Could Citgo be a No-Go?: Elliott's $8 Billion Venezuelan Nuisance

Elliott Management, a major US hedge fund, made an $8 billion bet last year to buy Citgo, Venezuela's state-owned oil refinery business in the US. They were hoping for a massive windfall worth potentially $13 billion, but things just got a lot more complicated.

The whole deal started because a US court ordered Citgo to be sold to help pay back Venezuela's creditors. Elliott jumped at the opportunity, using their typical playbook of aggressive legal tactics and distressed debt expertise. They even shocked other bidders with their initial offer, which one lawyer literally called "evil" in court before Elliott revised it and got the court's backing.

But then Donald Trump captured Venezuelan president Nicolás Maduro this month, completely upending the country's politics. Now Venezuela has a new president, Delcy Rodríguez, who absolutely hates this deal and has called it "fraudulent." She's been fighting the sale tooth and nail, even appealing the transaction.

The problem for Elliott is that their deal still needs approval from the US Treasury and now Citgo could become a bargaining chip in whatever negotiations Trump has with Venezuela's new government. One expert called this "by far the most complex legal case of public debt" they've ever seen, which is saying something.

Elliott does have some advantages though. Their founder Paul Singer donated over $56 million to conservative candidates in the 2024 election and helped finance Trump's transition. He also has a long relationship with Secretary of State Marco Rubio, who's been key in recent military actions against Venezuela. So they've got serious political connections.

The Venezuelan situation is still really murky: Trump says he's "loving Venezuela" and that "we are running Venezuela," but it's unclear what that actually means for the Citgo deal. The US might even try to change the terms to require the buyer to process Venezuelan crude, which could fit into broader plans to revamp Venezuela's oil industry.

Bottom line: Elliott thought they had a clear path to approval, but overnight everything changed. Now they're dealing with a whole new set of political complications that could delay or even derail their massive bet. As one Venezuela expert put it, "if there's anyone out there who could navigate these troubled waters, it's Paul Singer" - but they've definitely got their work cut out for them.

#Distressed