| INTELLIGENCE

MAY 31, 2022

YPF EXPROPRIATION CASE

Argentina’s Hail Mary Play

• A New York Judge says that Argentine law governs this case.
• The Republic and YPF claim that Petersen and Eton press legal theories that have never before been recognized
under Argentine law.
• Plainti s argue that defendants take positions that not only are legally awed, but fail the test of common sense.
• We anticipate a landmark ruling that will set a precedent for any sovereign nation that considers expropriating a
NYSE-listed company and seeks access to the U.S. capital markets.
• We expect Burford to negotiate an exit strategy of its Eton economic entitlement if the judge sides with plainti s.

Case Recap
• YPF expropriation legal proceedings in the U.S. (a.k.a. the “Petersen and Sebastian Maril
Eton Park cases”) continue to o er interesting twists and turns. In a June Director
5, 2020 ruling by Judge Loretta Preska of New York’s Southern District Latam Advisors
Court, Argentina and YPF su ered yet another setback in their e ort to [email protected]
dismiss a case that has already generated four adverse rulings or opinions by
di erent U.S. courts and not a single major victory for the Latin American
nation. First, in September 2016, Judge Preska denied the Republic’s and
YPF’s Motion to Dismiss on the grounds of the Act of State Doctrine1. Then,
a er more than a year appealing Judge Preska’s ruling, Argentina and YPF
once again failed to persuade the courts and three judges from the Second
Circuit sided with the Petersen2 companies and forced Argentina and YPF to
take the case to the Supreme Court. However, on June 2019, the nine
supreme justices rejected the petition to hear the case, and sent all legal
proceedings to where it all started: New York’s Southern District Court. Here,
Argentina and YPF attempted for one last time to dismiss the case, this time
under the Forum of Non Convenience Doctrine3. They failed again. Through
the mentioned June 2020 Order, Argentina and YPF su ered the fourth
setback in a row and agreed with the Petersen companies, as well as Eton
Park Capital4, to start a long discovery process ahead of a possible and yet-
to-be-con rmed trial.

• What’s at stake? The proper interpretation of YPF’s Bylaws and whether

Argentina, as the new majority shareholder and controlling party, had the
obligation to launch a tender o er of all shares not expropriated following
the 2012 nationalization of the oil and gas company.

• We are now three weeks away from the likely end of all legal
proceedings. In a February 8, 2022 letter, plainti s and defendants informed
Judge Loretta Preska that they believed that the expropriation cases did not

1The act-of-state doctrine or foreign act of state doctrine is a principle under United States law which states that every sovereign state is bound to respect the independence of
every other sovereign state, and the courts will not sit in judgment of another government's acts or act of any sovereign national done within its own territory. There are
exceptions.

2 Petersen Energia S.A.U. and Petersen Energia Inversora S.A.U., are two companies incorporated in Spain and currently in liquidation proceedings in a Madrid Court. These
companies owned 25% of YPF’s shares when the Argentine government nationalized the oil and gas company in 2012.

3Forum non conveniens is a mostly common law legal doctrine through which a court acknowledges that another forum or court where the case might have been brought is a
more appropriate venue for a legal case, and transfers the case to such a forum.

4 Eton Park Capital was a major U.S. hedge fund that is no longer in business and owned about 12 million YPF shares (2.9%) prior to its nationalization.

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need to go to trial and that this litigation should end with petitions for Summary
Judgement5. In the absence of any unforeseen developments, the Court could issue a
ruling as early as June 24, 2022, the rst day following the last scheduled ling of
briefs. We believe that the losing side will indeed lose big and all eyes are now on
Judge Preska’s chambers as she readies to issue a landmark ruling on this critical case
that will unquestionably set a precedent for future expropriations of listed companies
by sovereign nations.

