The letter to Bank of New York Mellon goes on to threaten the bank with litigation for complying
with the Court’s orders, castigates the Court and the Special Master, and directs the bank to
distribute to the Exchange Bondholders a “Legal Notice” that was enclosed with the letter. That
Notice, which was also published on August 7th on two full pages of the N ew York Times, Wall
Street Journal and Washington Post, among other things, urges Exchange Bondholders to
undertake efforts against the Trustee as a way to evade the pari passu injunction, again in clear
violation o f the Amended February 23, 2012 Order. A copy o f the letter to Bank o f New York
Mellon is enclosed as Exhibit B.
LEGAL NOTICE
TO THE HOLDERS OF ARGENTINE DEBT ADHERING TO THE 2005-2010 EXCHANGES
In the past week, there have been some incorrect, misleading and contradictory press reports
about the current status of the obligations undertaken by the Argentine Republic in the 2005
and 2010 Prospectuses and in the Trust Indenture dated 2 June 2005 as amended on 30 April
2010. This situation has arisen due to the erroneous and improper interpretations of the District
Court for the Southern District of New York in the case of NML Capital Ltd., et al, v. Republic of
Argentina-, the press release published by the Special Master appointed in such case, Mr. Daniel
Pollack, on 30 July 2014; and the legal notice published by the Bank of New York Mellon (BNY
Mellon) on 31 July 2014.
By means of this legal notice, the Argentine Republic complies with its obligation to ensure the
Holders of Argentine Debt Adhering to the 2005 and 2010 Sovereign Debt Exchanges (“Exchange
Bondholders") their right to avail themselves of the precise, complete and correct information
on the current status of the performance of the Republic's obligations under the Trust Indenture,
and the legal rights and remedies available to them, in light of the fact that the funds duly
deposited by the Argentine Republic in the account of the Trustee [BNY Mellon] in the Central
Bank of the Argentine Republic are exclusively owned the Exchange Bondholders.
Firstly, and as stated in the Legal Notices dated 27 June 2014 and 7 July 2014, the Argentine
Republic has paid in due time and manner the amounts of interest due on the New Securities
issued within the framework of the 2005 - 2010 Exchanges (the "Exchange Bonds").
Consequently, no Event o f Default has arisen under the Trust Indenture or the Exchange
Bonds.
In this regard, the terms of the Trust Indenture are clear and precise:
Pursuant to Section 4.1 (i), a Non-Payment event of default arises only when "the Republic fails
to pay any principal. . . or fails to pay any interest on the Debt Securities." Under Section 3.5 of
the Trust Indenture, the Republic effects "payment of principal of and interest (including the
Additional Amounts) on the Debt Securities" by "pay[ing] or caus[ing] to be paid to an account of
the Trustee [BNY Mellon]. .. an amount which ... shall be sufficient to pay the aggregate amount
of interest (including the Additional Amounts) or principal or both . . . becoming due in respect
of such Debt Securities on such Payment Date." Until such funds are applied to the Exchange
Bondholders' accounts, "such amounts shall be held in trust by the Trustee for the exclusive
benefit of the Holders entitled thereto in accordance with their respective interests and
the Republic shall have no interest whatsoever in such amounts."
There is no doubt whatsoever that the Republic of Argentina has duly paid the amounts due on
the Exchange Bonds in the manner required bv the Trust Indenture - by paying the funds to “an
account of the Trustee." In other words, the Republic has paid. The issue of the distribution of
Case 1:08-cv-06978-TPG Document 635 Filed 08/08/14 Page 18 of 21
"2014 - Ano de Homenaje al Almirante Guillermo Brown, en el Bicentenario del Combate Naval de Montevideo"
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the funds is now a separate issue between the Trustee and the Bondholders, which has arisen
only after the Republic has already performed its obligations under the Trust Indenture
and the Exchange Bonds.
Secondly, the Republic of Argentina acknowledges the Bondholders' absolute and unconditional
right to collect the funds deposited by Republic of Argentina in the Trust Account of the Trustee
(BNY Mellon], such funds being exclusively owned by the Bondholders. For this reason, on
July 3, 2014 a letter was sent to BNY Mellon, in its capacity as Trustee, to request that BNY
Mellon comply with its obligations - under Sections 3.1, 4.5, and 4.9 of the Trust Indenture - to
distribute the funds that the Republic had deposited to the Exchange Bondholders.1
However, as a result of ongoing legal proceedings before the District Court for the Southern
District of New York in the case of NML Capital Ltd., et al, v. Republic o f Argentina, which involves
a small number of holdout creditors, some of the payments duly made by the Republic of
Argentina have not yet reached the accounts of the Bondholders who adhered to the 2005 and
