Exclusive: Argentine debt mediator expects more meetings ahead

NEW YORK Tue Aug 12, 2014 7:28pm EDT

U.S.-court appointed mediator Daniel Pollack arrives at federal court for a hearing on Argentina's debt crisis, in New York August 1, 2014.       REUTERS/Carlo Allegri

U.S.-court appointed mediator Daniel Pollack arrives at federal court for a hearing on Argentina's debt crisis, in New York August 1, 2014.

Credit: Reuters/Carlo Allegri

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NEW YORK (Reuters) - Daniel Pollack, the court-appointed mediator in the debt dispute between Argentina and holdout creditors, who has come under fire from the Argentine government for his handling of the talks, expects to hold more meetings with both sides.

U.S. District Judge Thomas Griesa appointed Pollack, an experienced New York lawyer, as Special Master in the long-running dispute that dates back to Argentina's near $100 billion sovereign debt default in early 2002.

The two sides have not met since Argentina defaulted for the second time in 12 years on July 30.

"I have been in touch with the attorneys for the parties. I am anticipating meetings of the parties and their attorneys as we go forward," Pollack told Reuters. He declined to elaborate further.

Holdout creditors led by deep-pocketed hedge funds Elliott Management Corp and Aurelius Capital Management, won an award of $1.33 billion plus accrued interest in 2012.

Earlier on Tuesday Thomson Reuters IFR reported that plans being formulated by international banks to try to facilitate a buyout of the holdouts positions was struggling to come to fruition.

Elliott, with $24.8 billion in assets under management (AUM), and Aurelius, with $4.5 billion in AUM, specialize in buying up distressed or defaulted debt and negotiating profitable settlements, sometimes through the courts.

Their case was upheld on appeal and denied hearing by the U.S. Supreme Court in June, just before a regularly scheduled coupon payment was due on restructured bonds.

Argentina defaulted July 30 on those bonds after the two sides could not come to an settlement, having only been brought face-to-face for the first time in 13 years just one day ahead of the deadline.

Buenos Aires lashed out at Pollack the day after the default calling him incompetent. Griesa jumped to Pollack's defense on Aug. 1, confirming his position and maintained an order for both sides to continue to meet in hopes of reaching a settlement.

In 2012 Griesa ordered that Argentina could not pay creditors who decided to settle with the government in 2005 and 2010 without also paying the holdouts concurrently, basing his decision on an equal treatment clause known as pari passu that was contained in the original debt issued in 1994.

Griesa held a second post-default hearing with attorneys for both sides, this time prompted by published legal notices by Argentina asserting it was not in default because it deposited its coupon payment with the trustee Bank of New York Mellon. That $539 million deposit is now frozen per Griesa's 2012 ruling.

Griesa said Argentina it was publishing misleading statements and then threatened a contempt-of-court order if it did not stop. Argentina's lawyers from Cleary Gottlieb Steen & Hamilton said they had nothing to do with the legal notices.

(Reporting By Daniel Bases; editing by Andrew Hay)

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Comments (1)
GermanHoldout wrote:
Judge Griesa is 100% right!
Argentina is paying the “Exchange bondholders” according to the agreement reached.
BUT, as ALSO JUDGE GRIESA SAYS, ARGENTINA MUST ALSO PAY THE “HOLDOUT BONDHOLDERS” ACCORDING TO THE AGREEMENT, THE HOLDOUTS HAVE WITH ARGENTINA!
President Kirchner should end this HORROR WAR against innocent Holdouts and respect the bond contracts with the holdouts!
We are human beings and not the scapegoat of the politics!
President Obama should help and talk to President Kirchner to end Argentina’s Horror-Default.
IN PRACTICE, FOLLOWING COULD BE THE SOLUTION TO FINISH ARGENTINA’S SINCE 2002 ONGOING NIGHTMARE DEFAULT
ARGENTINA SHOULD GIVE A SIGN, A PROMISE TO JUDGE GRIESA / MEDIATOR POLLACK AND THE HOLDOUTS, THAT IT WILL NEGOTIATE IN GOOD FAITH AND IT WILL FULFILL THE COURT ORDER (EXTENDED TO ALL HOLDOUTS) AND REPAY THE DEBT TO THE HOLDOUTS, AFTER THE RUFO CLAUSE EXPIRES IN DECEMBER 2014.
THEN THE HOLDOUTS WOULD SURELY ASK JUDGE GRIESA TO REINSTALL THE “STAY” UNTIL JANUARY 1, 2015.
Argentina enters into good-faith negotiations with the holdout creditors – ALL OF THEM –via the offices of NML Capital. A firm deadline should be set to reach an agreement, say January 2, 2015, two days after the expiration date of the Rights upon Future Offers clause.
HOW COULD BE THE CONDITIONS FOR THE REPAYMENT?
Argentina owes to today about 230% to the Holdouts (since 2002 Argentina had not repaid a cent to the holdouts)
- at the latest, on 02/01/2015 (end of RUFO clause) Argentina would repay in CASH 100% of the nominal value of the defaulted bonds, which became due before 2015.
- For the accrued interest between 2002-2015 (until now about 130%), Argentina would emit new bonds with a maturity of 5-7 years.

Aug 12, 2014 6:36pm EDT  --  Report as abuse
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