• Jurisdiction has always been a central issue for Argentina. Since the very beginning,
YPF and the Argentine government have categorically rejected the claims made by
both Petersen companies and by Burford Capital6, arguing that the U.S. is not an
appropriate forum for dealing with such a delicate issue. In simple terms, defendants
claim that the Petersen companies did not bring the case under the U.S. securities
laws. In fact, Argentina and YPF argue that the very instrument pursuant to which the
oil and gas company sold the expropriated securities (the indenture), informed
investors that YPF’s Bylaws would be “governed by Argentine law” and that “any action
relating to enforcement of the Bylaws or a shareholder’s rights thereunder is required
to be brought in an Argentine court.”

• Breach of contract has been the main focus for Petersen and Eton. Plainti s, on the
other hand, insisted that the privatization of YPF in the mid 1990s, involved a Wall
Street IPO governed by New York law, and that any dispute involving these shares are
subject to New York law, not Argentina’s.

• For Judge Preska, this case is a matter of interpretation of Argentine law that
needs to be decided by a U.S. Court. The judge said that she will consider YPF’s
Bylaws as an Argentine document and that Argentine laws will not go overlooked
during the upcoming judgement. Judge Preska has held that this is a simple breach of
contract case governed by Argentine law, but the parties disagree on its interpretation
and application.

Summary Judgements Briefs Filed And Reveal Parties’ Strategies

Towards the Finish Line
• Argentina and YPF make solid arguments. On April 14 and again on May 26, both
defendants made convincing arguments in their e ort to persuade Judge Preska to side
with them. With the jurisdiction issue out of the equation, Argentina and the oil and
gas company are focusing on the judge’s claim that she will consider Argentine laws
when she writes her Opinion and nal Judgement. Both defendants have also made
other claims including lack of contractual standing, since Petersen and Eton did not
own any YPF shares in 2014 when the government “concluded” the takeover.

• Experts on Constitutional Law say that Argentine law prevented the sovereign
from launching a Tender O er. When Congress approved the proposed
nationalization of YPF in April 2012, it did so through the “General Expropriation Law”
and through the “Public Interest Law”. According to the experts introduced to the
Court by both defendants, “Argentina public law clearly and indisputably establishes
that a private legal instrument (such as YPF’s Bylaws) is preempted and therefore
becomes unenforceable to the extent it conditions the exercise of the constitutional
power of expropriation of the state”. These experts, in a series of briefs led in New
York’s Southern District Court, add that “enforcing the Bylaws’ Tender O er provisions
would frustrate the express intent of the Public Interest Law”. In other words, in an
attempt to persuade Judge Preska and her recent remarks that she will consider
Argentine law to decide this case, the sovereign and the oil and gas company claim,

5 Summary judgment is a judgment entered by a court for one party and against another party without a full trial since most if not all of the facts, are already known.

6 The leading nance rm focused on law and majority stakeholder of both Petersen and Eton Park Capital cases.

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through experts, that requiring the Republic to comply with YPF’s Bylaws would be
inconsistent with the central aspects of Argentina’s public law.

• The government was restricted by Congress from acquiring the shares not
expropriated. Argentina also claims that, according to the General Expropriation Law
and the Public Interest Law, “the expropriated 51% stake in YPF transferred to the
State was made free of any encumbrance, debt and obligation”. Experts argue that, in
this sense, YPF’s Bylaws clearly condition, render ine ective and modify the State
expropriation powers since it could not have launched a Tender O er without violating
two laws passed by Congress.

• Argentina and YPF dispute Petersen’s and Eton’s argument that the government
modi ed the oil and gas company’s Bylaws to entice U.S. investors into buying
YPF’s shares. Defendants claim that despite enormous amounts of discovery, Petersen
and Eton have not uncovered any evidence that the Bylaws’ tender-o er provision
persuaded anyone to invest in YPF; indeed, the evidence is to the contrary. By the time
of the YPF IPO in 1993, investors were eager to invest in Argentina. The Republic
claims that “investor enthusiasm had nothing to do with any corporate Bylaw
provisions”. Starting in 1989, during the administration of President Carlos Menem,
Argentina pursued a policy of privatizing state-owned enterprises across a wide variety
of industries including telecommunications, railways, utilities, and banks. In fact, more
than sixty Argentine companies were privatized during this time and plainti s’ Bylaws
claims were not an issue in any privatization.