2010 Exchanges.
This risk factor had already been informed by the Republic of Argentina in the Prospectuses of
its Sovereign Debt 2005 and 2010 Exchange Offers, where it was specifically explained that:
"Argentina's payments in connection with the Offer (including any payments due from Argentina
upon settlement of the Offer) or to holders o f New Securities may be attached, enjoined or
otherwise challenged by holders that declined to participate in the Offer or by other creditors o f
Argentina. In recent years, holdouts have used litigation against Sovereign States (for instance,
against Peru and Nicaragua) to attach or interrupt payments made by these sovereign debtors to,
among others, bondholders who have agreed to a debt restructuring and accepted new securities in
an exchange offer. Argentina has been subjected to suits to collect on amounts due on defaulted
bonds in Germany, the United States and Italy. Some o f these actions have resulted in judgments
against Argentina. There can be no assurance that a holdout creditor will not be able to
interfere, through an attachment of assets, injunction, temporary restraining order or
otherwise, with payments made in connection with the Offer (including any payments due
from Argentina upon settlement o f the Offer).11
This delay in processing the payment distribution of funds has been vigorously protested both
by Argentina and by a number of the bondholders who are the intended recipients of the
payment though, as of the time of this writing, the funds remain blocked at the account of the
trustee in the Republic of Argentina.
Thirdly, certain statements made by the United States District Judge and the Special Master
appointed in the case of NML Capital Ltd., et al, v. Republic o f Argentina about an event of default
are wrong, improper and false, and beyond their authority. The referred to lawsuit involves a
dispute between certain Vulture Funds and the Republic of Argentina under the 1994 Fiscal
"20¡4 - Año de Homenaje al Almirante Guillermo Brown, en e l Bicentenario del Combate Naval de Montevideo"
Case 1:08-cv-06978-TPG Document 635 Filed 08/08/14 Page 19 of 21
Agency Agreement - a wholly different security than the Exchange Bonds issued under the Trust
Indenture.
The District Court for the Southern District of New York lacks jurisdiction over the 2005
and 2010 Exchange Bonds, and the Exchange Bondholders and the BNY Mellon are not
parties to the case of NML Capital Ltd., et a!, v. Republic of Argentina. It is beyond the
authority of the United States District Judge to rule on whether an Event of Default has
arisen under the Trust Indenture or the Trust Instrument in a different lawsuit involving
different parties and a different agreement.
Similarly, the job of the Special Master is to conduct confidential discussions with and between
the parties - not to issue press releases speculating about the consequences of an agreement or
lack of agreement. In any event, the Special Master's comments lack any authority whatsoever,
given that he has no power to interpret the Trust Indenture, which at no time was submitted to
his interpretation.
Fourthly, the determination of "default" of the International Swaps and Derivatives Association
("ISDA"] for purposes of certain credit default swap instruments relating to the Republic of
Argentina’s sovereign debt has no bearing whatsoever on the Bondholders’ rights under the
Trust Indenture or the Exchange Bonds. The Trust Indenture sets forth several grounds for an
Event of Default, but a determination by ISDA is not one of the grounds for an Event of
Default to arise under the Trust Indenture. While ISDA’s decision may affect those who hold
credit default swaps, it does not create any rights or obligations under the terms of the Trust
Indenture or the Exchange Bonds.
In fact, complaints have been filed -both with the Securities and Exchange Commission of the
Republic of Argentina (Comisión Nacional de Valores, “CNV" as per its acronym in Spanish] and
the US Securities and Exchange Commission ("SEC") - concerning potential actions carried out
by the firm Elliot Management Corporation and its controlled and /o r related companies, on the
basis of the presumed existence of conflicts of interest based on the fact that such Corporation:
(i) takes part, in its capacity as "Voting Non-dealer” in the ISDA Credit Derivatives Determination
Committee; (ii) pursues aggressive litigation strategies against the Republic of Argentina in the
referred to case of NML Capital Ltd., et a l v. Republic o f Argentina, impairing the distribution of
the payments made in due time and manner, in connection with the amounts due on the
Exchange Bonds, which have substantially increased in value as a result of the ISDA "default"
determination.
Fifth, the Republic of Argentina -as it has demonstrated since 2005-has the resources and the
will to comply with the obligations undertaken in the 2005 and 2010 Exchange Offers.
In addition, the Republic of Argentina will continue to demand that the Trustee comply with its
obligations under the Trust Indenture and to urge the United States courts to remove the
impediments that are currently interfering with the orderly distribution of the payments made
by the Republic.
