The CITGO auction continuously makes headlines, particularly with the detailed evaluation of Black Lion Capital‘s offer to acquire 100% of the shares of CITGO owned by PDV Holding (PDVH), highlighted by Albemarle Capital, which warns that the Venezuelan refinery is being undervalued.
Albemarle Capital filed its objections and recommendations to the Delaware Court regarding the position of the court-appointed expert, Robert B. Pincus, and the offer he recommended. They conclude that Gold Reserve’s offer does not maximize value for creditors and is significantly lower than Black Lion’s potential.
The document discusses key issues such as lack of access to information, valuation of the offer, and discrepancies in financial calculations. It provides a thorough description of CITGO’s operations, assets, refineries, and the future value outlook for the company.
It then compares the refinery’s characteristics with Black Lion’s offer alongside potential values for CITGO, mentioning economic factors that impact refinery profitability. It argues that Black Lion’s offer has significant shortcomings and undermines CITGO’s value.
Objections to Black Lion Capital’s Offer
On July 7, 2025, the president of Albemarle Capital sent a communication outlining objections to the final recommendation of the court-appointed expert for the CITGO auction. This document was submitted to the U.S. District Court for the District of Delaware on July 10, 2025.
Albemarle Capital raised significant objections to accepting Black Lion Capital Advisors’ offer for acquiring 100% of CITGO shares owned by PDV Holding (PDVH). These objections center around the lack of “full access to room data and auction protocols,” the need for “confirmed information” for good faith negotiations, and the absence of “opportunities to finalize” the transaction.
The communication explains that Black Lion requested “full access to room data” to carry out their due diligence, but this request was not addressed by either the expert or Black Lion before June 18, 2025. It pointed out deficiencies in the submission of the offer, stating that it was not until June 25, 2025, that any progress was made.
It mentions that on June 25, 2025, a series of “deficiencies” for Black Lion were outlined. Pincus informed Black Lion that their lawyers at Weil Gotshal & Manges had determined that the offer did not meet offer requirements and was contingent and not finalized.
Aspects of Black Lion’s Offer
Albemarle Capital criticizes the violation of Third Circuit Court of Appeals rules, asserting that Black Lion’s offer does not “prevent, given the surrounding circumstances and the Third Circuit’s appeal rules, the maximization of value for the judgment creditors.”
It maintains that Black Lion’s offer fails to maximize value for creditors, which is a key requirement.
Furthermore, it indicates that despite access to the VDR on June 18, 2025, the expert found ongoing “deficiencies” in Black Lion’s offer that hindered its progress. The lack of access to the VDR by Black Lion until June 17, 2025, prevented the completion of their financing commitments and the anchoring of their financing arrangements.
It warns that Black Lion’s offer “undervalues the offers of the other two consortia not applicable to Black Lion,” which includes:
- Red Tree’s offer of USD 3.806 billion and
- Gold Reserve’s offer of USD 7.382 billion. Black Lion is considered to have a valuation nearly USD 5 billion lower than Gold Reserve.
It highlights that neither of these offers aligns with the current acquisition value of USD 12 billion for CITGO’s refining and marketing business, as stated in Black Lion’s offer from June 17, 2025, or its prospective future value.
It notes that the court granted “multiple extensions for processes and also granted extensions for the cap process, which were not used.”
It emphasizes that Black Lion “did not participate in the previous sale process of PDVH-CITGO, and therefore had not proposed a Stock Purchase Agreement or executed financing commitments for its offer.”
Recommendation and Opposition
Albemarle Capital believes that if the Court or the expert require additional information or wish to discuss these objections further, they should not hesitate to contact them.
It also noted that Robert B. Pincus requested and was granted a deadline extension to submit his final recommendation on Black Lion’s offer until at least July 2, 2025, to allow the company to finalize its Stock Purchase Agreement proposal.
Black Lion’s objections to the expert’s final recommendation argue that their offer is the best one to include in the auction.
Black Lion’s USD 12 billion offer provides “total combined value” that is “the highest received” by the court-appointed expert.
Attractions and Potentials of CITGO
It notes that CITGO is a “sophisticated” fuel refining and marketing company with a total crude feed capacity of 807,000 barrels per day, supported by an extensive network of distribution terminals consisting of 46 storage terminals and 8 crude and refined product pipelines linked to 4,200 independently owned and operated points of sale across 22 states in the eastern U.S.
In this regard, it highlights that CITGO is a “unique and extraordinarily valuable company, very different from the refineries that have been for sale in recent years.” Its refineries process heavy crudes at discounts of USD 10-USD 15 per barrel.
Each CITGO refinery is strategically located for easy access to:
- Heavy crudes with significant discounts from South America and the Middle East.
- Product markets in the eastern and southeastern U.S.
- Large U.S. product markets by pipeline or truck.
Additionally, it emphasizes the technical sophistication of the three CITGO refineries, as well as their distribution and storage infrastructure, eight joint ventures, and pipelines owned entirely by CITGO.
Albemarle Capital considers that CITGO holds two types of “hidden value” that can benefit its buyers and investors:
- USD 3 billion or more additional EBITDA from operational improvements. The refining and marketing business of CITGO is worth USD 25-USD 30 billion.
- USD 2.5 billion in cash: Generated from monetizing the value of CITGO’s infrastructure (46 refined product storage assets and 8 pipelines).
It recalls that CITGO is capable of generating billions in profits annually.
Additional Objections
In Albemarle Capital’s view, Gold Reserve and Rusoro Mining lack the “knowledge, experience, and operational expertise to identify, evaluate, and address the operational issues” needed to rectify CITGO’s “substantial profitability deficiencies.”
They indicate that an executive from Koch stated that their goal “is not to operate CITGO or acquire any of its refineries or assets, but merely to preserve Koch’s judgment of less than USD 500 million.”
They estimate that, under these circumstances, it is “highly unlikely that the Gold Reserve group can increase CITGO’s value from USD 7.382 billion to USD 25-USD 30 billion in two years.”
They refer to the Gold Reserve group’s offer as “clearly not maximizing value for the judgment creditors.” Thus, the prospective value of the Gold Reserve group’s offer is also “much lower than the prospective value of Black Lion’s offer.”