• Petersen and Eton also make solid arguments. Meanwhile, the Petersen companies
and Eton (both through Burford Capital), are focusing their strategy in arguing that
Argentine courts, like U.S. courts, do not strain to nd con icts between two statutes
(the Bylaws and the sovereign’s laws), but instead strive to interpret them
harmoniously. This is a very solid argument that tries to prove Judge Preska that
Argentina’s and YPF’s own defense plays in favor of plainti s’ case. As mentioned
before, Judge Preska has held that Plainti s’ claims are governed by Argentine law, but
the parties disagree on the interpretation and application of that law. According to
Petersen’s and Eton’s own experts, the sovereign’s Civil Code clearly says that
“contracts must be interpreted in good faith” and that “Argentine contract
interpretation rules direct courts to ascertain the mutual intent of the parties through
the text, context, and purposes of the relevant contract provisions”. It has also long
been established that both sides agree that the Civil Code of Argentina of 1871, which
was in force in 2012 when YPF was expropriated, applies in this case. In this sense,
Petersen and Eton also point out that the Second Circuit a rmed Judge Preska’s
conclusion that plainti s’ breach of contract claim is not based on Argentina’s
sovereign act of expropriation (“General Expropriation Law”) and now the Republic yet
again asks Judge Preska to dismiss plainti s’ claim on the basis that it is immune from
suit because the plainti s’ claim interferes with its “sovereign prerogatives”. These
facts, both Petersen and Eton argue, clearly show con ict between two statutes that
should be interpreted harmoniously and in good faith. Since the intention of YPF’s
Bylaws, amended in the 1990s, is to protect shareholders against the re-nationalization
of the company and the intention of Argentina’s Public Interest Law of 2012 was, in
part, to undo this protection, plainti s argue that, interpreted harmoniously as
Argentine law stipulates, these statues clearly show that Petersen and Eton should be
compensated.

• Numerous U.S. courts agree. Petersen and Eton point out that in rejecting
defendants’ sovereign immunity and act-of-state defenses, Judge Preska, in 2016,
squarely rejected arguments that plainti s’ claims o end Argentine public law or
Argentina’s sovereignty. The Second Circuit agreed in 2018, so did the Solicitor
General, on behalf of the United States, and the Supreme Court denied review in 2019.

• Petersen and Eton cry foul. Plainti s emphatically say that when foreign
governments and foreign companies come into the United States and make clear
promises to induce would-be investors and gain access to U.S. capital markets, they
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Quali

Eton Park
Case Case

should be hold accountable to the same standards as U.S. companies and the U.S.
government are. That is, everyone should honor their obligations and Argentina is well-
known for repeatedly reneging on its promises. As mentioned, Petersen and Eton argue
that, to entice private investors into purchasing shares of a newly privatized company
(YPF) in the one sector most vulnerable to re-nationalization, the government of
Argentina amended the YPF Bylaws and, through Articles 7 and 28, provided
assurances that, in the event of a re-nationalization, investors will get some
recompense. In their own words, “if Argentina and YPF had articulated any of the
positions they take in their summary judgment papers at the time of YPF’s IPO, that
critical privatization would have been dead on arrival”. Petersen and Eton add “given
Argentina’s checkered economic past, if Argentina and YPF had told investors that they
could only sue if they held on to their ADRs for years a er a re-nationalization and
then would have only limited remedies in Argentine courts, they would have been
laughed out of the road shows and been locked out of international capital markets”.
As explained, Argentina and YPF dispute these claims.

