(Bloomberg) – Argentina In 2012, state oil company YPF SA was ordered to pay at least $8.4 billion in damages and $7.6 billion in interest in a US lawsuit that led to its repatriation. Increasingly dangerous.
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U.S. District Judge Loretta Preska in Manhattan on Friday set the formula for the award to entities backed by litigation fund Burford Capital. The ruling initially stated that the Argentine government had taken control of YPF since April 2012, but stated that the 8% interest rate should run from May 2023. The second date was subsequently adjusted to May 2012, doubling the prize pool to $16 billion. .
The Argentine government has appealed the award, calling it an “unprecedented error”. A challenge could delay payments for months or even years, but could complicate the country’s efforts to return to international debt markets.
“This is not a case before a U.S. court regarding the rights of former shareholders of an Argentine company under an Argentine company statute,” the government said.
In the year Burford, who won the right to pursue claims for $16.6 million in 2015, said he will collect the lion’s share of the award. Shares in the company jumped as much as 28 percent in U.S. trading to hit their highest level since August 2019.
“I am excited to see this extraordinary win and the value it can create for our shareholders once we complete the litigation process and collect from Argentina,” Burford CEO Christopher Bogart said in a statement. “The deal is a major milestone for Burford and we continue to see momentum across our portfolio and continued demand for capital and our services.”
The verdict gives some vindication to the company’s business model. Major litigation funders have touted their ability to strategically invest in lawsuits they believe will yield exorbitant recoveries, but many have struggled to identify such opportunities.
Argentina devalued its peso on August 14 to support the currency after a low against the US dollar. With the ongoing presidential election, the country’s financially troubled economy is a major concern. With dollar reserves at their lowest level since 2006, it’s unclear how the next government will be able to pay bondholders big maturities next year. Argentina owes tens of billions of dollars to the International Monetary Fund.
Read more: Out of options and money, Argentina finally pressed the panic button
But it was the actions of the Argentine government a decade earlier that led to the Presca verdict. She ruled in March that the administration of current president Cristina Fernández de Kirchner had failed to properly compensate shareholders when it took over the country’s largest oil company, YPF. That left only damages to be measured in a three-day trial in July.
Argentina asked the judge to limit the award to less than $5 billion, while the plaintiffs requested $16 billion.
Argentina in the year It took over 51% of YPF in 2012, accusing its majority shareholder, Spanish company Repsol SA, of not investing enough resources in oil production. At the time, Argentina In 2001, it was fighting claims by investors led by Paul Singer Elliott Management over $95 billion in sovereign debt, and the YPF raid further contributed to the country’s reputation as an unattractive destination for foreign investment.
Preska confirmed that the company’s charter, which was privatized in the 1990s, required any future renationalisation to be accompanied by a tender offer at a predetermined price. In the year
Read more: Argentina blamed for multi-billion dollar lawsuit over oil raids
After finding Argentina liable in March, Presca ordered a trial to determine damages based on the date the nation took control of YPF and the amount of the advance interest.
Argentina vigorously fought the Burford-backed lawsuit, including an unsuccessful attempt to have the US Supreme Court dismiss the case.
The case is Petersen Energia Inversora SAU. v. REPUBLIC OF ARGENTINA, 15-cv-02739, U.S. District Court, Southern District of New York (Manhattan).
–Assistance from Scott Squires.
(Updates with a statement from Burford’s CEO.)
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