Venezuela's opposition led by Juan Guaidó took its fight to keep control of its prized Citgo refineries to the U.S. courts on Tuesday in an attempt to block bondholders from foreclosing.
Guaidó's team argues that socialist President Nicolás Maduro in 2016 put Citgo up as collateral in an ill-advised debt swap without the opposition-controlled National Assembly's approval — making the deal null.
The opposition is banking on profits from its Houston-based company to fund the crisis-torn nation's recovery — if they are ever able to force Maduro from power. Citgo is Venezuela's most valuable foreign asset, and losing it to creditors would be a political blow to Guaidó's challenge to Maduro.
Venezuela has owned Citgo since the 1980s as part of the state-run oil company PDVSA. It has three refineries in Louisiana, Texas and Illinois in addition to a network of pipelines crisscrossing 23 states. It provides between 5% and 10% of U.S. gasoline.
The Trump administration had temporarily shielded PDVSA from losing Citgo for three months upon missing a $913 million debt payment that came due on Monday.
Russ Dallen, a broker at Miami-based Caracas Capital Markets, said this opposition tactic runs against the White House's delay, which gave the PDVSA board time to renegotiate debt and not launch an ill-advised court battle.
"The U.S. government generously gave the Guaidó administration an additional 90-day ceasefire specifically to negotiate with... bondholders," Dallen said. "Two days into that 90-day negotiation-time PDVSA throws in the towel and sues the bondholders instead."
Maduro's government lost control of it after the Trump administration recognized Guaidó as Venezuela's legitimate president. The socialist leader accuses the opposition of illegally getting control of Citgo, saying it is part of the "imperialist" United States' attempt to install Guaidó as a "puppet" government.
The lawsuit is filed in the Southern District Court of New York.