Infobae Plan presented to solve the debt with the holdouts

Infobae

Plan presented to solve the debt with the holdouts

Is pushed by attorney Eugenio Bruno.  He seeks not only to settle with the funds but that the country also receive fresh money from investors for energy.  There is another proposal from an international investment fund.

 

Tuesday, November 05, 2013

 

In the market there are two plans in play to solve the lawsuit with the holdouts.  One is from the investment fund Gramercy, which is seeking to have the bondholders contribute money from their pockets to pay the debt of the vulture funds (US$1.5 billion).  This option would be an agreement between private parties without even the consent yet of the Economy Ministry.

 

The second plan that is coming out runs from the account of Eugenio Bruno, attorney from the Garrido firm.  The expert prepared the so-called “Program of Integral Settlement of the Debt in Default.”

 

The general lines of it consist of the following points:

 

-For the principal due in 2001, there is acknowledgement of principal with a 25% haircut.  Bonds for the said 75% with an annual interest rate of 4% and coming with an expiration term based on the demands of the holdouts and Argentina’s capacity to pay.

 

-Owed interest since 2001 to the present: acknowledgement of a rate of 4% annual.  Delivery of a 5 year bond and payment of a part in cash when the operation closes.

 

There would also be a component of fresh money that would come into the country through this operation.  According to the plan, for the majority of the holdouts, the big holders (more than US$50,000 nominal) they would have to subscribe 10% of what they would receive to an Energy Bond.  Plus reinvestment of interest in Energy Bonds for an amount of US$500 million.  

 

For their part, the swap bondholders will have the option of reinvestment of future payments up to US$1 billion in Energy Bonds.  There is not money from the swap bondholders to the holdouts.  They would be asked to move up the expiration of the RUFO clause (which does not allow an improvement on the offer of 2005 and 2010) from December 31, 2014, to April 30, 2014.  It would require an acceptance rate of 85%.

 

It is estimated that the minimum percentage of acceptance of the holdouts would be 90 to 95%.  If the percentage is greater than 95%, there would be a cash payment at closing and if it is 100%, the payment amount in cash would be larger.

 

"Argentina would solve the whole issue once and for all and forget about judicial threats.  It would get fresh, new money for energy.  It would improve relations with investors in the U.S., Europe and the international community and unblock investments for energy and infrastructure,” Bruno says.

 

"It also settles an old issue with retail bondholders that bought before the default and they are in their thousands, particularly in Italy, and have very significant amounts and have rights.  It’s a slow path with obstacles, but we are cautiously optimistic now that the options (default) are very bad for the three parties (holdouts, swap bondholders and national state),” the attorney from the Garrido firm said.