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Thank you Renegade for the link and thank you Seb the screenshot!
Not a lawyer but this to me sums it up … I would welcome any counter arguments to the following
Argentina did its best, before and during trial,
to ignore the key Bylaws language, which requires a tender offer if Argentina exercises control of
the shares "directly or indirectly, by any means or instrument." >………….. Argentina ignores that the Bylaws' protections were written capaciously and
functionally, not narrowly and formally, because investors insisted on a robust precommitment
before investing in the state-owned oil company of a nation with a history of economic nationalism.
Expropriation Law, which became effective on May 7, 2012. (Tr. 130:5-10; 118:7-10.) In any
event, the Republic's Answer expressly stated that it was "Law 26,741" that "authorized the
commencement of the expropriation process and permitted" the temporary occupation of Repsol's
PF shares until the expropriation process was completed in May 2014 (ECF No. 98 at 22). See
H. Daya Int'l, Co. v. Do Denim LLC, 2022 WL 974382, at *11 (S.D.N.Y. Mar. 31, 2022)
("Judicial admissions must be clear and unambiguous admissions] of fact.") (citation omitted).
II.
THE COURT SHOULD REJECT PLAINTIFFS FLAWED APPLICATION OF THE TENDER OFFER FORMULA.
While the Court should find that the Republic did not exercise control over Repsol's YPF
shares before May 7, 2012, the economic importance of this issue is magnified by Plaintiffs'
misapplication of the tender offer formula. Plaintiffs contend that they are entitled to $3.4 billion
more in damages if April 16, 2012, as opposed to May 7, 2012, is the trigger date. This massive difference is based upon Plaintiffs' incorrect application of the Bylaws' tender offer formula.
As demonstrated at trial, Plaintiffs' damages expert, Prof. Fischel, ignored available
earnings data in computing tender offer prices. Those prices are set as of a "notice date" 40
business days before the tender offer date. (SJ Op. at 55.) Based on the Court's summary judgment
ruling, under the Bylaws* "Formula D," an acquirer must calculate the tender offer price using the
highest daily price/earnings ("P/E") ratio at any point in the two-year period prior to the notice
There is no merit to Plaintiffs' theory that the April 16, 2012 drop in YPF's share price meant that the Republic controlled YPF's shares as of that date. As Prof. Harris explained, markets react to news, which here included the proposed YPF Expropriation Bill. (Tr. 378:3-379:3.) Likewise, Plaintiffs' assertion that Argentina's experts "never opined in any of their prior reports that there was any significant difference between April 16th and [May] 7" is false. (Tr. 19:14-18.) They did just that. (E.g. DX-29 99 43-44.) And Fischel's "precommitment" theory (Tr. 178:11-179:20) (that the Bylaws were to intended to "discourage" future government action), aside from lacking foundation (Tr. 375:2-23 (Harris)), just begs the question of when the Republic first controlled the shares.
The distinction between the Intervenor's powers under the Decree (those of the YPF Board,
initially for 30 days, and then for another 30 days following the May 11, 2012 extension (DX-22t))
and the powers that the Argentine Congress granted in the YPF Expropriation Law reflect the
settled distinction under Argentine law between management and shareholder rights. As Prof.
Manóvil explained (without contradiction), the Board enjoys the power to "administrate
..meaning to manage the business and the affairs of the company." (Tr. 262:9-13.) By contrast,
the "rights of shareholders" include "voting the shares at shareholders' meetings, selling the shares
[and] receiving dividends." (Tr. 260:15-21. The Republic "by no means" acquired control of
Repsol's YPF shares before May 7, 2012; it could not and did not exercise "any of (those] rights."
(Tr. 258:2-4; 261:21-23.) As Prof. Manóvil also testified, under settled Argentine law, neither (i)
the power to administer a company as an intervenor, nor (ji) the power to prevent the exercise of
a shareholder's right, is equivalent to control of shares. (Tr. 260:6-261:7;263:13-24; 286:8-287:2.)