Current Ownership of all Legal Proceedings

• Petersen and Eton Park cases. Burford Capital, the world’s largest publicly traded
provider of litigation nance, has seen its risky investments in Argentina’s numerous
international legal fronts paid-o handsomely. Burford currently has two investments
in claims relating to Argentina’s nationalization of YPF. According to a July 2021 ling in
the LSE, Burford claims to have the following holdings in YPF’s cases:

✓ The rst investment is with respect to claims brought by the two Petersen
companies (both in insolvency proceedings in a Madrid court) which owned
about 100 million YPF shares prior to its nationalization. Burford has thus far
invested $18.4 million (plus legal fees) in the Petersen claims. Burford was
originally entitled to 70% of the proceeds. However, it has already sold
38.75% of its entitlement in the Petersen claims to QIBs for total cash
proceeds of $236 million. Burford claims that these secondary market
transactions were conducted between mid 2017 until mid 2019, with 40
quali ed institutional investors.

✓ The second investment is with respect to claims brought by Eton Park, a

major U.S. hedge fund that is no longer in business that owned about 12

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million YPF shares prior to its nationalization. Burford has thus far invested
$26 million in the Eton Park claims (plus legal fees), which are essentially
identical to the Petersen claims. Burford is entitled to approximately 75% of
the proceeds recovered from the Eton Park claims and currently retains 100%
of its net interest in the Eton Park matter. Burford designs the legal strategy
and responds any of the defendants’ arguments presented in the U.S. courts.

The remaining 30% of the Petersen case is allegedly in the hands on the Petersen
companies’ liquidating trust, although there are multiple uncon rmed rumors that, in
fact, a number of undisclosed individuals are the bene ciaries of an award. Meanwhile,
the remaining 25% of the Eton Park Capital case allegedly remains with the New York
fund, although following its bankruptcy, is unclear whether its management has sold
portions of the case to QIBs.

Valuation
• Since the beginning of the legal proceedings against YPF and against the Republic
of Argentina, the real value of the economic damages against the Argentine
defendants has been a topic of great discussion. The Petersen case was rst led in
April 2015 and did not include an amount sought by the plainti s, whereas the Eton
case, led a year later, included a $495 million recovery amount.

• Several banks and brokerage houses have always speculated with a $3 billion
global award. This gure uses YPF’s value of its shares if the government had
launched a Tender O er in April of 2012, following its re-nationalization. Although this
number seems to o er some sort of common sense guidance, it fails to consider a
series of additional factors that would considerably change the nal award. These
factors include the value of secondary market transactions by Buford, the value of YPF
shares before expropriation rumors swirled in late 2011, and the oil and gas company ’s
own tentative valuation detailed on its Bylaws.

• YPF announces its valuation. On December 4, 2021, the Argentine oil and gas
company led a press release in the SEC and in Argentina’s market regulator (CNV),
with the results of its own experts’ analysis of the economic damages related to both
legal proceedings in New York. In this press release, YPF claims that, while the
Petersen companies’ own experts (we assume them to be Burford Capital’s) estimate
an initial economic damage between $3.5 billion and $5.5 billion, the company’s
valuation of both cases is closer to $146 million. We now know that the actual
calculation of the plainti s’ experts is not near the $3.5 billion to $5.5 billion range that
YPF mentioned and we still do not know how the oil and gas company calculated its
award.

• Secondary market transactions. Another way of estimating the value of any future
monetary award to all owners of both cases, is taking Burford’s last secondary market
transaction of 10% of its stake in the Petersen case. According the the provider of
litigation nance, the amount paid by a quali ed institutional investor was $100 million
in mid 2019, implying a total value of $1 billion. If we also take the $495 million plus
interests claimed by Burford in the Eton case, we can conclude that, using secondary
market transactions, YPF and Argentina are facing a $1.5 billion to $1.7 billion payment.

None of the above valuation estimates contemplates the application of a 9% pre-judgment

interest set forth in CPLR § 5001 under New York law.

