Argentina has been sued in a US district court in New York in connection with its nationalization of oil giant YPF in 2012, according to court documents. The plaintiffs are two Spanish firms, and they are represented by a US law firm Burford Capital.
The oil firm was owned by the Spanish giant Repsol until Argentina took over 51% of the shares in 2012, arguing the company was not investing in the country.
This particular case goes back to 2008, when the Argentine group Eskenazi created two companies in Spain, Petersen Energia and Petersen Energia Inversora, to buy a large package of shares in YPF, which then was still owned by Repsol.
When the seizure took place, those two companies were no longer able to pay off debts, and creditors ended up with their shares in YPF.
The two Spanish firms are now in the process of liquidation. They filed for bankruptcy protection in 2012, and a unit of Burford, Prospect Investments, won the rights to initiate legal proceedings.
In the 30-page suit filed on Tuesday the Spanish firms are seeking unspecified damages from Argentina and YPF.
In 2014, Argentina paid Repsol more than 6 billion dollars compensation. The Petersen Group owned a 25% stake in YPF when it was owned by Repsol.
The two companies filed a claim in the US Southern District Court asking for monetary compensation from YPF and Argentina with the argument that Argentina broke the rules on tenders for shares when it nationalized YPF.
The amount requested by Burford and Petersen hasn’t been disclosed yet but it would be a multi-billion claim as Eskenazi paid more than 3.3 billion dollars when buying the YPF shares between 2008 and 2011, with the help of loans.
“Argentina and YPF promised that any subsequent acquisitions of a controlling stake in the company would be conditioned on the acquirer making a tender offer for all Class D shares of YPF. But Argentina and YPF intentionally and in bad faith breached those promises,” the law firm Kellogg, Huber, Hansen, Todd, Evans & Figel representing Petersen said in the complaint.
The bill to nationalize YPF became law in 2012 after an overwhelming Lower House vote in May 2012. President Cristina Fernández justified the move on the grounds that Repsol failed to boost oil and natural gas production needed to keep up with local demand.
The supposed breach of the tender offer requirement by YPF and Argentina was “devastating” to Petersen, according to the litigation. Petersen declared bankruptcy and a court-appointed receiver sought to raise funds to pursue the firm’s claims, making an agreement with Burford.
“Petersen subsequently entered into insolvency proceedings in Spain and is undergoing liquidation in an effort to satisfy its outstanding creditor claims,” the law firm that filed the complaint said. “Argentina’s and YPF’s illegal conduct significantly reduced the value of Petersen’s YPF shares causing Petersen direct economic harm.”
The Petersen Group said the lawsuit was a consequence of the liquidation of Petersen Energia Inversora and Petersen Energia by the Spanish courts.
“After the federal government nationalized YPF, Petersen Energía and Petersen Energía Inversora got rid of all their YPF assets and because of that they don’t have any assets now. The Petersen Group is an outsider and has no role on the judicial process now being developed,” the company said in a press release.