Argentina found liable in multi-billion-dollar suit over YPF oil takeover

A US judge ruled against Argentina and in favour of entities funded by Burford Capital on claims the South American nation failed to pay fair value to shareholders when it nationalised the gas and oil company YPF SA in 2012.

US District Judge Loretta Preska Friday ruled in favour of the Spanish companies Petersen Energia Inversora SAU and Petersen Energía SAU, which sued YPF and Argentina in 2015. While she granted a request by YPF to dismiss the claims, she determined that the Argentine government itself was liable, with damages to be resolved at trial.

The ruling increases the likelihood of a settlement over a case that has its roots in former president Cristina Fernández de Kirchner’s decision to nationalise YPF, the country’s largest and most emblematic energy company. At that time, Petersen, controlled by the Eskenazi family, owned 25 percent of YPF. Fernández de Kirchner is currently back in government as vice-president and remains a key political figure in the country.

While the judge didn’t set a figure for the compensation, Argentina would have to pay US$7 billion to US$19.8 billion, newspaper La Nación said on Friday, citing estimates provided by the funds. The country has been trying to rein in expenses to reduce its fiscal deficit under a US$44-billion deal with the International Monetary Fund.

Burford’s New York-listed shares soared as much as 59 percent, an intra-day record, after the news. The London-listed shares were up 30 percent prior to being suspended. YPF’s US-listed shares dropped 1.8 percent.

“This look like a very substantial victory for Burford,” said Julian Roberts, an analyst at Jefferies, in a note. A settlement is possible, and the judge appears to mostly agree with Burford’s view on how to calculate damages, said Roberts, who advises buying the fund’s shares.

A lawyer representing Argentina in the case didn’t immediately respond to a request for comment. An Argentina government spokesman in Buenos Aires also didn’t respond to a request for comment.