BURFORD CAPITAL STATEMENT ON YPF DAMAGES RULING
- The Court's ruling implies a judgment against Argentina of approximately $16 billion
- None.
Court's Ruling suggests a final judgment of approximately
The Ruling follows a prior decision on March 31, 2023 by the Court granting summary judgment on liability against
The Court decided the issues raised at the hearing in Petersen's and Eton Park's (collectively, "Plaintiffs'") favor, holding that the appropriate date for the tender offer was April 16, 2012 and that pre-judgment interest should run from May 3, 2012 at a simple interest rate of
The Court has asked the parties to memorialize the Ruling in a proposed judgment and submit it to the Court, which Petersen and Eton Park will endeavor to do forthwith. We discuss below the computation of potential damages but in round numbers the Court's Ruling implies a judgment against
In other words, the Ruling results in a complete win against
Jonathan Molot, Burford's Chief Investment Officer who leads Burford's work on the Case, commented:
"We have been pursuing this case since 2015 and it has involved substantial Burford management time along with the dedicated engagement of a team of some of the best lawyers on the planet from multiple law firms and world-class experts (going up against very good lawyers, and winning). Burford is uniquely positioned to pursue these kinds of cases and secure wins for clients and substantial returns for shareholders – not only because of the size and scale of these kinds of cases, but because of the internal and external resources we can uniquely bring to bear. There is no aspect of this case, from strategy to minutiae, that did not involve an experienced Burford team spending many thousands of hours getting to this point. This case represents what Burford is all about and exemplifies the contribution we make to the civil justice system – without us, there would be no justice in this complicated and long-running case for Petersen and Eton Park."
Christopher Bogart, Burford's Chief Executive Officer, commented:
"In our recent shareholder letter, we referred to the YPF-related assets as one of Burford's four pillars of value and I'm pleased to see this extraordinary win and the value it could create for our shareholders once we complete the litigation process and collect from
Introductory matters
As is customary in US litigation, the Ruling was released without prior notice to Burford or the parties by its posting on PACER, the publicly available official US federal court site, at 10:45am EDT on September 8, 2023, and was thus public immediately upon release. The Ruling is also available in its entirety on Burford's IR website at http://investors.burfordcapital.com for the convenience of investors who did not wish to register for a PACER account.
While Burford offers in this release its views and interpretation of the Ruling, those are qualified in their entirety by the actual text of the Ruling and we caution that investors cannot rely on Burford's statements in preference to the actual Ruling. In the event of any inconsistency between this release and the text of the actual Ruling, the text of the actual Ruling will prevail and be dispositive. Burford disclaims, to the fullest extent permitted by law, any obligation to update its views and interpretation as the litigation proceeds. Moreover, the Case remains in active litigation and
Burford also cautions that there are meaningful remaining risks in the Case, including further proceedings before the Court, appeals, enforcement and collateral litigation in other jurisdictions. Moreover, litigation matters often resolve for considerably less than the amount of any judgment rendered by the courts and to the extent that any settlement or resolution discussions occur in this Case no public communication about those discussions will be possible until their conclusion.
The Ruling
The Court previously held that (i) the bylaws "on their face, required that the Republic make a tender offer" for Petersen's and YPF's shares; (ii) "the Republic failed to make the tender offer"; and (iii) the failure "harmed Plaintiffs because they never received the compensated exit" that the bylaws promised. Indeed, the Court held that "once the Court decides the legal issues, the relatively simple facts in this case will demand a particular outcome" and held that "there is no question of fact as to whether the Republic breached".
Thus, the Court held that "Plaintiffs were damaged by the Republic because Plaintiffs were entitled to receive a tender offer that would have provided them with a compensated exit but did not".
The Court previously held that the damages to be awarded will consist of the tender offer price under Formula D of the bylaws calculated in US dollars as of a constructive notice date that is 40 days prior to
The calculation of damages using a notice date that is 40 days before the April 16, 2012 takeover was included in Plaintiffs' publicly filed summary judgment brief and would imply tender offer consideration of approximately
The Court also previously reserved for determination the prejudgment interest rate that would run from the date of the breach in 2012 through the issuance of a final judgment in 2023. The Court accepted that "the commercial rate applied by the Argentine courts is the appropriate measure" and noted that Plaintiffs had pleaded that that rate was "between
Subject to final computations by the parties' experts, that finding implies interest of approximately
Investors may find notable the Court's commentary on Burford's role in the case:
The Court also rejects the Republic's effort to inject Burford Capital into these proceedings. This remains a case brought by plaintiffs against a defendant for its wrongful conduct towards them, and the relevant question is what the Republic owes Plaintiffs to compensate them for the loss of the use of their money, not what Plaintiffs have done or will do with what they are owed. The Republic owes no more or less because of Burford Capital's involvement. Furthermore, the Republic pulled the considerable levers available to it as a sovereign to attempt to take what it should have paid for and has since spared no expense in its defense. If Plaintiffs were required to trade a substantial part of their potential recovery to secure the financing necessary to bring their claims, in Petersen's case because it was driven to bankruptcy, and litigate their claims to conclusion against a powerful sovereign defendant that has behaved in this manner, this is all the more reason to award Plaintiffs the full measure of their damages.