Case 1:08-cv-06978-TPG Document 635 Filed 08/08/14 Page 20 of 21
Finally, may we remind the Bondholders that there are numerous rights and remedies available
to them under the Trust Indenture in the event the Trustee breaches its obligations, in particular
its obligation to transfer the payments made by the Republic of Argentina to the Bondholders. By
way of example, Section 5.9.c of the Trust Indenture provides that the Holders of a Majority in
aggregate principal amount Outstanding of the Debt Securities of any Series may at any time
remove the Trustee and appoint a successor trustee. Section 7.1 provides for the modifications
the Agreement may be subject to.'1'
The foregoing is without prejudice to the possibility of the Exchange Bondholders actively
pursuing any other actions as may be proper to enforce their rights -given that the funds
exclusively owned by such Bondholders are being unduly withdrawn- including the filing of
appeals from such orders of the District Court for the Southern District of New York as such
Exchange Bondholders may deem to be detrimental to their interests, or the commencement of
new actions as they may deem fit and proper. Notwithstanding this, the Republic of Argentina
will continue to pursue courses of action to defend and preserve its rights and those of the
Exchange Bondholders.
This notice shall not be construed or understood as legal advice or guidance of the Republic of
Argentina.
The Ministry of Economy and Public Finance shall keep you regularly updated as this situation
unfolds.
Ministry of Economy and Public Finances.
1 I he Trust Indenture (dated 2 June 2005 as amended on 30 April 2010) provides in relevant part:
Section 3.1, Payment of Principal and Interest.
The Republic covenants and agrees that it will duly and punctually pay or cause to be paid the principal o f and interest (including Additional Amounts) on each
o f the Debt Securities and any other payments to be made by the Republic under the Debt Securities and this Indenture to the Trustee, at the place o r places, at
the respective times and in the manner provided in the Debt Securities and thus indenture.
All monies (save for its own account) paid to the T rustee under the Debt Securities and this indenture shall be held by it in trust for itself and the Holders o f Debt
Securities in accordance with their respective interests to be applied by the T rustee to payments due under the Debt Securities and this Indenture at the time and
in the manner provided for in the Debt Securities and this Indenture .
Section 4.5. A p p lic a tio n of Proceeds.
Any monies collected by the Trustee pursuant to this Article shall be applied in the following order at the date or dates fixed by the Trustee and. in case o f the
distribution o f such monies on account o f principal or interest, upon presentation o f the Debt Securities o f the Series in respect o f which money has been
collected and stamping (or otherwise noting) thereon the payment, or issuing Debt Securities in reduced principal amounts in exchange for the presented Debt
Securities if only partially paid, or upon surrender thereof if fully paid;
'2014 - Año de Homenaje al Almirante Guillermo Brown, en el B icentemno del Combate Noval de Montevideo
"2014 - Año de Homenaje al Almirante Guillermo Brown, en el Bicentenario del Combate Naval de Montevideo"
Case 1:08-cv-06978-TPG Document 635 Filed 08/08/14 Page 21 of 21
< Je *y< ''t/H a /jix a s
FIRST: To the payment o f all amounts due to the Trustee o r any agent o r Appointee thereof under o r in connection with this Indenture or the Debt Securities o f
any Series including (without limitation) amounts due under Section 5.6;
SECOND: In case the principal o f the Debt Securities o f such Series shall not have become and be then due and payable. U> the payment o f overdue interest in
default on such Series o f Debt Securities in the order o f the maturity o f the installments o f such interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments o f interest at the same rate as the rate o f interest specified in such Debt Securities, such payments to be
made ratably to the Persons entitled thereto, without discrimination o r preference:
THIRD: In case the principal o f the Debt Securities o f such Series shall have become and shall be then due and payable, to (he payment o f the whole amount then
owing and unpaid upon all Debt Securities o f such Series for principal and interest at the rate o f interest specified in such Debt Securities; and in case such
monies shall be insufficient to pay in full the whole amount so due and unpaid upon the Debt Securities o f such Series, then to the payment o f such principal and
interest, without preference or priority o f principal over interest, or o f interest over principal, or o f any installment o f interest over any other installment o f
interest, or o f any Debt Security o f such Series over any other Debt Securities o f the same Series, ratably to the aggregate o f such principal and accrued and
unpaid interest.
Section 4.9 . Unconditional Right o f Holders to Receive Principal a n d In te re s t.
