FILE PHOTO: A sign of Citgo Petroleum is seen at its headquarters in Houston, Texas, U.S., January 11, 2024. REUTERS/Go Nakamura/File Photo

By Marianna Parraga

HOUSTON (Reuters) -Blue Water Acquisition Corp said on Friday that it submitted an offer valued at $10 billion for the parent of Venezuela-owned refiner Citgo Petroleum, which includes a $3.2 billion settlement proposal to holders of a defaulted Venezuelan bond.

A U.S. court-organized bidding round for PDV Holding to pay up to 15 creditors closed last month after improved bids were received by an officer overseeing the auction, but the court said it would allow unsolicited bids after the deadline.

Blue Water Acquisition Corp is a special purpose acquisition company formed to identify and complete businesses with high-potential companies across diverse sectors, especially healthcare.

The company is offering cash or stock distributions to creditors, and a settlement for holders of the PDVSA 2020 bond to be paid either in cash or in shares of the publicly listed entity to own Citgo.

"Our $10 billion proposal would provide creditors with both immediate recovery and the opportunity to participate in the future of Citgo as a U.S. public company," Joseph Hernandez, Blue Water's chief executive, said in a release.

Court officer Robert Pincus last month changed his recommended winner to Elliott Investment Management's affiliate Amber Energy. In July, he had selected a subsidiary of miner Gold Reserve as frontrunner, which is now trying to disqualify the Elliott affiliate's bid.

The Delaware court is expected to hold a procedural conference next week ahead of a final sale hearing in mid-September that would allow Judge Leonard Stark to make a decision on the auction's winner.

As of Friday afternoon, the court had not released any information about Blue Water's bid on public dockets.

(Reporting by Marianna Parraga; Editing by Nathan Crooks)