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Judge: Lawyers can seek facts about Argentina bond offering

Published:Friday | April 24, 2015 | 12:00 AM

Lawyers for US bondholders who are owed money by Argentina can seek information from banks and the republic about a new bond offering it has arranged, a judge said Wednesday.

United States District Judge Thomas Griesa told lawyers for billionaire hedge fund investor Paul Singer's NML Capital Limited that they are entitled to basic facts about the over billion-dollar offering. He said the information will allow them to see if there is any money they can try to obtain to satisfy judgments totalling about US$1.5 billion. He called their effort a "legitimate quest".

The judge said he would prefer that Argentina negotiate through a court-appointed special master with the US bondholders to settle their claims, but he understands the only other avenue is to try to siphon away money connected to Argentina that is passing through US financial institutions.

Argentina's leaders call the US funds "vultures" because they refused to participate in swaps in 2005 and 2010 in which more than 90 per cent of Argentina's bondholders agreed to accept lesser-valued bonds.

Internal domestic debt

Attorney Jonathan Blackman, representing Argentina, told the judge that the offering was a "purely internal domestic Argentine debt offering of a kind Argentina has done repeatedly over many years".

He said the money would be used to fund infrastructure and social issues in Argentina. The republic conducted a similar offering a year ago, he added.

He called the request by NML Capital "ridiculous", saying the bondholders were seeking information in the hopes they could seize assets they were not entitled to.

Attorney Robert A. Cohen, representing NML Capital, said he wants to see how the bond deal is structured to ensure it is not a ruse to evade the judge's orders.

The judge has required Argentina to pay the US creditors if they pay bondholders who accepted lesser-valued bonds in the debt swaps.

Cohen said Deutsche Bank AG in New York is buying the bonds from Argentina and was making calls to create a market to resell them. He said he knew that was true because some of the plaintiffs had received calls from Deutsche Bank about the bonds.

He asked for quick action by the judge because the bond deal was slated to close yesterday, Thursday.

The judge directed lawyers on all sides to immediately discuss what information can be turned over and to contact him if there are problems.

"The plaintiffs are entitled to discovery to determine if the new financing will produce assets which are available to satisfy, in whole or in part, the plaintiffs' long-standing unsatisfied debt," he said. "Mr Cohen has a legitimate need for very prompt information."

A lawyer for Deutsche Bank told the judge it would cooperate but said NML had not specified what information it was seeking.

- AP