Notwithstanding Section 4,8. each Holder o f Debt Securities shall have the right, which is absolute and unconditional, to receive payment o f the principal o f and
interest on its Debt Security on the stated maturity date for such payment expressed in such Debt Security (as such Debt Security may be amended or modified
pursuant to Article Seven) and to institute suit for the enforcement o f any such payment, and such right shall not be impaired without the consent o f such Holder.
11 Prospectus 2005, S-31, Risks o f Participating in the Offer, Prospectus 2010. S-57, Risks o f Participating in the invitation.
The Trust Indenture (dated 2 June 2005 as amended on 30 April 2010) provides in pertinent pan:
Section 5.9, Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee may at any time resign with respect to the Debt Securities o f one or more Series by giving not less than 90 days' written notice o f resignation to
the Republic and by providing notice thereof to the affected Holders at the expense o f the Republic as provided in Section 12.4 below and wit hout giving any
reason therefor. Upon receiving such notice o f resignation, the Republic shall promptly appoint a successor trustee with respect to such Series by written
instrument in duplicate, one copy o f which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee
shall have been so appointed and have accepted appointment within 60 days after such notice o f resignation has been given, the resigning Trustee may petition
any court o f competent jurisdiction for the appointment o f a successor trustee, o r any Holder o f Debt Securities o f the affected Series who has been a bona fide
Holder o f a Debt Security o f such Series for at least six months may, on behalf o f himself and all others similarly situated, petition any such court for the
appointment o f a successor trustee in respect o f such Series o f Debt Securities. Such court may thereupon, after such notice, if any. as it may deem proper,
appoint a successor trustee with respect to the Debt Securities o f the affected Series.
(b) In case at any lime any o f the following shall occur: the Trustee shall cease to be eligible in accordance with the provisions o f Section 5.8 and shall fail to
resign after written request therefor by or on behalf o f the Republic or by any Holder; or the Trustee shall become incapable o f acting, or shall be adjudged
bankrupt o r insolvent, or a receiver or liquidator o f the Trustee or o f its properly shall be appointed, or any public officer shall take charge or control o f the
Trustee or o f its property or affairs for the purpose o f rehabilitation, conservation or liquidation; then, in any such case. (A) the Republic may remove the Trustee
and appoint a successor trustee with respect to ail affected Debt Securities by written instrument, in duplicate, one copy o f such instrument shall be delivered to
the T rustee so removed and one copy to the successor trustee, or (IT) any Holder who has been a bona fide Holder o f a Debt Security o f any affected Series for at
least six months may on behalf o f himself and all others similarly situated, petition any court o f competent jurisdiction for the removal o f the Trustee and the
appointment o f a successor trustee o r trustees with respect to the Debt Securities o f such Series.
(c) The Holders o f a Majority in aggregate principal amount Outstanding o f the Debt Securities o f any Series may at any time remove the Trustee and appoint a
successor trustee for the Debt Securities o f such Series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Republic the
evidence provided for in Section 6.1 o f the action in that regard taken by the Holders. If at any time there is more than one T rustee with respect to Debt Securities
o f different Series issued pursuant to this indenture, each reference to the “ Trustee” .shall be read as a reference to the Trustee for the time being in place in
respect o f the relevant Series o f Debt Securities. The foregoing sentence is without prejudice to Section 5.12.
id) The Republic shall give notice o f each resignation and removal o f the Trustee with respect to the Debt Securities o f any Series to all Holders o f Debt
Securities o f such Series in the m anner provided in Paragraph 10 o f the Terms.
(e) Any resignation or removal o f the Trustee and any appointment o f a successor trustee pursuant to any o f the provisions o f this Section 5.9 shall become
effective upon acceptance o f appointment by the successor trustee as provided In Section 5.10.
Section 7.1. Modifications.
(a) Any modification, amendment, supplement, request, demand, authorization, direction, notice, consent, waiver o r other action provided by this Indenture o r the
terms and conditions o f the Debt Securities o f one o r m ore Series (each, a '‘Modification”) to this Indenture or the terms and conditions o f the Debt Securities o f
one or more Series may be made, given, or taken pursuant lo (i) a written action o f the Holders o f the Debt Securities o f such affected Series w ithout the need for
a meeting, or (¡1) by vote o f the Holders o f the Debt Securities o f such affected Series taken at a meeting or meetings o f Holders thereof, in each case in
accordance with the terms o f this Article Seven and the other applicable provisions o f lh is indenture and the Debt Securities o f such affected Series.
b) Except as provided in a GDP-Linked Securities Authorization and/or the terms and conditions o f the Debt Securities o f any Series, this Article Seven shall
apply to all Modifications to this Indenture and/or to the terms and conditions o f the Debt Securities o f such Series.
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