Burford Capital Share Discussion Threads

[tomtrudgian] 21/7/2023 13:05

I cannot see any difference either. Hohum1.

Everyone is understandably focusing on the interest rate, or rates, decided by the court to be applied against Argentina between 1912 and the date of judgement. And of course from what 2012 date this interest should start to be applied from, ie quantum.

What has not been discussed here so far is the rate of interest applicable from the date of judgement to settlement. This is set out in a 1964 federal law and not decided by the court. The formula is based on the weekly constant maturity US Treasury yields averaged over the year preceding judgement date. Currently looks to be about 5.23%.

Burford’s submissions have suggested 6-8%. However will this lower statutory rate affect the court’s judgement on the rate or rates they decide to apply prior to the judgement date?

Secondly to what extent will the rate or rates decided by the court to the whole period, now over 10 years since the expropriation, affect the attitude of the new (Dec 2023) government to the speed of settlement?

It will all end up in horse trading of course!

[stentorian] 21/7/2023 13:02

Argentina do pay - eventually,

[hohum1] 21/7/2023 11:54

As I recall, the BRICS group was a marketing ploy invented by Goldman Sachs. Not sure how Argentina trying to “join” makes any difference to Burford’s ability to reclaim the $bns almost certainly owed to them. Roll on the court case…

[extrader] 20/7/2023 12:31

Argentina has applied along with Iran, Saudi and the United Arab Emirates to join BRICS, decision expected at bext month's summit in S Africe
[Just announced , Putin won't be attending : SA wiuld supposedly have been obliged to arrest him for war crimes]
All part and parcel of growing antiWest/ antiUS/ anti US$ sentiment
at political level.
But populace still prefers to visit/ look up to the US...
And shares in bellwhether stocks GGAL and YPF continue their pre- election season gains.

[stentorian] 20/7/2023 08:31

I see that the Agreement between the EU and South American/Carribean States includes a clause that the Falkland Islands will be referred to by the EU as "Malvinas".

Argentina already engaging their spin doctors to build up hatred for the "English vulture fund" aka Burford in anticipation of 'explaining' how they have lost $17bn. Just shows you don't have to be a Junta.

Maybe the Falklands should be renamed the Burford Islands?

[riverman77] 18/7/2023 15:08

Yes very impressive update from LIT - starting to look a more interesting proposition than BUR if I'm honest. I've been gradually trimming BUR since it hit £11 and adding to LIT (although BUR still the bigger position for now).

[dekle] 18/7/2023 11:16

LIT provided a very upbeat message this morning

[donald pond] 18/7/2023 08:51

Everyone I have spoken to who knows about enforcement says it will not be easy to get Argentina to pay but in the end, they always do. The post judgment interest rate will be interesting as the judge will no doubt expect Argentina to prevaricate. But the key point here is that this is not a bond issue, where the investors accept the sovereign credit risk. It is a breach of contract case arising out of a scenario designed specifically to avoid the sovereign risk issue. And with a burgeoning lithium industry, what premium would investors demand for building projects in a country that has seized assets and ignored US judgments in relation to them?

[375uv] 18/7/2023 00:19

The Argy media doesn't have any other source to consult on this issue but Seb. He just posted that he will be traveling to New York for the trial.

[extrader] 17/7/2023 23:19

Thanks galatea99,

Also worth noting this bit

.."After the next hearing, Argentina can appeal again not to pay. But it runs a risk: that Burford will also appeal and ask that YPF's exoneration in the case be revoked. The national government could save its own coffers, but it would expose the majority state-owned oil company to falling into trouble again.

Preska is the heir of Judge Thomas Griesa, who was the former head of the Southern District of New York in the United States. May 2019. Griesa postponed all determinations until the upcoming electoral process, which Alberto Fernández won in the primary elections and then in the general elections. Those who know the case suspect that Preska could take a similar attitude, and postpone any determination until after the elections.

Everything indicates that it will no longer be this administration that will have to pay the compensation, but that the task will be left for the next administration.

Pretty much repeating Seb's playbook...

