Lawless
All About Brad!
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Registered: Jun 2003
Local time: 09:12 AM
Location: Freezing in Colorado
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By Hugh Bronstein and Brian Winter
NEW YORK/BUENOS AIRES, Argentina (Reuters) - Argentina will outline its plan for restructuring $100 billion in defaulted debt on Monday, although many of its 500,000 bondholders are braced for an unappetizing proposal that could kick off years of haggling.
More than 21 months after an epic economic collapse led the government to stop payments on its debts, officials are expected to ask for a massive "haircut," or reduction in the debt's value, when they unveil the plan at the International Monetary Fund's annual meeting in Dubai next week.
Meanwhile, there is an increasingly impatient judge in New York who might allow bondholders to start seizing government assets if he believes the Argentine proposal does not justify putting such action off.
With thousands of Argentine children suffering from malnutrition and more than half the population unable to feed or clothe itself properly, Economy Minister Roberto Lavagna recently warned the tough proposal "will cause long faces in several languages."
Analysts say Argentina could propose a haircut of as much as 85 percent.
"There is a delicate balance between the first step in a tough negotiation and a proposal that would frighten creditors so much they would go directly to court," said Martin Caselli, a lawyer for Alfaro Abogados, an Argentine law firm that is advising foreign creditors.
FRUSTRATION BUILDING
"We do not expect our clients will find the proposal acceptable, but we will of course consider anything that is offered," said Joel Chernov of the New York law firm Dreier LLP, which represents holders of more than $10 million in Argentine paper.
Since the default in January 2002, Japanese bondholders have sought to seize land in the vast Patagonia region, while Europeans have tried to claim Argentine property abroad to secure their debts.
This week, Judge Thomas Griesa of the U.S. Southern District of New York gave the government 45 days to get the restructuring under way before creditors can start laying their hands on assets. But he warned Argentina that it cannot expect one stay after another without showing concrete signs of progress on the restructuring.
"A time comes when the court must give bondholders the option of litigation," the judge said.
In Monday's court hearing, Griesa read aloud from President Nestor Kirchner's May inaugural speech and subsequent government statements, searching for signs that Argentina intends to negotiate a settlement.
The government's lawyer, Jonathan Blackman, told the judge that, on the eve of Dubai, now would be the worst time to permit investors to start seizing assets.
EM Ltd, a Cayman Islands-based company claiming to be owed about $700 million in principal and interest, argued that, at every point in the case so far, Argentina has claimed to be at a critical juncture.
"We are faced with the prospect of an infinite number of critical points," which would be no good reason to keep stopping investors from getting back their money, EM lawyer John Missing told Griesa.
EM Ltd. is controlled by Kenneth Dart, the plastic coffee cup tycoon and emerging market investor, who last decade was involved in Brazil's restructuring, according to court papers filed by Argentina.
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09-19-2003 08:47 PM
