It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E. Singer, is now well on its way to being resolved…
Could it be? Is it over?
The $4.6bn deal (in principle) announced on Monday involves four big pari passu holdouts, including Elliott’s NML.
They have reached agreement days after Judge Thomas Griesa said he would lift his injunction on Argentina to pay holdouts alongside restructured bondholders, which had set off this saga and (along the way) an Argentine sovereign default.
The holdouts would get 75 per cent of their claims on Argentina. Its offer this month, made both to holdouts with judgments on defautled bonds and those building up hefty post-dated interest on pre-judgment debts, had been 70 per cent. (It also paid another holdout 100 per cent of his claim to settle, of course.)
The difference is likely to be more than 5 per cent as Argentina’s specific treatment of that post-dated interest had been a big issue. Argentina will also be paying the holdouts back certain legal fees which, in a litigation which has taken the best part of a quarter of a century, may not be minuscule. Under a deal, Argentina would have to repeal a law against paying holdouts, and issue bonds to raise cash for payment.
According to Mr Pollack (who gets quite emotional in his statement about “nothing short of heroic” President Macri of Argentina and Elliott’s Paul Singer, “a tough but fair negotiator”):
No party to a settlement gets everything it seeks. A settlement is, by definition, a compromise and, fortunately, both sides to this epic dispute finally saw the need to compromise, and have done so.
We’ll be analysing the deal, where we go from here, and whether this saga will bloody end at last later this week.
But for now — some questions to consider:
- Is it actually a deal that has delivered equal treatment to anyone, like you might perhaps have expected from a 15-year pitched battle over the meaning of an 80-word equal-treatment clause?
- Will the creditors holding the remaining 15 per cent of Argentina’s defaulted debt follow Elliott’s lead?
- Did Judge Griesa’s injunction change Argentina’s behaviour at all, or was it all just Mauricio Macri’s election? (Alternatively, did Griesa help Macri win?)
- Does the way Griesa lifted the injunction mean pari passu won’t be so powerful against other sovereign debtors in future?
- Because no sovereign would ever leave itself this vulnerable to a pari passu lawsuit again, right?
Judge Griesa is supposed to have a hearing about lifting the injunction on Tuesday. If you’re in Manhattan and have a good supply of popcorn, it may be your last chance.
Then again, knowing this saga, it may well not.