There is already a concrete number. New York judge Loretta Preska issued a ruling in the lawsuit against Argentina over the nationalization of YPF in 2012, when Repsol was the majority shareholder. The government of Cristina Fernández de Kirchner, with Axel Kicillof as economic manager, expropriated 51% of the company’s capital, the majority of the Spanish oil company’s stake, but did not fulfill its obligation to make an offer to the remaining shareholders. After a lawsuit from the other shareholders, the judge has now decided that Argentina must pay 16,099 million dollars (around 15,080 million euros) between capital and interest.
The figure corresponds to the estimate from last week, when the judge agreed with the plaintiffs on the valuation method and interest calculation. Now the exact number and their distribution are known in the final sentence, which is unsigned and against which Argentina wants to appeal.
Preska has ruled that Argentina must pay $14,385 million to Petersen Energía, divided into $7,533 million in damages and $6,852 million in interest, calculated at a simple interest rate of 8%. In addition, the company must pay an additional $1,714 million to Eton Capital: $898 million in damages and $816 million in interest. Furthermore, if Argentina fails to pay, interest will continue to be generated at 5.42% per annum, in this case compound interest (i.e. unpaid interest in turn generates interest). Burford Capital, which funded much of the litigation in return for retaining most of the compensation, had said after last week’s ruling that it represented “a complete victory against Argentina.”
In a ruling issued a few months ago, Preska agreed with shareholders, saying that Argentina owed them compensation and that YPF bore no responsibility for the expropriation. In her March decision, the judge had already ruled in favor of the plaintiffs, considering that the State had not offered compensation to all shareholders when it decided to sell the 51% of YPF shares held by Repsol decided to nationalize. According to the YPF Articles of Association, if someone buys more than 15% of the company, they should offer everyone the same.
Burford Capital is a fund that specializes in purchasing the litigation rights of bankrupt companies to file lawsuits for large sums of money, a method similar to that used by debt vulture funds. The fund sued the Argentine state after acquiring the rights to Petersen Energía Inversora and Petersen Energía, two Spanish companies belonging to Argentina’s Eskenazy family group, which owned 25% of YPF’s shares.
These companies are bankrupt because they went into debt to buy their stake in YPF, which was devalued by the expropriation. Repsol loaned them 1.5 billion to buy shares. The oil company pledged the YPF securities it had pledged in the event of non-payment and could now recover part of the outstanding debt through bankruptcy proceedings. The fund is entitled to around 70% of the compensation, with the rest going to the previously insolvent companies and Eton, which filed the lawsuit in 2015.
Argentina is unable to make the payment because its central bank reserves are at minimum levels and access to credit markets is very limited due to its long history of defaults.
Follow all information Business And Business on Facebook and Twitteror in our weekly newsletter
The five-day agenda
The most important business quotes of the day, with the keys and context to understand their significance.
RECEIVE IT IN YOUR EMAIL