Burford-Backed Investors, Argentina Stalemate on Payout at Trial

Argentina and investors at a three-day trial defended proposed payout totals that leave a $6.5 billion gap in what they say shareholders are owed for the nationalization of gas and oil company YPF SA.

The trial ended Friday, with each side doing its best to persuade Judge Loretta A. Preska how high or low the payout should be. Shareholders assess they could be owed as much as $16 billion and Argentina estimates the amount is as much as $9.5 billion. The investors’ case is funded by Burford Capital, which stands to gain a substantial return.

After closing arguments, Judge Preska gave no indication of when she would rule. Argentina’s attorney, Robert Giuffra, said the republic will appeal any award the judge decides.

The near-decade’s worth of litigation over the 2012 nationalization of YPF is certain to result in some number of billions of dollars awarded to shareholders. It could be the largest judgment ever awarded in the Southern District of New York.

The trial was to assess damages that should be awarded to shareholders who claim Argentina did not offer a payout as it was required to do after the republic nationalized YPF in 2012. In March, Judge Preska granted summary judgment to investors, ruling that Argentina is liable for losses.

At issue during the trial was the date that Argentina re-took control of the shares of YPF and how much pre-judgment interest should be applied. Argentina and investors are three weeks apart on the date.

Investors also argue that 6% to 8% pre-judgment interest should be applied, as they say is standard in Argentina commercial court. Argentina argues that 0% should be applied.

The majority of the trial was spent discussing the way each side’s economists calculated the price-to-earnings ratio, which is a key component in the damages calculation stipulated in YPF’s bylaws. The two methods contribute to a difference over damages.

Burford invested 15 million euro ($16.6 million) into the case and said in an April statement that the award could be worth more than $7.5 billion. Burford shares jumped more than 30% after Preska’s ruling in March before trading was suspended.