Prof. Bianchi did not disagree. He conceded that, between April 16 and May 7, 2012, the Republic did not "sell any YPF shares," "vote any dividends," "elect any directors," or "remove any directors." (Tr. 109:24-110:11; see Tr. 261:12-23 (Manóvil).) Prof. Bianchi also could not explain away his prior testimony submitted when relying on a later date advanced Plaintiffs' successful effort to overcome the Republic's sovereign immunity'_ stating unequivocally that it
was Article 13 of the YPF Expropriation Law, effective on May 7, 2012, that "triggered the
obligation to carry out a tender offer." (Tr. 113:16-114:18; 115:14-116:5; 117:25-119:11; PX-81
at 6-11.) As Prof. Bianchi conceded, it was only upon the temporary occupation (May 7, 2012)
that "the Argentine state replaced Repsol in the exercise of those rights of those shares"-which,
I Plaintiffs' current theory-that the intervention triggered the tender offer runs directly counter to their basis for FSIA jurisdiction, that a "post-expropriation tender offer" would not conflict with Argentina's sovereignty. Petersen v. Argentine Republic, 895 F.3d 194, 208-209 (2d. Cir. 2018).
THE REPUBLIC DID NOT ACQUIRE OR EXERCISE CONTROL OF REPSOL'S YPF SHARES BEFORE MAY 7, 2012.
The Court has already held that the Republic's "acquisition of control of [Repsol's YPF1
shares, not its intervention in or acquisition of control of YPF." triggered the tender offer
obligation. (SJ Op. at 56 (emphasis added).) The evidence at trial conclusively established that
the Republic did not acquire or exercise control of Repsol's YPF shares before May 7, 2012.
A.
The April 16, 2012 Intervention Decree and Proposed YPF Expropriation Bill
Did Not Give the Republic Any Control Over Repsol's YPF Shares.
On April 16, 2012, the President of Argentina issued the Intervention Decree, which
granted the Intervenor the "powers conferred by YPF S.A. Bylaws to the Board of Directors and/or
the President of the company." (DX-4t.) Prof. Bianchi agreed that "by its terms, the decree did
not confer any powers on the Intervenor over Repsol's YPF shares." (Tr. 109:15-18.) Instead, as
Prof. Rafael Manóvil explained, the purpose of the intervention was to "ensure the continuity of
the company," and to "preserve[] its assets" by giving the Intervenor the management of YPF.
(Tr. 259:6-9; see Tr. 108:5-10 (Bianchi).) The Intervenor's managerial powers over YPF as a
whole did not give him "control" over Repsol's YPF shares. (DX-4t (Intervention Decree) at 6;
Tr. 258:2-15; 260:6-14; 263:16-24; 266:25-267:3 (Manóvil).)
Also on April 16, the Argentine Executive Branch proposed a bill to declare "fifty-one
percent (51%) of the equity of YPF . .. subject to expropriation," and to allow it temporarily to
"exercise all of the rights that the shares to be expropriated confer." (DX-3t at 40.) But, as Prof.
Bianchi conceded, this bill had "no legal force," was "debated" in Congress, and the government
"could not have begun the process of expropriating Repsol's YPF shares" until it passed. (Tr.
105:8-12; 106:22-107:3. The Argentine Congress considered other measures including buying
Petersen's YPF stake and could have rejected the bill or passed an alternative. (DX-80t; see Tr.
105:13-16; 106:16-20.)
Argentina Papers
Plaintiffs had two-and-a-half days to try to justify their jaw-dropping request for a $16.05
billion judgment, which would be the largest ever entered in this District's 234-year history. But
Plaintiffs did not carry their burden to prove that (i) the Republic's tender offer obligation was
triggered prior to May 7, 2012; and (in) Argentine law and Section 7 of the YPF Bylaws support
their demand for $8.43 billion in damages and $7.62 billion in prejudgment interest.
At trial, Plaintiffs' lone Argentine law expert, Prof. Alberto Bianchi, tried to dodge his
earlier sworn statements that the May 7, 2012 YPF Expropriation Law not the April 16, 2012
Intervention Decree-granted the Republic rights over Repsol's YPF shares and thereby
"triggered" the Republic's tender offer obligation. Plaintiffs also offered a smattering of other
theories for the April 16 trigger date not supported by the evidence that they cite, including that
the Republic supposedly admitted to controlling Repsol's YPF shares as of April 16 in its 2014
Settlement Agreement with Repsol.
Plaintiffs also could not justify the decision by their damages expert, Prof. Daniel Fischel,
to ignore YPF's Q4-2009 earnings data to inflate their damages by $3 billion. The testimony of
the Republic's expert, Prof. Jeffrey Harris as well as evidence of Bloomberg's standard
methodology demonstrated that the "financial community" would not cherry-pick earnings data
as Prof. Fischel did. And, as to prejudgment interest, Plaintiffs elected to shield both of their
private law experts- who had opined on prejudgment interest pre-trial-from cross-examination.