[galatea99] 17/7/2023 21:08

This was in Clarín a few days ago. According to the article,

"There is the possibility that there will be an agreement in the next hearings, or that the appeals will continue. According to analysts of the case, such as Sebastián Maril - who knows the case like no one else - Argentina and Burford could be exploring an agreement".

"The Burford fund claims between US$7.500 million and US$19.350 million, although there is talk of a lesser settlement (US$6,000 million). Burford expects it to be determined from when Argentina owes the money) and then interest to apply."

[sam55todd] 17/7/2023 15:48

RE: ...might get caught up in an international power-play between the US and the BRICS group...

Out of nearly $70b of Argentina' annual foreign trade (export side for which they collect $) they have almost 25% with US/CA+EUR countries (western block), not something they can flip in one day (although these aren't GOV money but mostly by privately owned entities).
More than half of the oil and related products exports does go to US/west but it's relatively small fraction of total exports. There's more dependency on western block for imports though - nearly a third (but imports was a bit lower that tested recent year, thus they were in surplus, ARG tends to swing between deficit/surplus and not inherently running deficit like some other countries).

[extrader] 17/7/2023 13:26

A court judgment gives BUR international enforcement rights not open to 'conventional' creditors.

BUR can also take unconventional approaches to settlement (eg payment in kind), not open to other creditors.

That's the upside.

The downside (IMO) is that BUR's monetisation of its award MIGHT get caught up in an international power-play between the US and the BRICS group of nations (which Argentina, along with Saudi Arabia and the UAE have applied to join- to be decided next month), who are keen to promote (1) de-dollarisation (2) 'non-alignment'; and (3) South/south trade.

The US-led sanctions on Russia have ironically accelerated the drive for 'de-dollarisation', we now see India able to buy (sanctioned) Russian oil ....and pay in INR, which would have been unthinkable previously.....and a lot of recent US initiatives eg the CHIPS and IRA acts amount to 'desinofication' on its side.

BUR may get 'leant on' - hopefully, not 'stiffed' - in the broader US interest.

AFAICS

[kaos3] 17/7/2023 12:17

Easy. They will wait few years for the currency to collapse and pay cents on the now dollar. Post judgment rates are low.

It sounds stupid but think about it. Eurodollar could be extremely cheap to get from some non aligned state players in due time.

It happend many times withother currencies. History is full of it.

[elsa7878] 17/7/2023 11:45

Argentina is completely broke with inflation running at over 100%. How will Burford get payment if they do win. They'll be joining a very, very long line of creditors.

[laughton] 16/7/2023 22:05

And I'm sure they haven't been waiting around twiddling their thumbs before thinking about how they might make recoveries should judgement go in their favour.

[maddox] 16/7/2023 19:21

On the other hand, Burford have a business division dedicated to making recoveries. There would be no better demonstration of their skill and expertise than wrangling a settlement in full from Argentina.

It would clearly be tempting....

[extrader] 16/7/2023 15:16

Hi lomax99,

You're right, BUR mentions it as an option, but one unlikely to be pursued...and even less likely to succeed.

AIUI, the roadmap is set out in the 3 April RNS 'Next steps', viz :

.."Once the Court issues its final judgment [on date and interest rate ie quantum], that judgment will be appealable as of right to the Second Circuit Court of Appeals and based on past practice it would be surprising if Argentina did not appeal. After seeing Argentina's appeal, Plaintiffs would decide whether to cross-appeal the dismissal of YPF.

The Second Circuit presently is taking around a year to resolve appeals once filed, although there is meaningful deviation from that mean. The District Court's judgment would be enforceable while the appeal is pending unless Argentina posts a bond to secure its performance, which we consider unlikely, or unless a court grants a relatively unusual stay.

Following the Second Circuit's decision, either party can seek review from the Supreme Court of the United States. The Supreme Court accepts cases only on a discretionary basis and we believe the likelihood of it accepting a commercial case of this nature that does not present a contested issue of law is quite low, particularly given that Argentina has already once in this Case unsuccessfully sought Supreme Court review.