Next steps
The Court has asked the parties to submit a proposed judgment reflecting the Ruling, which Plaintiffs will endeavor to do promptly. Once that judgment issues,
There is also a process for seeking reconsideration from the District Court of its own ruling, although such motions rarely prevail as they are being made to the same judge who decided the matter originally.
Once the Court issues its final judgment, that judgment will be appealable as of right to the Second Circuit Court of Appeals.
The Second Circuit presently is taking around a year to resolve appeals once filed, although there is meaningful deviation from that mean. The District Court's judgment would be enforceable while the appeal is pending unless
Following the Second Circuit's decision, either party can seek review from the Supreme Court of
With an enforceable judgment in hand, Plaintiffs will either need to negotiate a resolution of the matter with
Burford's position
Burford has different economic arrangements in each of the Petersen and Eton Park cases.
At bottom, on a net basis, we expect that the Burford balance sheet will be entitled to around
In the Petersen case, Burford is entitled by virtue of a financing agreement entered into with the Spanish insolvency receiver of the Petersen bankruptcy estate to
Burford has, however, sold
In the Eton Park case, there is both a funding agreement and a monetization transaction. The net combined impact of those transactions is that Burford would expect to receive around
In both Petersen and Eton Park, the numbers above are approximations and will vary somewhat depending on the ultimate level of case costs by the end of the Case, as we expect continued significant spending on the Case.
For further information, please contact:
Burford Capital Limited | |
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David Helfenbein, Vice President, Public Relations – email | +1 (212) 235 6824 |
Numis Securities Limited – NOMAD and Joint Broker | +44 (0)20 7260 1000 |
Giles Rolls | |
Charlie Farquhar | |
Jefferies International Limited – Joint Broker | +44 (0)20 7029 8000 |
Graham Davidson | |
Tony White | |
Berenberg – Joint Broker | +44 (0)20 3207 7800 |
Toby Flaux | |
James Thompson | |
Arnav Kapoor |
About Burford Capital
Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in
For more information, please visit www.burfordcapital.com.
This announcement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford.
This announcement does not constitute an offer of any Burford private fund. Burford Capital Investment Management LLC, which acts as the fund manager of all Burford private funds, is registered as an investment adviser with the US Securities and Exchange Commission. The information provided in this announcement is for informational purposes only. Past performance is not indicative of future results. The information contained in this announcement is not, and should not be construed as, an offer to sell or the solicitation of an offer to buy any securities (including, without limitation, interests or shares in any of Burford private funds). Any such offer or solicitation may be made only by means of a final confidential private placement memorandum and other offering documents.
Forward-looking statements
This announcement contains "forward-looking statements" within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, regarding assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". In some cases, predictive, future-tense or forward-looking words such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "potential", "predict", "projected", "should" or "will" or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, Burford and its representatives may from time to time make other oral or written statements which are forward-looking statements, including in its periodic reports that Burford files with, or furnishes to, the US Securities and Exchange Commission, other information made available to Burford's security holders and other written materials. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Burford cautions you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions, expectations, projections, intentions and beliefs and that Burford's actual results of operations, including its financial position and liquidity, and the development of the industry in which it operates, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. Significant factors that may cause actual results to differ from those Burford expects include, among others, (i) uncertainty relating to adverse litigation outcomes and the timing of resolution of litigation matters and (ii) those discussed under "Risk Factors" in Burford's annual report on Form 20-F for the year ended December 31, 2022 filed with the US Securities and Exchange Commission on May 16, 2023 and other reports or documents that Burford files with, or furnishes to, the US Securities and Exchange Commission from time to time. In addition, even if Burford's results of operations, including its financial position and liquidity, and the development of the industry in which it operates are consistent with the forward-looking statements contained in this announcement, those results of operations or developments may not be indicative of results of operations or developments in subsequent periods.
Except as required by law, Burford undertakes no obligation to update or revise the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise.
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SOURCE Burford Capital