Burford-Backed Investors Seeking $16 Billion in Gas Deal Payout

After the first day of a trial, Argentina and investors are $6.5 billion apart on what the shareholders should be paid over the nationalization of gas and oil company YPF SA.

Shareholders assess they are owed $16 billion and Argentina estimates the payout at $9.5 billion in what could be the biggest judgment ever in the Southern District of New York. A sizeable award would be a victory for Burford Capital Ltd., a litigation funder that financed investors’ lawsuit against Argentina that won a favorable ruling in March.

Both sides are presenting arguments as to how low, or high, the award should be in a three-day trial before Judge Loretta A. Preska that began Wednesday.

The case goes back to 2012 when Argentina nationalized YPF. Petersen Energia Inversora, S.A.U. and other investors filed suit in 2015, claiming the country did not offer a payout to shareholders as was required in a nationalization. The drawn-out litigation included an unsuccessful appeal to the US Supreme Court by Argentina in 2019.

In March, Preska granted summary judgment to the investors, ruling that Argentina is liable for losses suffered by the nationalization of the oil company. Burford shares jumped more than 30% before trading was suspended.

A key issue in arguments Wednesday was the date the country acquired YPF’s shares. Argentina and investors are three weeks apart on the date, and the difference could add up to substantial amounts in damages based on who prevails in the argument.

Three Weeks

Shareholders argue that the earlier date, April 16, 2012, when the intervention decree was issued, is when Argentina took over the majority of YPF’s shares. Argentina argues that May 7, 2012, when the law went into effect, is the date of the takeover.

The two parties also differ on the price-to-earnings, or P/E, ratio that should be used to calculate damages. Argentina’s counsel presented data showing YPF had a lower P/E than what the investors’ expert said the company had.

Burford put 15 million euro ($16.6 million) into funding the suits. Burford said in an April statement that the award could be worth more than $7.5 billion. Argentina takes issue with the role of Burford, which it says will receive the majority of the award.

Argentina in the 1990s when it privatized its oil company included language in its bylaws that if the country decided to nationalize the entity in the future it must give a tender offer to all Class D shares at a predetermined price.

But when Argentina nationalized YPF in 2012, Deputy Economy Minister Axel Kicillof, the vice-intervenor of YPF, said the tender offer requirement was a “bear trap” and that only “fools” would expect Argentina and YPF to honor it, according to a court filing.