Just two days before the result of the second round of elections, and with the media ratification of President-elect Javier Milei’s intention to privatize YPF, the US judge of the Southern District of New York, Loretta Preska, granted powers to Argentina in the case for the nationalization of the oil company. While awaiting a final ruling for the ruling that forces the Republic to pay 16.1 billion dollars to the vulture fund Burford Capital for the way in which the company was nationalized in 2012, he agreed to waive the payment of a deposit for the total amount of the trial, which was impossible for the country to pay. In return, he suggested that provides other assets (such as shareholding and debts receivable) before December 5as a guarantee to avoid embargoes.
Among the assets that the vultures requested as an alternative to the $16.1 billion bail bond, is the 26 percent of the shareholding that the State has National (the remaining 25 is property of the provinces) in the company and a credit receivable from the government of Paraguay in the construction of the Yacyretá binational energy generating dam. Also They tried with the Sustainability Guarantee Fund which the judge omitted because Argentine law requires that pension funds “may only be used to pay the benefits of the Argentine Integrated Pension System.”
A long way
Almostwho succeeds Thomas Griesa in the New York courts, had put number in September still process that has already been disputed for eight years among the vulture background Burford Capital and the Argentine Republic, whose defense and appeals are in the hands of the Treasury Attorney General, headed by Carlos Zannini.
The judge had determined that Argentina must pay the vulture fund Burford $16.1 billion (between interest and capital) due to the way in which the oil company was nationalized without making a Public Acquisition Offer, as it appeared in the statute defined in 1993 during the privatization promoted during the presidency of Carlos Menem. The country undertook that any subsequent acquisition operation of a portion of the Argentine oil company would require an offer to be made for all the shares on the market.
The Republic warned that it will use the first of the two appeal instances it has, so the trial does not yet have a final ruling. Meanwhile, he asked the judge to exempt her from the bail of a bond of 16.1 billion dollars to be executed in the event that the sentence is final that the plaintiffs demand, stating that the Republic could not make the payment, since it would impose irreversible damage to a population that already suffers from “high inflation.”
This Tuesday and in an eleven-page letter, Preska granted Argentina the obligation to pay the $16.1 billion bail. Instead, he suggested that You have until December 5 to deposit alternative assets to protect to some extent the interests of the plaintiffs.
That they ask for
In the brief, Preska names three assets that the plaintiffs proposed as collateral for the debt. First of all, the vulture fund targeted the Sustainability Guarantee Fund, created in 2007 after the nationalization of the pension system to have a countercyclical fund that can be used to sustain the payment of pensions in the face of possible economic and social crises. However, Judge Preska warned that “Argentine law 26,425 requires that pension funds may only be used to pay the benefits of the Argentine Integrated Pension System, and the Court considers that this proposal is not viable.”
However, they did listen to two other proposals for YPF assets. On the one hand, the 26 percent shareholding of the national state, which the plaintiffs value at 2,350 and 3,050 million dollars and, on the other hand, an amount of 4,000 million dollars in future credits that Paraguay has agreed to pay to Argentina in the passage of 30 years for amounts owed for the construction of the Yacyretá binational energy generating dam.
Giving 26 percent of YPF shares as collateral would mean, in practice, a privatization of the company. However, the law creating YPF Nacional says that the shareholding cannot be modified without two-thirds of Congress, so the vultures will find in Argentine legislation one more block to advance on its assets.
Vulture alert
The trial that reaches its final stretch began when in In 2015, the vulture fund Burford Capital bought the firms Eton Park and Petersen Energíawho were minority shareholders of YPF at the time of the renationalization, the right to litigate against the Argentine Republic for the way in which the oil company was nationalized without making a Public Acquisition Offer (OPA).
As it appeared in the statute defined in 1993 during the privatization driven in the presidency of Carlos Menemthe country undertook that any acquisition operation of a portion of the Argentine oil company would require a purchase offer to be made for all the shares on the market. In 2012 the Republic acquired 51 percent of the shares of the majority Repsol and did not carry out a takeover bid to the rest of the shareholders, a fact for which they claimed to have been harmed.
What is distinctive about this case is the plaintiff’s characteristic: the Burford vulture fund is not a specialist in financial investments (much less in the energy or oil world), but rather His specialty is mega-trials for million-dollar lawsuits., in general, to bankrupt companies or bankrupt companies that have undefined previous claims and that need cash to face their closure or bankruptcy. Burford was incorporated on September 11, 2009 in the tax haven of Guernsey, an English Channel island.
For this fund, the YPF case is not just another one in its business portfolio. When it began trading as a public company on the New York Stock Exchange on October 19, 2020, it had to submit statutory reports and balance sheets to shareholders. There it was stated that this trial is the main asset in your portfolio. Unlike the traditional scavenger action, Burford Capital did not buy bonds in default to later claim payment of one hundred percent plus interest and penalties, but instead took over the rights of a bankrupt YPF investor to litigate the expropriation of the majority of the company’s shares. It also does not have the financial backing that more traditional vulture funds have.