Based on the evidence at the damages trial, accepting its summary judgment ruling, which the
Republic respectfully disagrees with, the Court should award Plaintiffs no more than $4.92 billion, which is an enormous sum by any measure.
From being deprived of their contractual due for over a decade. Argentina's appeal to the
equities like its alleged hardship from having to pay what it owes is beyond irrelevant,
especially when Argentina has made no commitment to actually pay the judgment, and when its
claims of poverty in this Court are contradicted by its own officials' simultaneous boast that YPF's
massive oil and gas reserves enable it to pay the judgment "with one annual EBITDA" and still
have "150 years of gas reserves," making the expropriation "a good decision," and "we would do
it again." Rhodes Decl. Ex. A (July 28, 2023 statement by YPF Chairman Pablo Gerardo
Gonzalez). Vice-Intervenor Axel Kicillof echoed the point, noting that "the numbers are big"
because the Vaca Muerta resources are valuable and allow Argentina to pay. Rhodes Decl. Ex. B.
Finally, this Court should reject Argentina's last-minute effort to throw in an entirely new
issue by challenging the price/income ratios Prof. Fischel used to calculate damages. Argentina
never raised that purported issue in its expert reports, its summary judgment briefing, or even in
its pretrial memorandum, making the issue thoroughly forfeited and well outside the scope of this
trial. And there is a reason Argentina's learned counsel did not raise this purported $3.4 billion
issue earlier: Argentina's criticism of Prof. Fischel's calculations is plainly incorrect, as the ratios
that Prof. Fischel used were the only price/income ratios that were actually used by investors and
computed by the financial community for "reporting purposes" on a daily basis "during" the two-
year look-back period. PX-3 at 7 (Bylaws § 7(f)(v)(D)). The fact that a single database later also
provides revised numbers does not change that reality and in any event, the Bylaws entitle
investors to the highest relevant price/income ratio. This Court should find that Argentina
breached its Bylaws obligations on April 16, 2012, award prejudgment interest at 8%, reject
Argentina's remaining arguments as forfeited and meritless, and enter judgment for Plaintiffs.
Traded company from the majority shareholder without exercising even indirect control over that
majority shareholder's shares. That explains why Argentina did its best, before and during trial,
to ignore the key Bylaws language, which requires a tender offer if Argentina exercises control of
the shares "directly or indirectly, by any means or instrument." PX-3 at 22 (Bylaws § 28(A).
Instead of confronting that broad functional language, Argentina reverts to formalities, arguing that
it could not vote the shares before May 7 and did not actually vote them until the rescheduled
shareholders' meeting on June 4. The Bylaws' text, however, turns on when Argentina directly or
indirectly "exercise[d] the control of" the shares, not when it formally exercised the voting rights
belonging to the shares. Id. As with its earlier unsuccessful focus on formal ownership, see ECF
No. 437, at 27-28, Argentina ignores that the Bylaws' protections were written capaciously and
functionally, not narrowly and formally, because investors insisted on a robust precommitment
before investing in the state-owned oil company of a nation with a history of economic nationalism.
Second, this Court should award prejudgment interest at 8%. The Court held at summary
judgment that "the commercial rate applied by Argentine courts" governs, id. at 63, and both the
case law and trial make clear that rate is between 6% and 8%. Argentina's own expert, Dr.
Manóvil, confirmed that apart from one outlier panel, every modern decision from the Argentine
court for general commercial cases has been in that range or above. And Prof. Fischel's testimony
was undisputed that even the high end of the range 8% simple interest -would undercompensate
Plaintiffs for being forced to serve as Argentina's involuntary creditors for over a decade.
Again, Argentina has no real response. Instead, it ignores the parameters of this Court's
summary judgment decision and asks this Court to award zero prejudgment interest because the
underlying liability is substantial. But this Court rejected similar no- or low interest arguments at
summary judgment, and the judgment's size only underscores the magnitude of Plaintiffs' harm
PRELIMINARY STATEMENT
This Court's detailed summary judgment opinion has already resolved the vast majority of
this case, establishing that Argentina breached its obligations under the Bylaws "no later than May
7,2012." ECF No. 437, at 28. The Court's meticulous opinion left only two issues to be resolved:
(1) whether Argentina breached earlier by taking direct or indirect "control of [Repsol's] shares"
via the Intervention Decree; (2) what "precise rate" of prejudgment interest to apply based on "the commercial rate applied by Argentine courts," which is "between 6% and 8%." Id. at 56, 62-63.
