The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Long piece in the Argentine media about Burford’s hiring of a negotiator for the YPF case.
https://www.infobae.com/economia/2024/05/22/juicio-por-ypf-burford-quiere-cobrar-los-usd-16000-millones-y-contrato-a-un-tiburon-de-wall-street-argentino-para-negociar-con-el-estado/
Burford has hired former Argentine Wall Street bankers to lead the efforts to negotiate a settlement with the government, the local media reported late on Friday. This does not mean that Milei will open the door soon. Is just a first step towards an agreement. Argentina needs to name its negotiator.
The wheels are moving.
Another:
Busy month for Argentina in the international courts:
1. May 16: Argentina will file response to YPF judgment creditors' turnover motion.
2. May 17: Argentina and Bainbridge Fund will file a joint letter updating Judge Preska about ongoing discovery of sovereign assets.
3. May 21: Hearing in England's Court of Appeals related to the 2023 judgment against the Republic in the GDP-Linked Warrants litigation.
4. May 28: Pre-motion conference in Judge Preska's court to present arguments for and against compelling Argentina to produce documents concerning the Republic’s current relationships with certain SOEs.
5. May 30: YPF judgment creditors will file reply to Argentina's response to turnover motion.
The Petersen companies are currently being administered by the Spanish Liquidator named by the Madrid Commercial Court N.3 in early 2014.
Late in 2014, the Liquidator filed the Liquidating Plant which was approved by the judge. The plan included launching a search of a firm that would finance and administer the case that would eventually be filed against the Republic. Several firms submitted bids. Prospect Investments (Burford won). The price paid? We all know it. EUR 15m plus 30% of the economic award.
Whatever money Burford negotiates with Argentina, the Madrid Commercial Court and the Liquidator, will distribute the funds to the Petersen companies' creditors. Repsol and Anchorage Fund are among these creditors.
Very little money, if any, will be left for the Eskenazis. This is critical. If the Argentine Congress realizes (and it will!) that the Eskenazis will be benefiting from the award, then approval will take time and will be very complex. If on the other hand, no money is left for them, then Congress may go ahead and approve the award "faster".
Hope this helps.
YPF SEC filing.
https://www.sec.gov/Archives/edgar/data/904851/000119312524106041/d818720d6k.htm
Hearing before Judge Preska rules? Appeal afterwards?
Getting smaller but more efficient?
https://latinfinance.com/daily-brief/2024/04/17/ypf-asset-sale-stirs-buyer-interest/
One last point on the Petersen companies' award: I am not aware, since it is private information, of the details of the original agreement between Burford and Petersen. The Spanish companies have creditors waiting to get paid once this proceeding is over. For instance, we know that Repsol holds a EUR 1.3 billion credit with the Petersens. So, it could be the case that Burford is contractually obligated to settle this case as a whole and cannot request Judge Preska to separate de award pending an investigation by the Argentine Congress.
Don't underestimate politics in Argentina. YPF is of a national interest and has always been a topic of corruption and mismanagement. Congress will not sign a check to judgment creditors until they fully know who will benefit. Offering to freeze Petersens' award is a way out, but, again, I am fully unaware if Burford can even propose this.
I anticipate the agreement unfolding in two stages: first, the establishment of the economic framework, and then its approval by Congress. Believe it or not, the initial phase appears relatively straightforward. Congress is the problem.
Regarding timing, I predict that the government and Burford may finalize the agreement's structure within this year, but congressional involvement will likely await the appellate court's decision.
Navigating a clear path forward is challenging, given the various potential outcomes. However, I remain convinced that Burford will need to propose freezing the 30% economic entitlement of the Petersen companies in an ESCROW account until Argentina completes an investigation into its ownership, that has not even started or proposed. Congress will most likely want to know if politicians are behind Petersen.
Lastly, keep an eye out for updates. Expect news to emerge shortly.
1) Nice catch! Article 29 (now referred as Article 55 in the new revised Decree) will be sent to Congress in April. For those who don't know about this Article, it gives the Executive Branch full powers to negotiate and settle "controversies" bypassing Congress. In any case, regardless of this Article, if I was advising Burford, judgment creditors should demand the Milei administration to put any settlement agreement in front of both chambers of Congress for approval. This will validate the settlement and avoid any future default with a new administration.
2) It should be but for now, it is not. The market doesn't seem to be bothered about the likelihood of YPF being brought back to the case and neither does YPF's management (at least publicly).
3) Honestly, I don't think this case will reach SCOTUS again. If it does, it will be because of the remote possibility of a setback in the appellate court by plaintiffs. I don't see Argentina once again filing for certiorari after not wining a single ruling in this case since April 2015. The longer Argentina waits to negotiate with Burford, the more interests it will incur and the less likelihood of securing a deep discount from the original award. Remember, with an appeal ruling in Burford's favor, I would not show much flexibility to negotiate a 40% - 50% discount.
Hope this helps.