Burford Capital Share Discussion Threads

[donald pond] 01/8/2023 09:19

It's all down to Argentina imo. They have a close election coming up and this could become a key issue. We also don't know what the IMF will do. It might even be possible to freeze and seize any dollar payments to Argentina as soon as they are disbursed through a clearing bank. There is certainly a mutual interest in resolving the dispute. Argentina has huge gas and lithium reserves and it will be costly to commercialise them with Burford seeking to seize assets everywhere

[djderry] 01/8/2023 08:34

That's just a starting point.You've still got duration risk,collection risk,legal risk,etc.
And,as you know,in most cases,there's a settlement.If there is,then we know that there will be a substantial discount.
I posted several years ago the most likely scenario was an initial lump sum payment followed by yearly sums over a longer period.
If you plug all the above into the calculations,I think you will get a more accurate range of probabilities.

[nori_wasabi] 01/8/2023 08:08

Totally agreed with you, Three Black Crows. Please note the range £18-£60 / share (gross)came from £3.8 B(4.9 B USD) – £12B (16B USD) potential wins, divided by 230 million shares in circulation . Therefore , after allowing for Peterson and Eton Park shares of the proceeds and the already sold entitlement (as Stentorian’s approximations - 55%) we get £8 to £27/shares. I am sure if the share price is £18 with a special dividend of ~£2 in Dec and the remaining proceeds is invested for the future, no one will complain.

[kaos3] 01/8/2023 07:51

BUR could securitise the debt into 1 mio USD bonds. Get YPF royalty as a security or similar. And start selling off those bonds to anyone depending on the current financial needs based on their opportunities.
And general market.
Argentina could slowly buy back those bonds bellow par when they can afford.

Meanwhile every one collects interest.

Also bonds could be used as assurance for new cheaper debt (interest arbitrage) etc....

PS Thank you all for illuminating contribution

[stentorian] 31/7/2023 23:02

It is crucial to understand the two different positions Burford have amassed in YPF via Petersen and Eton Park.

Petersen
Burford is funding Petersen’s legal fees in exchange for 70% of the proceeds. Burford is contractually obligated to provide the litigating law firms success fees and other expenses, and Burford therefore expects to retain 58-59% of the gross proceeds. In addition, Burford has over time sold 38.75% of their net entitlement
(i.e., 38.75% of the 58-59%, not of the gross proceeds). In exchange for $236 million, retaining 61.25% of their original entitlement for their own book. Thus, Burford should receive just under 36% of Petersen’s gross proceeds (58.5% * 61.25% = 35.8%).

Eton Park
In the Eton Park case, Burford paid $26 million in exchange for rights to 75% of the proceeds, all of which Burford retains on their own book. Eton Park was a much smaller shareholder than Petersen (4% vs. 25%), but because Burford retains its entire Eton Park entitlement, (4%*75%= 3% / 75% =12%) Burford’s Eton Park entitlement is approximately a quarter of their Petersen net entitlement. (Eton Park gross proceeds = 12% of Petersen gross proceeds [3% / 25% = 12%]. Burford’s entitlement for Eton Park is then 9% of Petersen gross proceeds [12% * 75% = 9%], which is a quarter of the 36% of Petersen gross proceeds that Burford is entitled to from the Petersen proceedings.

Jointly
For simplicity’s sake, 36% + 9% = 45% of the total of the whole shebang.

Sensitivity Analysis based on Damages and Prejudgment Interest as at 31/07/23
In full
16 April 7 May
$bn $bn
0% 8,431 4,999
1% 9,383 5,560
2% 10,335 6,122
4% 12,239 7,245
6% 14,142 8,368
8% 16,046 9,491

@45% for BUR
16 April 7 May -------------------Less $1015m carrying value
$bn $bn
0% 3,794 2,250 $17.33ps $10.27ps 2,779 ($12.69ps) 1,235 ($5.64ps)
1% 4,442 2,502 $19.28ps $11.43ps 3,207 ($14.65ps) 1,487 ($6.79ps)
2% 4,651 2,755 $21.24ps $12.58ps 3,636 ($16.60ps) 1,740 ($7.95ps)
4% 5,508 3,260 $25.15ps $14.89ps 4,493 ($20.52ps) 2,245 ($10.25ps)
6% 6,364 3,766 $29.06ps $17.20ps 5,349 ($24.43ps) 2,751 ($12.56ps)
8% 7,221 4,271 $32.98ps $19.51ps 6,206 ($28.34ps) 3,256 ($14.87ps)

No of shares in Issue = 218,957,218

[syoun2] 31/7/2023 21:04

Thanks, sounds like we’re all aligned

[stentorian] 31/7/2023 20:55

djderry has used the carrying value ($823m) as at 31 December 2022.
syoun2 has used the carrying value ($1,015m) as at 31 March 2023.

