NEW
YORK, Aug. 15, 2024 /PRNewswire/ -- Province of
La Rioja Bondholders (the "Province" and
"Bondholders", respectively), represented by Quinn,
Emanuel Urquhart and Sullivan, LLP,
moved today for summary judgment in the U.S. District Court of the
Southern District of New York
against the Province in relation to the ongoing default on its
US$318mm Green Bonds issued internationally under New York law. The Province defaulted on
a principal amortization due to holders of the Green Bonds in
February 2024. Further payments of interest and principal on
the bonds are due on August 24, which
may precipitate yet additional defaults by the Province.
The Province of La Rioja has a particularly egregious record of
disregard for its financial obligations. It was one of the
first provinces to default in August 2020. Creditors took
legal action against the Province at the time, terming its default
"opportunistic" and noting the Province's failure to service debt
despite running a budget surplus of 11% of revenues.
The Province was then the last in Argentina to reach a negotiated restructuring
with bondholders.
In February 2024, the Province
became the first and only province to re-default on its
restructured obligations, failing to pay US$16mm of principal
due. The context of the 2024 default was particularly
outrageous. La Rioja used the majority of the proceeds from
the Green Bonds to construct wind farms through the provincial
company, Parque Eolico Arauco S.A. ("PEA"). The
Province then concluded a sale of 100% of Vientos de Arauco
Renovables S.A.U., one of the undertakings of PEA, for
US$171mm to Pampa Energia S.A., prior to defaulting on
bondholders.
La Rioja stands conspicuously alone as the only province in
Argentina in default on its
international obligations. The table below shows the current
status of all Argentine provinces which restructured unsecured
bonds during the 2020-21 period. Aside from La Rioja, every
province has timely honored all payments and made significant
progress towards amortizing the principal amount of outstanding
obligations.
Status of Provincial
Unsecured Bonds Through Q3 2024 (1)
|
|
|
|
|
Province
|
Default?
|
Amortizations
Honored
|
Percent of Debt
Amortized
|
|
|
|
|
La
Rioja
|
Yes
|
0
|
0 %
|
Chaco
|
No
|
2
|
22.2 %
|
Cordoba
(2)
|
No
|
3
|
50 %
|
Entre Rios
|
No
|
4
|
28 %
|
Jujuy
|
No
|
4
|
44.4 %
|
Mendoza
|
No
|
4
|
30.7 %
|
Rio Negro
|
No
|
2
|
22.2 %
|
Salta
|
No
|
3
|
17.5 %
|
Buenos Aires
(3)
|
No
|
2
|
3.7 %
|
(1) Based on
payments made and announced to be made during balance of
Q3 (2) 2025 bond (3) 6.375% 2037
bond
|
The reckless disregard of La Rioja's government for its
financial obligations directly harms the people it is meant to
serve by discouraging investment and, thereby, job creation and
economic activity in the Province. Further, it undermines the
efforts of Argentina's national
government to change the credit market narrative about the
country. Only when both Argentina's national government and its
federal sub-units jointly show determination to turn the page on a
long history of defaults and mismanagement can country risk reduce
to levels consistent with full market access and the support of
financial markets for growth and investment be re-gained.
Until La Rioja recognizes and takes seriously its obligations,
the Bondholders will use all available judicial means to pursue
recovery of their lawful claims against the Province.
Media Contacts:
Keely Gispan
kgispan@ascadvisors.com
203-992-1230
Kylie Souder
ksouder@ascadvisors.com
203-992-1230
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content:https://www.prnewswire.com/news-releases/province-of-la-rioja-bondholders-move-for-summary-judgement-over-defaulted-green-bonds-302223497.html
SOURCE Ad Hoc Committee of Province of La Rioja Bondholders