(Adds plans by bank to ask judge for guidance on payment deposit)
By Hugh Bronstein
BUENOS AIRES, July 2 (Reuters) - Argentina will press a U.S. judge to unfreeze a payment to holders of the country's restructured debt as a condition for negotiating with a group of New York hedge funds suing for full repayment, a government official said on Wednesday.
Latin America's No. 3 economy has been pushed to the brink of a new default by a string of U.S. court decisions that have forced it to negotiate with "holdout" investors who declined to restructure their bonds after the country's 2002 debt crisis.
More than 92 percent of the country's investors agreed to receive less than 30 cents on the dollar in bond restructurings carried out in 2005 and 2010.
The holdouts rebuffed those terms and want 100 cents on the dollar, but say they are willing to negotiate.
The government is sending a team to New York next week to set conditions for talks by way of a court-appointed mediator.
"These conditions will naturally include our objective of honoring the restructuring of 92.4 percent of our debt and generating fair conditions for all creditors," Cabinet Chief Jorge Capitanich told a news conference. "We are going into the meeting with this objective."
Argentina tried to make a coupon payment on its restructured debt due on Monday but payout was blocked by U.S. District Court Judge Thomas Griesa, who says the government must settle with the holdouts before any more payments can be made on restructured bonds.
The payment was in limbo after being deposited with transfer agent Bank of New York Mellon but not paid out.
Griesa wants the $539 million deposit returned to Argentina's accounts, but the government claims the cash now belongs to holders of its restructured bonds.
Fearful of being sued by those investors but unwilling to defy Griesa, a source close to the situation said the bank will formally seek guidance from the judge by July 8.
Argentina has until the end of the month to settle with the holdouts. If it fails, the country risks tumbling into its second sovereign debt crisis in 12 years.
This would sap already thin central bank reserves and prolong Argentina's banishment from the global bond market. The country requires foreign financing to rebuild its grains export infrastructure and develop its shale oil and gas sector.
Capitanich said Argentina needs to respect its two restructurings as a basis for any deal with the holdouts, who the government regularly denigrates as vulture funds circling the remains of the country's 2002 debt crisis, which pushed millions of middle-class Argentines into poverty.
Holdouts led by Elliott Management Corp are seeking $1.33 billion plus interest.
Economy Minster Axel Kicillof will go to the Organization of American States on Thursday to look for international backing as each side in the feud accuses the other of unwillingness to negotiate in good faith.
"We are ready to meet with Minister Kicillof during his visit to Washington, and to negotiate without preconditions," Elliott said in a statement. (Additional reporting by Daniel Bases in New York; Editing by James Dalgleish and Andrew Hay)