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U.S. Supreme Court rejects Argentina on YPF shareholder suit


YPF SA refinery, Argentina.

- Decision paves way for lawsuit after 2012 nationalization
- Burford firm sells another 10% of the case for $100 million

By Greg Stohr and Jonathan Gilbert / Bloomberg

Petroleumworld 06 26 2019

The U.S. Supreme Court rejected appeals from Argentina and its state-run oil producer YPF SA , clearing the way for a shareholder lawsuit to go forward over the 2012 nationalization of the company.

The rebuff is a victory for Burford Capital Ltd. , which is financing Petersen Energia Inversora S.A.U.'s suit. Petersen, which held a 25% stake in YPF at the time of the nationalization, says that company breached a contractual promise in its bylaws to make a tender offer to shareholders.

Argentina and YPF argued unsuccessfully to the Supreme Court that the suit, filed in federal court in Manhattan, was barred by a U.S. sovereign immunity law. The Trump administration in May urged the Supreme Court not to take up the appeals.

The high court action opens Argentina to the possibility of having to pay even more money to investors. The nation was locked in a debt battle for years with hedge funds led by billionaire Paul Singer, though President Mauricio Macri paid up three years ago in order to be able to tap global bond markets.

Argentina still has avenues to delay a trial, according to Sebastian Maril , a debt analyst at consultancy Fin.Guru who follows the case. The litigation is detrimental to how investors view legal protections in Argentina, which in turn weighs negatively on country risk, he said.

Burford issued a statement on Monday saying it sold another 10% of its entitlement in the Petersen case for $100 million, implying a $1 billion value for the original investment. The firm said it has kept 61% of its original stake and doesn't intend to hold less than 50.1%.

Argentina's lawyers on Monday filed a motion asking U.S. District Judge Loretta Preska to consider new arguments related to the jurisdiction of the case before it progresses to a pre-trial procedure known as discovery, according to the Solicitor General's Office.

Argentina could end up owing $1.82 billion if it loses the suit and another one related to the YPF nationalization, Fin.Guru's Maril said.

Argentina took control of YPF by expropriating 51% of its shares from Spain's Repsol YPF SA, which at the time was the majority shareholder. Petersen says that caused the value of its shares to drop precipitously.

The cases are YPF v. Petersen, 18-575, and Argentine Republic v. Petersen, 18-581.

Story by Greg Stohr and Jonathan Gilbert from Bloomberg. 06 25 2019


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