| NEW YORK
NEW YORK Nov 23 Investors holding $1 billion
worth of restructured Argentine debt say they are preparing to
appeal a U.S. court ruling that they fear would trigger another
default and prevent them from being paid principal and interest
due on their bonds next month.
U.S. District Judge Thomas Griesa ordered late on Wednesday
that Argentina immediately pay a separate group of holdout
investors who rejected two debt restructuring offers the $1.33
billion in judgments they have won in court, a stinging blow to
the country's efforts to overcome a 2002 debt crisis.
The holdout investors in the case are led by NML Capital, an
affiliate of Elliott Management, and Aurelius Capital
Management, both based in New York.
Griesa's order means Argentina must deposit the money into
an escrow account by Dec. 15, which protects both sides of the
case pending a final decision by the U.S. 2nd Circuit Court of
"Given Judge Griesa's obvious frustration with the Republic
of Argentina, we expected this ruling. What we did not expect
was the disregard of innocent Exchange Bond Holders' due process
rights," said Sean O'Shea, a lawyer representing a group of
hedge fund investors. He was referring to investors who agreed
to the restructured debt deals in 2005 and 2010.
At stake for all exchange bondholders is a potential
technical default on approximately $24 billion worth of debt
issued in the 2005 and 2010 exchanges. Principal and interest
payments due those bondholders next month total over $3 billion.
"We are preparing an immediate appeal and motion to stay
this ruling so that we may be heard in the 2nd Circuit Court of
Appeals," O'Shea said in a statement released late on Thursday
through a spokesman.
It said the exchange bondholders represented by O'Shea hold
approximately $1 billion in restructured Argentine government
Griesa ruled in February that all bondholders must be
treated on equal terms, also known as pari passu. That means
bondholders who fought Argentina in the courts for payment must
be paid alongside those who cut deals with Buenos Aires.
If Griesa's ruling is upheld and Argentina still refuses to
pay, U.S. courts could eventually block debt payments to
creditors who took part in the debt restructurings out of
consideration for investors who rejected Argentina's terms at
the time. That would trigger a technical default.
The exchange bondholders group represented by O'Shea and
attorney David Boies, and who have had no involvement in the
pari passu case, includes Greenwich, Connecticut-based Gramercy
Funds Management, Boston-based MFS Investment Management,
London-based Brevan Howard Asset Management, and Newport Beach,
California-based SW Asset Management.