Monday, June 24, 2024

ECONOMY | 15-09-2023 15:22

Expropriation of YPF: Argentina sits down to negotiate and offers US$15.1 billion

Argentina's government presents first proposal and denies accusations it refused to participate in the drafting of the ruling, as reported by the plaintiffs. Now everything is in the hands of New York Judge Loretta Preska.

After the tough ruling by Judge Loretta Preska in favor of the Burford Capital fund, Argentina started negotiating to attempt to mitigate the financial damage from the expropriation of oil company YPF. On Friday, the country offered to pay US$15.1 billion.

That figure is a billion short of the US$16.1 billion that was part of the recent judgment by the court official in the Southern District of New York, who ordered the maximum expected amount.

The country had to appear to draft the ruling next to the plaintiffs, so that it would not be final with a refusal to negotiate; if they had, they assumed the risk of the previously assigned minimum becoming even higher.

Even though the face of the plaintiffs is the Burford firm, the ruling also includes Eton Park, a minority shareholder.

Thus, they had accused the country of refusing to talk to them. This, as revealed by Sebastián Maril, CEO of Latam Advisor, was denied by Argentina on Friday.

“On Wednesday, the plaintiffs submitted a pleading with their number, US$16.1 billion. In that document they claimed Argentina was refusing to join. This was denied by representatives of the country, who said that they wanted to take part in the drafting of the ruling and counter-offered with US$15.1 billion,” he told Perfil.

Starting now, with all the cards on the table, it will be up to Loretta Preska to see what the next step is in the litigation. 

This new offer by Argentina contrasts with the arguments prior to the judgment raised by the Government, where they assured that the compensation ought to be approximately US$5 billion.

The latter stems from the differences with its counterparty as to the date when the takeover bid of YPF should have been launched and its punitive interest rate.

As for the calendar, the analyst stated that “the plaintiffs assured it should be April 16, 2012 whereas Argentina, was asking for May 7 that year”. The latter coincided with the day when Cristina Fernández de Kirchner’s administration submitted the bill to Congress to expropriate 51 percent of YPF shares.

While, in relation to the punitive interest rate, he said “the country asked for zero and the plaintiffs wanted eight percent."

This difference in days determined the compensation the country should provide. And the New York judge ruled “in favour of the plaintiffs on both points, and thus, applying the formula, the total number is US$16.096 billion”, he said.

This comes all in a context of extreme fragility and more than negative net reserves in the Central Bank, which, as of September 12, amounted to US$27.767 billion.

Thus, and in case the number to be paid as a result of the litigation were defined according to the Argentine Government’s request, that debt would now account for 54.3 percent of all international reserves recorded and disclosed by the entity.

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