• Finally, there’s only one o cial formula that provides a clear guidance. According
to YPF’s Bylaws, Argentina should have launched a tender o er for Petersen’s and
Eton’s shares in YPF when it re-took control of YPF in 2012. The oil and gas company’s
Bylaws (Article 7, Point F, Section G), shows a formula for calculating the price that
Argentina should have paid for those shares. The formula relies on inputs such as
corporate earnings and historical trading prices. Speci cally, the relevant formula

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calculates share value by taking the highest P/E ratio over the two years prior to
Argentina providing notice of the expropriation and multiplying it by the last-twelve-
month earnings.

Petersen and Eton recently led their own expert report with a methodical and
comprehensive explanation on how this formula should be approached. In this report,
Daniel Fischel, President of Compass Lexecon, a consulting rm that specializes in the
application of economics to a variety of legal and regulatory issues, o ered his opinion
as to the size of the award. Professor Fischel was asked by Counsel for Petersen and
Eton Park to evaluate the economic purpose of the YPF Bylaws provision relating to
controlling acquisitions. He was also asked to calculate the minimum tender o er price
under YPF’s Bylaws Formulae, applying the Formulae as if Defendants had launched a
tender o er that would have been completed on April 16, 2012, for the shares of YPF
that were not expropriated. The results of Professor Fischel comprehensive analysis
are illustrated in Exhibit 2.

| Exhibit 2. Petersen & Eton Park’s Proposed Award Scenarios (*)

Estimated Damages Scenarios Award Petersen Award Eton Park

Without Prejudgement Interest $7,532 billion to $899 million to $1,116

- Range for Tender O er Notice Dates: Jul. 1, 2011 - Feb. 13, 2012. $9,356 billion billion

Prejudgement Interest 9% $13,935 billion to $1,663 billion to

- Range for Tender O er Notice Dates: Jul. 1, 2011 - Feb. 13, 2012. $17,310 billion $2,066 billion

Prejudgement Interest 8% $13,224 billion to $1,578 billion to

- Range for Tender O er Notice Dates: Jul. 1, 2011 - Feb. 13, 2012. $16,426 billion $1,960 billion

Prejudgement Interest 7% $12,512 billion to $1,493 billion to $1,855

- Range for Tender O er Notice Dates: Jul. 1, 2011 - Feb. 13, 2012. $15,542 billion billion

Prejudgement Interest 6% $11,801 billion to $1,408 billion to

- Range for Tender O er Notice Dates: Jul. 1, 2011 - Feb. 13, 2012. $14,658 billion $1,749 billion

(*) Prepared by Daniel Fischel, President of Compass Lexecon, a consulting rm that specializes in the application
of economics to a variety of legal and regulatory issues. Mr. Fischel was asked by Counsel for Petersen and Eton
Park to evaluate the economic purpose of the YPF By-laws provision relating to controlling acquisitions. He was
also asked to calculate the minimum tender o er price under YPF’s By-laws Formulae, applying the Formulae as
if Defendants had launched a tender o er that would have been completed on April 16, 2012, for the shares of
YPF that were not expropriated.

Analysis and Opinion

The Petersen and Eton complaints contain claims related to the expropriation of the
controlling interest of Repsol in YPF by the Republic in 2012, asserting that the obligation
by the government, as the new majority owner, to make a purchase o er to the remaining
shareholders would have been triggered following the change of control. These claims are
mainly grounded on allegations that the expropriation breached contract obligations
contained in the Initial Public O ering (IPO) and the Bylaws of YPF.

From the beginning, we have expressed our opinion that this litigation should have
been an open and shut case for plainti s. It is clear that the government of Argentina
should have launched a tender o er for all shares not included in the expropriation and,
failing to do so, gave the Petersen companies and Eton Park Capital enough reasons to le
a complaint seeking a monetary award. But Argentina has made solid arguments to
persuade Judge Preska to rule in its favor, claiming, above all, that it was barred by its own
laws from acquiring additional shares. The Republic in all of its international proceedings
(and it has plenty), has always found a way to “kick the can down the road” hoping to come
across some piece of information that will convince the judge that there was no
wrongdoing. Although it has so far accomplish its goal of delaying an outcome, a er seven
years litigating, the time has come to put this litigation in the history books.

