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NY. A group of creditors sues an Argentine province for a debt of US $ 500 million

The Governor of Entre Ríos, Gustavo Bordet Source: Archive

On August 8, the province of Entre Ríos should have paid US $ 21.87 million for an interest coupon on a debt of US $ 500 million, issued between 2017 and 2018, under foreign legislation. The government of Gustavo Bordet it did not make the disbursement and reported that “discussions on the debt sustainability analysis of the province” were beginning. But the agreement was not reached and today the province received a lawsuit against it in the court of the Southern District of New York, the same one where the trial for the nationalization of YPF is carried out.

The person driving the lawsuit is an old acquaintance of Argentina: Dennis Hranitzky, the lawyer who helped the fund NML – Elliott Capital Management in its fight against the country and even confiscated the Libertad Frigate in Ghana. Now, from the law firm Quinn Emanuel Urquhart & Sullivan, represents a group of creditors that sued Entre Ríos.

Hranitzky was also a relevant actor in the restructuring carried out by the Ministry of Economy last year, as he represented the holders of the 2005 and 2010 bonds, known as the Ad Hoc group of exchange bond holders, who together had more than $ 4 billion of capital to be restructured.

In this case, according to the lawsuit filed, the province owes the group of creditors represented by Hranitzky a total amount of almost US $ 12 million “plus interest on any unpaid past due coupon payment, pre-judgment interest and all other amounts that are payable under the terms of the Contract and the Notes and each and every one of the amounts due between now and the time they are pass judgment on this action “.

According to data from the Aerarium consultancy, which closely followed the negotiation, the institutional investors committee, whose members claim to jointly own more than 45% of the Entre Ríos securities, had reported that “the province formulated a proposal for the restructuring of the titles that the committee considered inadequate for not reflecting the true capacity of payment of the province, or have a design that would address their short-term needs. “

At that time, and in the absence of an official response, the Creditors Committee had threatened to carry out other measures to collect the debt, for which he hired the firm White & Case LLP to provide him with legal advice, which finally happened.

The restructuring of sub-national debts is a pending issue for most of the provinces. Only Mendoza (US $ 590 million) and Chubut (US $ 650 million) were able to finalize their negotiations and postpone payments. Córdoba (US $ 1,685 million), Neuquén (US $ 694 million), Salta (US $ 383 million) and Tierra del Fuego (US $ 170 million) continue to trade while meeting maturities, while Buenos Aires (US $ 7,148 million), Chaco (US $ 250 million), La Rioja (US $ 300 million) and Río Negro (US $ 300 million) are negotiating in default, according to a survey by the consulting firm Aerarium.

Córdoba reported today that it was improving its offer, by enabling an increase in the interest rate offered, and by proposing a cash payment of 30% of the accrued interest for those who accept the offer.

The modifications also include a new payment schedule for the securities to be restructured in order to achieve the necessary acceptance in the collective action clauses (CAC) and, thus, exchange that debt for new securities under the agreed conditions, according to the government. of Juan Schiaretti.

“The province of Córdoba announced its decision to improve the terms and conditions of the debt swap, through a proposal that increases the payment of interest to creditors and improves other conditions,” the province said in a statement sent to the Buenos Aires Stock Exchange.

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