(Adds details, background)
By Davide Scigliuzzo
NEW YORK, Aug 21 (IFR) - A group of Argentina's exchange
bondholders is working with Deutsche Bank to remove the
so-called RUFO clause that prevents the sovereign from
voluntarily offering holdout creditors better terms than those
of its 2005 and 2010 restructurings.
Christopher Clark, a partner at law firm Latham & Watkins,
which is advising holders of over EUR5.2bn of Argentine debt,
told IFR on Thursday that a consent solicitation on the clause
is in the works.
"We are moving forward and we are working with Deutsche Bank
to progress as rapidly as possible to a solicitation," Clark
The Argentine government has often cited the Rights Upon
Future Offers (RUFO) clause as a major stumbling block in its
ability to cut a deal with the holdouts, who are owed US$1.33bn
plus interest, according to a US court ruling.
Critics, however, argue that Argentina has been using the
provision as an excuse and that its latest proposal to swap
foreign-law restructured bonds for local-law securities
demonstrates it has no intention to cut a deal with holdout
The clause is set to expire at the end of 2014, but the
Argentine government has so far given no indications that it
would be willing to restart talks with litigant investors next
A waiver of the RUFO clause would require the consent of
bondholders representing at least 75% of the nominal outstanding
on each series. Alternatively, the waiver can be obtained with
two third majority of each series provided that all holders
representing at least 85% of the nominal outstanding amount
agree to the waiver.
While the consent solicitation can be launched without
Argentina's approval, it is unclear whether bondholders would be
able to close the deal without the sovereign's consent.
"There is no problem launching the solicitation without the
Republic's consent," said one lawyer familiar with the
situation. "I just don't know what happens if the Republic
doesn't sign the supplemental indenture in the end. It's an
Argentina has US$56bn of restructured bonds outstanding,
according to HSBC.
Deutsche Bank declined to comment.
(Reporting by Davide Scigliuzzo; Editing by Paul Kilby)