Gramercy Funds Management LLC is forming an “ad hoc” group and steering committee with other investors in Argentina’s restructured bonds to formalize a plan aimed at reaching a settlement with holders of defaulted debt.
The group is in the final stages of hiring legal and financial advisers as they seek to persuade holders of the defaulted securities to drop their lawsuits against Argentina, Gramercy Chief Investment Officer Robert Koenigsberger said in an e-mailed statement, without providing details on the number of investors involved.
A U.S. Appeals Court said on Aug. 23 that Argentina can’t make payments on bonds it issued in restructurings in 2005 and 2010 unless it pays a group of holdouts led by hedge fund Elliott Management Corp. in full. The effect of the ruling is being delayed until the Supreme Courtdecides whether to hear the case. The legal battle, stemming from Argentina’s 2001 default, has spurred concern the government may opt to cease payments on its overseas bonds rather than settle with holdouts that President Cristina Fernandez de Kirchner has dubbed “vultures.”
“In an attempt to create a solution for a decade-old standoff, exchange bondholders have held several meetings over the last couple of weeks,” Koenigsberger said. The participating investors “expect to provide more details regarding our plan, which we believe benefits all bondholders, in the coming weeks.”
Officials at Elliott didn’t immediately return a voice mail and e-mail seeking comment on Koenigsberger’s statement.
Elliott said in a Nov. 7 statement that it’s only willing to negotiate a settlement with the Argentine government and has no interest in holding talks with fellow bondholders. Elliott said at the time that it hadn’t been approached by Gramercy.
A preliminary proposal by Gramercy called for investors to cede a portion of their coupon payments to the holdouts, five bondholders approached by the Greenwich, Connecticut-based fund said last month.
In order to change the terms of the notes to earmark coupon payments to holdouts, Gramercy must garner approval from holders of 75 percent of each series of bonds, according to the bond prospectus.