‘It’s the Only Way to Get Paid’: A Struggle for Citgo, Venezuela’s U.S. Oil Company

But now the exemption, which gives bondholders the right to acquire Citgo shares as payment, would end up hurting Mr. Guaidó, not Mr. Maduro. Citgo is a profitable company and can pay the interest due on its own debt, but it would struggle to shoulder PDVSA’s debt.

Members of a committee of Venezuela bondholders, led by Greylock Capital Management and T. Rowe Price, have proposed to the administration and Mr. Guaidó that they allow the creditors to lend more money to forestall a default. The investors have not defined the form of that loan, but it presumably would add to PDVSA’s debts.

“No one wants to see them unnecessarily default,” said Ajata Mediratta, Greylock’s managing partner, president and portfolio manager. “A number of creditors have explicitly offered to assist the Guaidó administration in making this payment. But the quid pro quo is that creditors would like the Guaidó administration to work with creditors to nudge the U.S. Treasury to amend the trading sanctions.”

A Treasury Department spokesman declined to comment on Thursday.

The opposition-controlled National Assembly declared this week that the 2020 bonds were not valid because the assembly had not approved them. Bondholders say that argument might not hold up in an American court.

Exacerbating Citgo’s jeopardy, the United States Court of Appeals for the Third Circuit in Philadelphia ruled last month that Crystallex International, a Canadian gold-mining company, could lay claim to shares of Citgo. In 2011, the Venezuelan government, then led by Hugo Chávez, nationalized Crystallex’s share of a mining project. Mr. Maduro’s government paid the company $500 million toward a $1.4 billion debt last year, but neglected to pay other installments agreed upon in arbitration.

Other potential claimants include ConocoPhillips, which has been awarded over $10 billion by international tribunals for its Venezuelan projects expropriated by Mr. Chávez, who died in 2013. That Houston-based oil company has so far not sought to acquire Citgo, attempting to be paid directly through an arbitration with PDVSA and the Venezuelan government.

Financial analysts expect that holders of the PDVSA bonds would be first in line to receive shares in Citgo, since the $3.4 billion in 2020 bonds are secured by 50.1 percent of Citgo shares. Ashmore Group, a London investment firm, has the largest bond holding, and other creditors could initiate legal proceedings to auction off Citgo to the highest bidder to recoup the money they are owed.