US judge extends topping period in Citgo parent's auction

By Marianna Parraga

HOUSTON, May 27 (Reuters) - A U.S. federal judge has extended to at least June 2 a period for bidders to submit rival bids in a court-organized auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, according to a filing released on Tuesday.

Last month, Delaware judge Leonard Stark approved a $3.7 billion offer from Contrarian Funds' affiliate Red Tree Investments as the starting bid in the auction of shares, aimed at compensating 15 creditors for debt defaults and expropriations in the South American country.

Red Tree and rival consortia had been given until May 28 to submit competing or improved offers, but lawyers representing Venezuela last week requested more time for parties to analyze parallel lawsuits in other U.S. courts that could affect the amount or conditions of some bids.

According to a new calendar proposed by some creditors and supported by a court-appointed "special master" overseeing the sales process, the topping period could be extended for as much as three weeks, but the auction's final hearing would still be done in July after a winner is selected. Judge Stark must rule on the proposed calendar.

Since last year, some Venezuela-linked creditors trying to cash proceeds in the eight-year case in Delaware have introduced lawsuits in pursuit of the same assets. A New York court last week dismissed arguments by one of the groups of creditors.

The new legal developments are encouraging fresh offers, special master Robert Pincus said on Tuesday in a motion supporting the extension, without elaborating on the potential bidders' names.

"The special master believes that the requested 21-day extension of the topping period may lead to a more robust bidding process through the submission of new and improved topping bids," a counsel for Pincus said in a filing.

The lawyers representing Venezuela requested the extension, writing: "This is a monumental development in the sale process. The Venezuela parties respectfully move for an extension of (the) topping period to allow bidders, or potential bidders, to account for the elimination of what the special master has called a 'cloud of uncertainty,' that has hung over the bidding."