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ECONOMY | 11-10-2023 22:31

Argentina appeals US$16-billion payout order for YPF expropriation

State appeals US$16-billion judgement in US lawsuit over firm’s controversial 2012 expropriation.

Argentina on Wednesday lodged an appeal against a New York court ruling ordering it to pay nearly US$16.1 billion to two companies that were not compensated in the 2012 nationalisation of oil giant YPF.

Then-president Cristina Fernández de Kirchner expropriated 51 percent of the shares of YPF, which was partially controlled by Spanish giant Repsol.

Two years later, Repsol was compensated with US$5 billion to settle litigation.

Not so for minority shareholders such as Petersen Energía or Eton Park Capital, which together held 25.4 percent of YPF's capital. In 2015, they filed a lawsuit alleging the country had not submitted a takeover bid as mandated by law. 

Last month, US District Judge Loretta Preska (US Court of Appeals for the Second Circuit) ordered Argentina, mired in economic and political crisis, to compensate Petersen Energía and Eton Park Capital.

Preska ruled on the amount after a three-day trial in Manhattan in July on the proper formula for calculating the amount of damages Argentina owed shareholders. In September, she ordered Argentina to pay US$8.4 billion in damages and US$7.6 billion in interest to shareholders.

The plaintiffs then asked Preska to order Argentina to deposit a guarantee equivalent to the full amount of the ruling with the court, given it believes the state intends not to pay.

The expropriation case was brought in US courts because YPF shares trade on the New York Stock Exchange. The protracted litigation included an unsuccessful appeal to the US Supreme Court by Argentina in 2019.

The case was sponsored by litigation fund Burford Capital, which acquired the right to prosecute the claims for 15 million euros (US$16.6 million) in 2015. The fund's share is around US$6.2 billion, which would give Burford a return of more than 37,000 percent on its initial investment.

Argentina argues that such a payout would cause "irreparable damage to the [Argentine] population, which suffers from high inflation caused by an unprecedented drought," according to the appeal filing as quoted by the Télam state news agency.

Furthermore, "the country does not have access to the capital market to issue a bond and deposit a guarantee," it said.

In the 1990s, when Argentina privatised its oil firm, it included in its bylaws a regulation stating that if the country decided to nationalise the entity in the future it must make a tender offer for all Class D shares at a predetermined price.

But when Argentina eventually nationalised YPF in 2012, then-deputy economy minister Axel Kicillof said the tender offer requirement was a "bear trap" and that only "fools" would expect Argentina and YPF to comply, according to a court filing.



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