[djderry] 31/7/2023 20:51

From memory,the realised gain is about $256 million.( There would probably be a gain as well from the fund management side depending on the outcome of the case).
The unrealised gain is as above.

[syoun2] 31/7/2023 20:41

And the other 200million extracted is realised gain from the sale, is that correct. I thought they had just over 1 billion unrealised gains

[djderry] 31/7/2023 20:13

When doing the calculations,on a net basis,Burford is entitled to about 35% of any proceeds from Petersen ( ie having had 70%,they sold off tranches to diversify risk) and around 73% of Eton Park matter.
They have $823 million carrying value for these (YPF),a cost basis of $54.6 million ( some of which is recoverable) and an unrealised gain on the balance sheet of $768.4 million.

[three black crows] 31/7/2023 17:58

Oh and by the way, the payout might be some time off yet

[three black crows] 31/7/2023 17:57

Nori_wasabiNot sure where your calculations come from. Try this ........If we get 2Bill pounds payout that would give us a share price of around 8 pounds, then added to the current share price 0f 10 pounds we might be around the 18 pounds mark, possibly a lift up in Sept with some positive results and up to 20 pounds, I would think even long term holders that were pre muddy waters atack would be comfortable with that for a startersTry to be realistic with calculations

[nori_wasabi] 31/7/2023 17:07

So in the Land of Silver, they are talking about the award will be between 4.9 and 16B dollars. With the current market cap of 2.29 B and a share price of £10.6, the award will worth £18 to £60/share . hxxps://buenosairesherald.com/economics/ypf-expropriation-payout-trial-ends-argentina-to-pay-at-least-us4-9-bn

[maddox] 31/7/2023 12:26

I understand that typically it would be for the full award - unless Judge Preska decides otherwise.

As Argentina have dismal track record of paying their debts - it would be a huge concession against the interests of the plaintiffs. Whom as the lawyer stated - have become, through Argentina's unlawful action, become unwilling creditors to Argentina for the last eleven years! But nothing is certain.

[laughton] 31/7/2023 12:04

"The District Court’s judgment would be enforceable while the appeal is pending unless Argentina posts a bond to secure its performance"

So, that will be the next interesting development - we assume that Argentina will appeal - so will they have to post a bond and if so for what amount?

[maddox] 31/7/2023 11:58

I thought she was enjoying the hearing - bit of banter with the lawyers and the recorder - certainly didn't detect any exasperation with Argentina.

From BUR's statement of 2 April:

'Once the Court issues its final judgment, 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.'

So, don't hold your breath.....

[stentorian] 31/7/2023 11:46

I wonder how infuriated Judge Preska is with Argentina after hearing during submissions that irrespective of her decision they are going to appeal?

[maddox] 31/7/2023 11:37

Hi Harry,

Currently the post-Judgement interest rate is 5.33%.

[chester9] 31/7/2023 07:35

We will know when Judge Preska decides by end sept approximately.

[madharry3] 31/7/2023 07:29

does anyone now how much the post judgement interest will be?

[extrader] 31/7/2023 00:23

Seb's full tweet (or 'X')

.."1. The damages trial in the YPF expropriation case is over.

2. Argentina has already announced that it will appeal whatever ruling Judge Preska issues.

3. The judge showed professionalism and complete impartiality throughout the trial.

4. Both legal teams were outstanding and ready for the challenges that a case of this magnitude offers.

5. IMO Argentina will lose the date argument (APR 16) and may get a break on the interest rate issue (5%-6%).

6. In 10 days, both sides will file post-trial briefs.

7. I don’t expect a ruling until at least late September..."

ATB

[donald pond] 29/7/2023 21:34

Good info in recent posts, thanks to allThe size of vaca muerte is key. IIRC the nationalisation happened shortly after the scale of VM became known. It's another factor Preska will consider - in the end Argentina broke the rules deliberately for commercial gain. While the legal principle for any breach of contract is that the wronged party should be put in the position they would have been in if the contract had been fulfilled, judges don't like to see people rewarded for breaching contracts so cynically

[three black crows] 29/7/2023 20:40

Thank you Extrader,The value of future gas and oil reserves in Argentina is colossal and infrastructure is currently being added to deliver this on a global scale.This article goes into some detail.I am sure Bogarts team are well aware of thishttps://www.pagina12.com.ar/572171-el-valor-de-ypf

[planit2] 29/7/2023 20:34

Burford have cultivated their modus operandi over the years. Their business is run for the long run, they don't rush or chase short term wins (they are the opposite of investment bankers). They are non-emotional and stay professional at all times (see Sysco).

This reputation means companies take them seriously and adversaries have to treat them seriously and with respect. I am sure it leads to early settlements on a portion of their cases and is therefore valuable.

I can't seem them acting any differently with Argentina so expect a calculated and non-rushed outcome despite the value and length of time they have already invested.