With an enforceable judgment in hand, Plaintiffs will either need to negotiate a resolution of the matter with Argentina, which would certainly result in what would likely be a substantial discount to the judgment amount in exchange for agreed payment, or engage in an enforcement campaign against Argentina which would likely be of extended duration relying on Burford's and its advisors' judgment enforcement expertise. Burford will not provide publicly any information about its enforcement or settlement strategies."

Once BUR has a 'sum certain in money', it can start enforcement even if Argentina appeals, unless Argentina posts a bond.

I would imagine thatfor public consumption BUR would prefer to use the velvet glove of a consensual arrangement (esp bearing the humanitarian optics that Argentina is already deploying)but make clear at some stage that it's covering an iron fist.

IMO

[lomax99] 16/7/2023 13:07

Surely this has already been referred to the US Supreme Court, they ruled in 2019 that Judge Preska's ruling would be final.

[extrader] 16/7/2023 12:41

.."So the judge will almost certainly say imo that if you want her to exercise discretion in your favour you need to show good faith..."

By committing to make prompt payment, post adjudication, perhaps?

If - as we suspect - Argentina will (eventually) seek a deferred/discounted payment plan, that's just another opportunity for them to show bad faith.

Will Argentina (new government ?) appeal to the US Supreme Court ?

Preska is considered a conservative judge, and served on the advisory board of the Federalist Society.
The Federalist Society is an American conservative and libertarian legal organization that advocates for a textualist and originalist interpretation of the U.S. Constitution. The Federalist Society is generally recognized as the leading representative and vehicle of the conservative legal movement.

Six of the nine sitting Supreme Court Justices are current or former members of that club.

No easy choices, it would seem.

[stentorian] 16/7/2023 10:59

I loved the use of the word "stiffed" at page 10.

"In 2014, Argentina paid Repsol $5 billion for its expropriated shares with government bonds including debt with compound interest exceeding 8% (see note). That Argentina stiffed Plaintiffs and dragged out this litigation for nearly a decade is grounds for a more favourable interest interest rate, not a lower one."

(note Argentina financed $3.25 billion at 8.75%; $1.25 billion at 8.28%; and $500m at 7%).

I would have gone further ...Petersen had taken out compound interest loans backed by its YPF shares, as these shares were appropriated...the banks put Petersen into liquidation. For Petersen it was an existential threat, one that its insolvency practitioners, thwarted by enaging Burford to take over 75% of its interest. I wonder how much Petersen has to pay back on the loans to the banks after all these years the principal plus compound interest must be eye watering.

[donald pond] 16/7/2023 09:51

What the Argentines don't engage with is the argument that this isn't about what would be fair in the case of a simple (perhaps unfortunate) breach of contract, but how to apply a very specific damages clause that Argentina freely entered into precisely because the nations longstanding lack of respect for the rule of law demanded it. If I had to use an analogy it would be a fox asking to be let into the henhouse on the basis that if he killed all the chickens he would give 3 chickens back for each one he killed. Then killing all the chickens, saying for years that he hadn't, and then after being found liable saying that the deal was unfair. I think the argument about interest is doomed because the general Argentine case is so weak. They haven't won a single argument in this case. So the judge will almost certainly say imo that if you want her to exercise discretion in your favour you need to show good faith. Had Argentina sought to engage with and settle the case in 2015 they would have a chance. But they have delayed at every stage and so to now complain that the cost of the delays is unfair will surely provoke the simple answer that Argentina knew from the start that the longer the case went on the higher the final sum would be and they made the tactical decision to accept that cost. I suspect Preska might even go as far as to say that if this was not a sovereign country punitive damages would be on the cards as their behaviour has shown a complete disregard for time and costs. Their sole tactic has been to delay, and now the birds are coming home to roost

[donald pond] 15/7/2023 22:40

Argentina's case seems very weak. I think we will win on both counts. It's a hard call to argue against pre judgment interest when you have delayed at every point. That principle about not profiting from your own wrongdoing again

[jockthescot75] 15/7/2023 17:04

The briefs filed yesterday are on Seb’s Twitter feed.