Argentine President Javier Milei announced on Tuesday that his government is considering issuing a perpetual bond to pay Burford Capital $16,000 million (more than 14,400 million euros) in compensation sought by the US justice system in connection with the Nationalization of Argentina was imposed on the local oil company YPF. In economic matters, Milei has also stated that the current agreement that the South American country maintains with the IMF has failed because the previous Peronist government did not respect the basic objectives agreed, pointing out that austerity measures are the key to restoring the agreed program will be. Fondo sees us as heroes,” he commented.
The new Argentine president proposed that the government would issue the bond without a fixed maturity while also imposing on Argentinians the “Kicillof tax,” named after Buenos Aires Governor Axel Kicillof, who was economy minister when the energy company was nationalized. “Here we have a problem because we don't have the money, we don't have 16 billion, that's the reality, but we have the will to pay,” he said on Tuesday evening in a new television interview, trying to attract the sympathy of international markets and investors to win.
After several years of litigation in New York, a judge awarded Burford Capital $16 billion in damages in a lawsuit against Argentina that alleged the country made material errors in the legal aspects of the 2012 nationalization of YPF committed. This fund owns the assets of the Petersen Group, which acquired 14.9% of the oil company in 2007, until then in the hands of Repsol. Burford thereby acquired the litigation rights of two companies registered in Spain, Petersen Energía Inversora and Petersen Energía, as well as the Eton Park fund, which controlled 2.9% of YPF.
U.S. federal judge Loretta Preska said Argentina must pay by January 10 or Burford has the right to request the seizure of Argentine assets. “If the issue is as critical as the Republic presents it, one would think that the new government would deal with it immediately,” Preska said last week, rejecting Argentina's request for a new payment extension.
The plaintiffs argued that the Argentine State should have made a public takeover offer for the remaining shares that did not belong to the Spanish company Repsol, the owner of 51% of the expropriated YPF, as stipulated in the oil company's statutes. In her ruling, the judge supported the Fund's position by considering that Argentina took control on April 16 (and not May 7, the date of publication of the expropriation law). In addition, it has been established that the applicable interest rate is 8% (and not 0% as provided for by Argentina) and that the price-earnings ratio, an essential part of the formula that determines the value that the country will pay for the shares must be taken into account must be the highest and most advantageous for the plaintiffs.
Critical questions
“What we are going to do is an idea that we are working on is the creation of the Kicillof tax, that is, paying this fund with a perpetual bonus,” explained Milei, then turned to political criticism, making similar ones terms used to those he used as a talk show host in television debates. “They will introduce a new tax called the 'Kicillof tax' to pay for the misdeeds of an amateur, because although he is a doctor from UBA, he does not seem to have studied these subjects. “He is someone who is not entirely clear about how finance works, let alone the markets,” commented the head of state, the governor of Buenos Aires province.
The case adds to Argentina's long list of financial problems. With central bank reserves in the red, the country must next month start paying creditors who agreed to restructure $65 billion of bonds in 2020. It also needs to renegotiate a $44 billion deal with the fund. International currency.
Milei announced that Argentina could potentially receive $15 billion in funding from the IMF in January. The local Ministry of Economic Affairs had previously ruled out this. In addition, Milei issued a decree last week instructing all state-owned companies to prepare for privatization, although no timetable was set for the sale of the energy company.ç
The biggest political announcement of the interview came at the end, when the Argentine president stated that he would call on Argentines to vote on his government if parliament repealed the decree.
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