Gold Reserve Provides Update on Recent Delaware Proceedings
This update is qualified in its entirety by reference to such documentation which is available on the Public Access to Court Electronic Records (“PACER”) system in the
On September 27, 2024, the Special Master publicly filed a status report with the
The Special Master also publicly filed on September 27, 2024, a “Notice of Special Master’s Recommendation” with the
- The Special Master has selected Amber Energy Inc. (the “Buyer”), an affiliate of Elliott Investment Management L.P., as the “Successful Bidder” pursuant to the Sale Process.
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The Special Master may recommend at a future date, in the Notice of Final Recommendation (as defined therein), the
Delaware Court approval of the Buyer’s purchase of all of the common shares of PDVH (the “PDVH Shares”) pursuant to the terms and conditions set forth in the proposed executed Stock Purchase Agreement attached as Exhibit A to the Notice (the “Proposed Purchase Agreement” and the transactions contemplated thereby, the “Proposed Sale Transaction”). -
In the Notice, the Special Master excerpted certain terms from the Proposed Purchase Agreement, including:
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Purchase Price. The proposed purchase price for the PDVH Shares is equivalent to a total CITGO enterprise value of up to approximately
US , subject to material assumptions and adjustments pursuant to the Proposed Purchase Agreement, which terms are redacted in the attached Proposed Purchase Agreement but will be available upon the commencement of the Topping Period (as defined below) and the Special Master’s filing of his final recommendation of the Proposed Sale Transaction, as described below (the “Final Recommendation”).$7.28 6 billion - Purchase Price Escrow. Cash consideration paid by the Buyer at closing of the Proposed Sale Transaction will be placed into escrow accounts in accordance with the Trust Structure Term Sheet (as defined and attached as Exhibit A to the Proposed Purchase Agreement). The release of the escrowed proceeds will be subject to conditions including, among other things, resolution of Ascertained Alter Ego Claims and the CITGO Holding Pledge (each as defined in the Trust Structure Term Sheet).
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Injunction Termination Right. In the event the
Delaware Court denies the relief sought in the Special Master’s “Motion to Enjoin the Alter Ego Claimants from Enforcing Claims Against the Republic or PDVSA by Collecting from PDVH or its Subsidiaries in Other Forums” (the “Alter Ego Motion”), which is scheduled for a hearing on October 1, 2024, the Buyer may elect to terminate the Proposed Purchase Agreement (the “Injunction Termination Right”). - Superior Proposals. From the date of execution of the Proposed Purchase Agreement until the date on which the Special Master files the Final Recommendation, the Special Master is subject to a non-solicitation and non-discussion provision and is not permitted to consider any alternative proposals to purchase the PDVH Shares. If, following the Court’s decision with respect to the Alter Ego Motion, and pursuant to the terms of the Proposed Purchase Agreement, the Special Master and the Buyer amend the Proposed Purchase Agreement and the Special Master files the Final Recommendation of the Proposed Sale Transaction, as amended, the 45-day period during which the Special Master may consider alternative proposals (the “Topping Period”) will commence during which the Special Master will be permitted to consider alternative proposals, subject to the limitations set forth in the Proposed Purchase Agreement.
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Purchase Price. The proposed purchase price for the PDVH Shares is equivalent to a total CITGO enterprise value of up to approximately
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In light of the Injunction Termination Right, the Special Master does not believe that a final recommendation of the Proposed Sale Transaction is appropriate at this time, nor would it be productive given the upcoming October 1, 2024 hearing on the Alter Ego Motion. Therefore, the Special Master recommends to the
Delaware Court that it adopt the following briefing schedule and process related to the Proposed Sale Transaction:- Notice filed on September 27, 2024;
- Hearing on Alter Ego Motion -- October 1, 2024;
- If the Court grants the relief requested in the Alter Ego Motion, the Special Master and the Buyer will work in good faith to make any amendments to the Proposed Purchase Agreement as are necessary to reflect the Court’s ruling and, within three business days after the execution of such amendments—i.e., the Trust Structure Effective Date (as defined in the Proposed Purchase Agreement, which itself must occur by the later of October 25, 2024 and ten business days following entry of the Delaware Court’s order on the Alter Ego Motion —the Special Master will file the “Final Recommendation”. The Final Recommendation will include (i) an amended Proposed Purchase Agreement, (ii) final Trust Documentation (as defined in the Trust Structure Term Sheet), and (iii) a proposed form of Sale Order in connection therewith;
- The deadline for objections to the Proposed Sale Transaction, and all other briefing deadlines provided in the Delaware Court’s Oral Order entered on September 20, 2024 will be based on the date of filing of the Final Recommendation;
- The Topping Period pursuant to the Proposed Purchase Agreement shall commence on the date of the filing of the Final Recommendation; and
- The Sale Hearing in connection with the Proposed Sale Transaction shall be scheduled based on the briefing schedule described in the fourth bullet above.