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Argentina seldom wins an international arbitration. The Republic’s reckless

interpretation of international law, has generated multiple legal proceedings against the
sovereign with just a handful of victories. According to an SEC ling by the Argentine
government, since 2000, taxpayers have roughly paid $16.8 billion in monetary awards to
companies and bondholders as a result of adverse rulings. Now the Republic is facing yet
another blockbuster judgement that, a er seven years, four setbacks and not a single
major victory in a U.S. court, has all the ingredients to spell trouble for the sovereign.

However, if there is will, there is a way. If the Petersen companies and Eton lose, Burford
Capital, a company that has invested large amounts of resources in the case and has a
vested interest in its outcome, will come up empty handed. There is too much at stake for
Burford and the case stakeholders should be on alert. As long as the all litigation
proceedings remain ongoing, Argentina has the door open to score big and score late in the
game. We don’t know what the more than 100,000 pages of documents produced during
the Discovery phase have revealed. Only a handful have been made public. If Judge Preska
goes deep into Argentina’s arguments, she might nd grounds to side with the Republic. If
there is will, there’s a way. Otherwise, this has always been a simple breach of contract
case and Burford should win.

Let’s not forget about the Judge’s reputation. We still believe Judge Preska will rule in
plainti s’ favor and yes, there’s still time for Argentina to throw a Hail Mary Pass. But there
is too much a stake. This will unquestionably be a landmark ruling since it will set a
precedent for any sovereign nation that considers expropriating a U.S.-listed company. With
her ruling, we expect the Judge to send a strong message: every country that seeks to
access U.S. capital markets must be hold accountable to the same standards as U.S.
companies and the U.S. government are. If Judge Preska rules otherwise, sovereign nations
will be free to nationalize listed companies without any consequences leaving investors
unprotected from these “sovereign” acts.

We have always believed that the losing side will indeed lose big and that the
responsible approach to end all litigation was for either side to initiate talks that
would eventually lead to an out-of-court settlement. We also believe that the time for
such agreement is long gone. Congress would have to approve any settlement and
Argentina’s current political environment is not suitable to vote on such a delicate issue for
all Argentines. Let’s not forget that YPF’s privatization and subsequent re-nationalization,
involve more than just a Tender O er. The company’s history continues to be the source of
multiple accusations of corruption as well as local litigation proceedings that involve local
businessmen and politicians. A simple yes or no vote by Congress ahead of an election
year, is an unlikely scenario.

Petersen and Eton should not expect to get paid anytime soon. Argentina is in dire
straits with little foreign reserves and a handful of creditors trying to seize assets in
relation to cases that already have judgements, mostly by Judge Preska7. It is true that the
sovereign just received a $45 billion, three-year credit facility from the IMF. But this
agreement comes with strings attached and we do not believe (although we have not seen
the ne print of the agreement) that using IMF funds to settle all international
proceedings is part of the deal. If plainti s come up on top, they should expect multiple
scenarios:

1. Appeal by Argentina and YPF: Although both defendants have already lost an
appeal in an earlier stage of this litigation, it was, as we mentioned earlier, on the
grounds of State Doctrine. This means that the Republic and the oil and gas
company could le an appeal with the Second Circuit on di erent grounds and
push the resolution of this case, perhaps, for another 18 months. If an appeal is in
the horizon, we anticipate Judge Preska to order both defendants to deposit a
guarantee in an Escrow account.

7Attestor Master Value, Trinity Investments and Bainbridge Capital. There is also an ICSID ruling related to the expropriation of Argentina’s national ag carrier that has not yet
been settled and Titan Consortium is looking to enforce the judgement in a U.S. Court.

