Cars drive past a gas station owned by Argentine state energy company YPF in Buenos Aires, Argentina, February 10, 2021. Portal/Matias Baglietto acquires license rights
NEW YORK, Sept 8 (Portal) – Argentina suffered a major legal defeat on Friday as a U.S. judge ruled that the country must pay around $16 billion to minority shareholders of YPF (YPFD.BA) who are out of the government’s acquisition of a majority stake in the oil and gas company in 2012.
U.S. District Judge Loretta Preska in Manhattan ruled in favor of Burford Capital (BURF.L), which financed the litigation brought by shareholders Petersen Energia Inversora and Eton Park Capital Management LP and was entitled to 70% and 75% of theirs, respectively, according to court documents damage.
The payout includes approximately $8.4 billion in damages sought by Burford, as well as approximately $7.6 billion in provisional interest at 8% from May 3, 2012, approximately two and a half weeks after the seizure.
Argentina, which is in financial distress and lacks foreign exchange reserves, among other things, announced an immediate objection.
Burford called the decision a “complete victory.” Its shares closed up 22% in London and up 14.7% in New York.
Analysts at Jefferies estimate that Burford could be entitled to $6.3 billion from the ruling.
Argentina had sought to avoid paying more than $4.92 billion, saying a large payout would place “further strain on a sovereign nation with a population facing urgent economic challenges and strain Argentina’s budget for many essential services.” far exceed.”
Preska had previously ruled that Argentina had breached its obligations to shareholders by seizing the 51% YPF stake held by Repsol (REP.MC), excluding the remaining shares, including those held by Petersen and Eton Park to offer shares.
Axel Kicillof, now governor of Buenos Aires province, said in 2012 when he led the nationalization of the YPF that only “idiots” would think the state was stupid enough to play by Repsol’s rules and offer to buy 100% of its shares .
Argentine government spokeswoman Gabriela Cerruti posted on X, formerly Twitter, that the country would immediately appeal Preska’s decision.
“We will continue to defend energy sovereignty and our state-owned company YPF against vulture funds,” Cerruti said.
CASH CRUNCH
Argentina is short of U.S. dollars and its net foreign reserves were in the red last month before $7.5 billion was paid out by the International Monetary Fund.
Last month it also relied on a $775 million loan from Qatar, a $1 billion loan from a regional development bank and $1.7 billion from a swap deal with China to make a half-yearly payment to the IMF.
To sustain the IMF program and keep money flowing, Argentina pledged to add reserves, which the IMF estimates could increase by about $8 billion between August and December.
The shareholders’ $8.43 billion damages estimate was based on Argentina’s seizure of YPF shares on April 16, 2012, which they said transferred “control.”
Argentina responded that the trigger date was May 7, 2012, when the law allowed it to exercise the rights attached to the seized shares, and the interest rate should be zero or a maximum of 3%.
But the judge found it “significant” that Argentine officials considered April 16 as the seizure date, stripping Repsol of its power to operate YPF and distribute capital.
She also pointed out that YPF’s share price fell more than 40% shortly after the seizure, reflecting the reality that Argentina was “exercising control over Repsol shares in every meaningful way” at the time.
The judge also described the 8% interest rate as “reasonable and fair” and “within the range established by Argentine courts.”
Reporting by Nate Raymond in Boston and Jonathan Stempel in New York; Additional reporting by Adam Jourdan in Buenos Aires and Rodrigo Campos in New York; Edited by Mark Porter, Will Dunham and Richard Chang
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