurdles.

By contrast, the Red Tree revised bid depended on unconsented non-cash instruments intended for Rusoro and others, which violated the “no forced non-cash consideration” principle established in court filings. Analysts suggest the bid’s overreliance on conditional instruments reduced its valuation credibility and weakened its competitive position despite early favoritism.

Institutional sentiment, though mixed, appears to favor the Dalinar-led resolution, especially among senior creditors eager to realize cash recoveries after more than a decade of litigation. Experts familiar with the case say this also reflects a broader court preference to resolve sovereign enforcement actions with clean, enforceable outcomes, minimizing political entanglements.

How is the Dalinar bid being financed, and what regulatory approvals remain?

Dalinar has lined up committed debt financing from J.P. Morgan, TD Bank, and SMBC, as well as strategic backing from consortium partners Rusoro, Koch, Gold Reserve, and XYQ (representing Siemens). The deal structure includes a $4.5 billion bridge facility and a $350 million asset-based pre-fund, with plans to roll over into a $2 billion asset-based revolving credit line post-closing.

Gold Reserve’s effective control—holding 85% of Dalinar’s voting rights—is intended to help align creditor recovery with operational continuity, especially given its historic legal standing in the Venezuela litigation. The structure also ensures that, post-acquisition, Citgo will merge with Adolin Holdings, the financing vehicle, to consolidate debt obligations.

However, the deal is still subject to final court approval and clearance from the U.S. Treasury’s Office of Foreign Assets Control (OFAC). While prior engagements with OFAC have yielded favorable licensing guidance, final authorization remains a condition precedent to closing.

What is the next step, and how are stakeholders reacting?

The Delaware court is scheduled to hold a Sale Hearing on August 18, 2025, to determine whether to formally approve the transaction. If approved, closing could occur by late 2025 or early 2026, pending regulatory sign-off and satisfaction of closing conditions.

Gold Reserve’s Executive Vice Chairman Paul Rivett emphasized that the recommended bid “satisfies creditors further down the waterfall than was ever contemplated by any prior bid.” He also noted the role of financial advisors at J.P. Morgan and TD Bank in sustaining the bid’s competitiveness throughout the multi-year process.

Analysts monitoring the enforcement case believe that institutional confidence in the U.S. court’s process has significantly increased following the Dalinar recommendation. The use of a clean capital structure, high-cash component, and creditor-supported non-cash elements could serve as a model for future sovereign asset enforcements, particularly involving sanctioned entities.

What is the future outlook for Citgo and Gold Reserve if the sale goes through?

If the deal closes as recommended, Citgo Petroleum Corporation would transition into a U.S.-owned entity, unlocking potential strategic shifts and capital investment under new governance. Gold Reserve’s transition from creditor to majority controller of a major U.S. refiner would also mark an unprecedented turnaround in sovereign litigation strategy—transforming courtroom judgments into operating assets.

Meanwhile, the deal could reshape recovery expectations for other creditors holding judgments against Venezuela, especially in Europe and Canada, where enforcement has stalled. With multiple global sovereign debt cases in early stages, the Citgo sale—if successful—may serve as a litigation playbook for post-judgment asset monetization in cross-border disputes.