- Pursuant to the Sale Process Order, within seven days after the filing of the Final Recommendation, the Special Master will file a report under seal (and serve a copy to the Sale Process Parties) that provides a summary of the Bids for the PDVH Shares, including their cash and non-cash consideration components.
On October 1, 2024, the
“At present, it is not clear what, if any, monies the Company would receive under the terms of this Proposed Purchase Agreement, and there is a significant risk the Company would not receive any recovery,” said Paul Rivett, Executive Vice Chair. “All of the proposed terms appear to be contingent on the resolution of the Alter Ego Motion, as well as subject to further amendment if the motion is granted and, unfortunately, many of the terms are redacted. Gold Reserve’s recovery appears to be entirely contingent on the amount of the Purchase Price that is escrowed to resolve the CITGO Holding Pledge (related to the 2020 Notes), and the resolution of the pending litigation concerning the CITGO Holding Pledge as well as the Ascertained Alter Ego Claims. Gold Reserve looks forward to obtaining further clarity on these open issues. In the interim, Gold Reserve is considering all of its options, including in respect of its objection rights and preparations for the topping period.”
On Behalf of the Board of Directors
Paul Rivett
Executive Vice-Chairman
Cautionary Statement Regarding Forward-Looking statements
This release contains “forward-looking statements” within the meaning of applicable
We caution that such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause the actual events, outcomes or results of Gold Reserve to be materially different from our estimated outcomes, results, performance, or achievements expressed or implied by those forward-looking statements, including but not limited to: the Sale Process may not be consummated, including that it may not result in a sale of the PDVH Shares to any person, including to the Buyer; the Company may not receive any monies under the Sale Process, including under the Proposed Sale Transaction, any potential transaction of the Company solely or with one or more other parties ( “Potential Transaction”) in relation to the sale of PDVH Shares pursuant to the Sale Process, including, but not limited to: complying with the topping bid terms under the Proposed Purchase Agreement, discretion of the Special Master to otherwise considering any Potential Transaction, entering into any discussions or negotiation with respect thereto and that the Special Master may reject any Potential Transaction including without limitation because the Special Master’s view is that the Potential Transaction is not of sufficient value, does not sufficiently take account of the PDVSA 2020 Notes, does not have sufficient certainty of closing and/or for any other reason; the form of consideration and/or proceeds that may be received by the Company in any Potential Transaction; that any Potential Transaction, and/or the form of proceeds received by the Company in any Potential Transaction, may be substantially less than the amounts outstanding under the Company’s September 2014 arbitral award (the “Award”) and/or corresponding November 20, 2015 U.S. judgement; the failure of the Company to put forth or negotiate any Potential Transaction, including as a result of failing to obtain sufficient equity and/or debt financing; that any Potential Transaction of the Company will not be selected as a “Successful Bid” under the Sale Process including complying with any topping bid procedures, and if selected may not close, including as a result of
Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to Gold Reserve or persons acting on its behalf are expressly qualified in their entirety by this notice. Gold Reserve disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, subject to its disclosure obligations under applicable rules promulgated by the Securities and Exchange Commission and applicable Canadian provincial and territorial securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
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Gold Reserve Inc. Contact
Jean Charles Potvin
999 W. Riverside Ave., Suite 401
Tel: (509) 623-1500
Fax: (509) 623-1634
Source: Gold Reserve Inc.
