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ECONOMY | 22-04-2024 20:29

Burford Capital seeks Argentina’s YPF stake to pay US$16-billion award

Burford Capital asks US judge to grant it controlling 51% stake in YPF as part of its effort to collect on a US$16-billion court judegment.

Burford Capital asked a US judge to give it control of Argentine state oil company YPF SA as part of its effort to collect on a US$16-billion court judgement against the Latin American country.

In a motion filed Monday in New York, Burford asked US District Judge Loretta Preska to grant it the 51 percent stake in YPF currently held by Argentina’s federal and provincial governments. Preska is also the judge who in September issued the judgement that Burford is now trying to collect.

Burford had sought to keep its filings secret, saying that news of its collection effort could impede efforts to resolve the issue. It would also attract attention in Argentina “because the motion calls into question the republic’s continued majority ownership and control over YPF,” Burford said in a court filing. Argentina opposed.

Preska declined to seal the filings. Neither Burford nor the Argentine government responded to emails seeking comment. 

Even if Preska orders that Argentina’s YPF shares be handed to Burford, it’s unclear how the litigation funding firm would enforce that decision. Argentina has in the past fought foreign judgments, but those disputes have also harmed the country’s ability to raise overseas capital. 

Burford is asking the judge to order Argentina to transfer its class D shares in YPF through a custodial account at Bank of New York Mellon. According to the filing, the shares are not covered by a US law that shields certain assets of foreign governments, and Argentina has used them to back debt securities sold to US investors.

But Burford acknowledged it has “a long road ahead” to collect the full judgement, “given Argentina’s many years of structuring its assets to avoid enforcement.” It said a court order requiring Argentina to hand over the shares could be the only way to force the nation to engage in negotiations over the judgement.

A 51 percent stake in YPF is currently worth about US$4 billion, roughly a quarter of the judgement.

The case in which Burford is seeking to collect stems from the Argentine government’s seizure of YPF in 2012. Preska found that re-nationalisation violated YPF by-laws requiring the company to make a tender offer to all shareholders.

Argentina is appealing the ruling but failed to post security for the judgment during the appeal. That led Preska to rule in January that the judgement — the biggest ever ordered by the federal court in Manhattan — was subject to immediate collection, before the appeal is decided.

Burford, which paid US$16.6 million to acquire the interests of two groups that held YPF shares at the time, stands to make some US$6.2 billion if the full judgement is paid.

The case is Argentine Republic v. Petersen Energia Inversora SAU, 23-7370, 2nd US Circuit Court of Appeals (Manhattan).

by Bob Van Voris & Jonathan Gilbert, Bloomberg

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