The evidence relevant to those two issues is straightforward and largely undisputed. First,
Argentina acquired and exercised control of Repsol's shares when it issued the Intervention Decree
on April 16, 2012. Through the Decree, Argentina displaced the YPF Board and Chairman that
Repsol had elected, and installed the Intervenor and Vice-Intervenor in their place depriving
Repsol of the central right of a majority shareholder to select the Board. That seizure of control
over Repsol's shares was reflected in the markets, where the share price plunged by 40% after the
Decree, while barely budging three weeks later. It was confirmed by Argentina's contemporaneous
statements recognizing the change in control, PX-15 at 22, and its contemporaneous actions, as Argentina canceled the shareholders' meeting that Repsol had called for April 25 making it
impossible for Repsol to vote its shares or approve the capital distribution on the agenda (which
as a result never occurred). And it was reconfirmed by the unambiguous determination of
Argentina's own federal appraisal agency of what Argentina took from Repsol-51% of YPF's
shares and when it dispossessed Repsol of those shares April 16, 2012.
As the trial showed, Argentina has no real response. The material facts are undisputed.
Argentina concedes that it took control of YPF as a company through the Intervention Decree; it
argues only that it somehow avoided taking even indirect control of the shares in doing so. But
Argentina has never explained (and cannot explain) how it could take total control of a publicly
Bloomberg - Capita Beats Expectations!
Dividend to be reinstated in 2024 (modest)
Cyberattack - We now expect net exceptional costs associated with the cyber incident of £20m to £25m reflecting the complexity of the forensic analysis of exfiltrated data. These costs comprise specialist professional fees, recovery and remediation costs, and investment to reinforce Capita’s cyber security environment, offset by anticipated insurance receipts.
…..
The recent trial gathering in the heart of New York's legal arena perhaps symbolizes the culmination of a decade-long struggle over YPF's nationalization. As the legal proceedings unfold, Argentina stands at a crossroads, with the potential for a fresh approach to resolving this contentious issue. Regardless of the final ruling, this chapter in Argentina's history will undoubtedly serve as a case study for law schools worldwide, illustrating the intricate interplay of national sovereignty, legal intricacies, and international diplomacy.
Seb I look forward to catching up the £20+ dinner early in 2024… reckon we should move it to Miami 😎
The $16 Billion Gathering: A Decade in the Making
Over a decade ago, the Argentina embarked on a bold move, exercising its sovereign right to nationalize YPF, the country's largest oil and gas company. This decision, involving the expropriation of 51% of YPF's shares held by Spain's Repsol, set off a series of events that led to a significant legal and diplomatic battle spanning two continents.
While the legal battles resulting from the expropriation raged on, Argentina faced mounting challenges. In 2014, the government reached an agreement with Repsol, paying $5 billion for the expropriated shares, seemingly putting an end to the disputes. However, the story took an unexpected turn when two Spanish companies, Petersen Energia Inversora and Petersen Energia (later joined by Eton Park Capital) filed a multibillion-dollar lawsuit in a New York court. Their claim? Argentina had neglected the remaining 49% of YPF shares, leading to a complex legal entanglement.
Recently, I had the privilege of attending a three-day trial presided over by Judge Loretta Preska in New York. This trial marked a significant milestone, bringing together for the first time all the stakeholders who have been entwined in this legal drama for over eight years. In a dramatic courtroom setting, arguments for and against the multibillion-dollar award were passionately presented by esteemed legal minds.
As the trial unfolded, it became clear that this gathering might be the turning point in the prolonged YPF expropriation saga. While the ruling's outcome on the economic award remains pending (Argentina has already been found liable for the damages caused by the expropriation), the trial prompted reflections on the country's next steps. With upcoming presidential elections, there is a sense that the new leadership will seek to resolve this issue once and for all. Argentina's track record in previous legal battles in this very same case (Court of Appeals and Supreme Court), raises questions about the feasibility of a late-game victory. While Argentina may continue to explore legal avenues, the mounting costs and previous legal setbacks suggest a need for strategic reconsideration. The incoming government should consider assembling a team of legal and financial experts to assess the potential benefits of negotiating a settlement with the plaintiffs. This approach could offer a more pragmatic resolution to a complex and protracted conflict.
… I don’t think it will be back again EVER…
Not a Chartist myself but someone with more knowledge than me pointed out a month or so ago that a rare pattern is forming. After any SP doubles and a short minimal retrace of c10-15% happens and then the SP high is reached again in a short period of time then the next push higher comes very quickly and very strong …