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2. Long and heavily contested negotiations: If on the other hand, Argentine

attorneys recommend the government that appealing an adverse ruling is not an
appropriate alternative, we expect both sides to hire a Special Master (mediator)
and start negotiations that will lead to a satisfactory outcome. These negotiations
will likely be long and contested since Argentina will do what it does best and
delay any payment. Although plainti s will eventually get paid, Judge Preska will
have a busy post-judgement period. This would not be the rst time Argentina
uses a Special Master to settle a NY claim and, the last time it did, a judge found
the sovereign in contempt for taking steps to evade his orders in a long-running
dispute with hedge funds suing over defaulted debt.

3. How Argentina will settle with plainti s remains a topic of speculation: In

2014, Argentina paid Repsol the equivalent of $5 billion for the 51% it expropriated.
At that time, the Republic paid with sovereign, dollar-denominated bonds issued
under Argentine law. However, Argie bonds traded better in 2014 than they do
today, and Repsol quickly sold all $5 billion worth of sovereign debt to Wall Street
banks. Today, Argentina’s bonds are trading in distressed territory and we don’t see
Buford agreeing to receive sovereign bonds at this stage. The government could
also o er YPF corporate bonds, oil royalties or some type of proceeds from
exports, although no alternative is being discussed at the moment.

4. Selling additional YPF shares in the open market: Use proceeds from a follow-
on o er of YPF’s shares is not out of the question, although current shareholders
may have something to say about it. The oil and company’s current market cap is
$3 billion with each ADS trading at $4.4 at the NYSE.

5. YPF may also be found liable. If the Judge also rules against the oil and gas
company, we imagine an unlikely scenario where Argentina, unable to pay what’s
due, sells company’s assets and tries to avoid attachments by a U.S. Court.
Argentina has done a good job in recent years of protecting sovereign assets from
creditors and has reduced its exposure overseas to a bear minimum. However, as
the sovereign’s Alter Ego, YPF still has assets in the U.S. that could be seized.

6. Buford Capital could negotiate a payment with likely presidential candidates

ahead of critical elections: This would be one of those “history repeats itself”
cases. In 2014 and 16 months before the country’s 2015 elections, Argentina
intentionally failed to comply with a judgment related to its defaulted sovereign
bonds and Judge Preska’s predecesor (Judge Thomas Griesa), approved injunctions
on all foreign debt payments, forcing Argentina into default. Paul Singer’s NML
Capital bet that a new government would be elected and quickly settle all
judgements with creditors. It paid o . During the 16 months Argentina was in
default and unwilling to negotiate with bondholders, NML Capital prepared the
ground for a likely opposition victory. Argentina’s current vice-president Cristina
Fernandez was the president during this period and Mauricio Macri, who’s party is
currently leading the polls with him as a likely candidate, won the elections. Not
coincidentally, we are now 16 months away from Argentina’s next presidential
elections.

Finally, should the ruling go on its favor, we expect Burford to negotiate an exit
strategy of its Eton economic entitlement with interested U.S and UK-based funds. In
2018, in an ICSID case that involved the nationalization of argentina’s national ag carrier,
Burford sold its entire interest in the case for $107 million a er acquiring the rights for $13
million a few years earlier. The global nance and investment management rm, opted out
of the case a er the arbitral tribunal decided the entire matter in Burford’s favor and
awarded it more than $300 million damages. However, a er learning that Argentina would
le for an annulment of the judgement, delaying the award for at least two more years,
Burford decided that it was time to realize gains and reached an agreement with Titan
Consortium for $107 million plus a Put Option. Titan has not yet received any payment
from Argentina and is currently trying to enforce a judgment in a Delaware court. As we
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explained before, Burford will not realize any gains on the Petersen and Eton matters
anytime soon should they win. There’s little doubt that Argentina will try to delay such
payment. For this reason, we anticipate Burford to negotiate an exit strategy just of its
stake in the Eton case with interested U.S and UK-based funds and cash-in sometime this
year. In 2019, Burford announced that it sold a further 10% of its entitlement in the
Petersen matter into the secondary market, leaving Burford with 61.25% of its original
entitlement. Since Burford has committed always to hold at least 50.1% of its original
economic entitlement in the Petersen matter, we don’t expect to negotiate an exit strategy
of this case.

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