03.02.2005 – 22:18
GCAB Condemns Argentina's Most Recent Attempt to Coerce Holders Into Its Exchange Offer
New York (ots/PRNewswire)
Yesterday, the Argentine Economy Minister Roberto Lavagna announced that the executive branch would send to the Argentine Congress a law that would prohibit any future offer to bondholders who do not accept the current exchange offer commenced by Argentina on January 12, 2005. In addition, the law would require the government to take all necessary steps to delist defaulted bonds not tendered in the exchange offer.
This proposal is another deliberate attempt by Argentina to threaten bondholders into accepting a unilateral and coercive exchange offer that many holders are now realizing is well below Argentina's ability to pay and does not represent fair value for the defaulted debt held by hundreds of thousands of holders. It ignores the various international legal systems under which the defaulted debt was issued. Passing a law in Argentina does not subordinate a creditor's rights that are contained in the bond agreements.
Holders of the defaulted debt should recognize that this action by Argentina is a last ditch attempt to rescue a failing transaction following public rejection of the offer from major bondholder groups. Congressional action in Argentina will not supersede rights under international law. Moreover, Argentina has historically adopted and repealed laws to suit short-term political goals and this action should not be considered a permanent change.
If there was any question that Argentina has not acted in good faith, this development should clarify matters. Given this lack of good faith, which is contrary to its written commitment to the International Monetary Fund and the G-7 to do so, the IMF cannot re-engage Argentina and, in any way, provide added financial assistance as it will be acting in direct contradiction of its own policy regarding "lending in arrears."
The Official Sector needs to finally express, in the strongest possible terms, its condemnation of this maneuver, which will establish a dangerous precedent for sovereign bond issuances. GCAB again calls on the G-7 and the IMF to reject this plan and denounce Argentina's unilateral and coercive exchange offer as Italy has already done so rather than stand by in tacit approval.
GCAB was formally established in January 2004 by representatives of all the major foreign bondholder constituencies of defaulted Argentine debt, and consists of a broad-based group of holders. The Steering Committee represents holders from Germany, Italy, Japan, Switzerland, the USA and other countries. Its retail and institutional members hold approximately US$40 billion in defaulted debt of Argentina, accounting for 45% of the principal amount of US$82 billion in outstanding Argentine debt and 73% of all outstanding Argentine debt held outside Argentina.
In order to download its recent Investor Roadshow Presentation, the Urban Class Action Appendix to the class notice distributed in connection with the Urban Class Action filed in the United States, a GCAB general membership form, position papers or obtain additional information, please visit the GCAB website at http://www.gcab.org .
GCAB Contact: Hans Humes Greylock Capital Associates, LLC +1-212-808-1818 Nicola Stock Associazione per la Tutela Degli Investitori in Titoli Argentini +3906-676-7603
Investors in Argentine securities must make their own evaluation, analysis and decision with respect to participation in any exchange offer, restructuring, debt swap or other transaction, based on such information as they deem appropriate after consultation with their own advisors and without reliance upon this communication or any materials contained herein or furnished herewith or upon GCAB or any of its members, affiliates or advisers. Any such evaluation, analysis and decision should be based on, among other matters, the investor's own views as to the financial, economic, legal, regulatory, tax and other risks and consequences associated with Argentina's exchange offer, including but not limited to the consequences of declining to participate in any exchange offer proposed by Argentina, the structure, terms and conditions of any proposed new securities, the Argentine political situation and economy, convertibility and exchange rate risks, and risks posed by developments in other emerging market countries.
GCAB and each of its members, affiliates and advisors disclaims any and all liability relating to any exchange offer or other transaction proposed by Argentina or any creditor's decision regarding its participation or non-participation in any such exchange offer or any transaction or any litigation pursued by or on behalf of such creditor either individually or in concert with others, whether or not such decision was made in whole or in part based on information furnished by or obtained through GCAB.
The information contained herein or furnished herewith are for discussion purposes only and do not constitute an offer or solicitation of an offer to purchase or sell any security. These materials are not intended to form the basis, in whole or in part, for any investment decision or to provide a rating or recommendation of any kind with respect to any investment opportunity. Factual information contained herein or furnished herewith has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Any financial and economic projections and pricing estimates contained herein or furnished herewith are illustrative only and are based on assumptions that may prove inaccurate or incomplete. Actual prices, performance and results may differ substantially. GCAB and each of its members, affiliates and advisors disclaims any and all liability relating to these materials including, without limitation, any error in or omission from the information contained herein or furnished herewith and any duty to update the same in whole or in part. These materials speak only as of the date hereof and are subject to change without notice. The views expressed herein or furnished herewith do not necessarily represent the position of any GCAB member, affiliate or adviser. GCAB and its members, affiliates and advisers may have positions and deal as principal in transactions in securities discussed herein (or options with respect thereto), including positions and transactions inconsistent with the matters discussed herein.
Web site: http://www.gcab.org
Hans Humes of Greylock Capital Associates, LLC, +1-212-808-1818;
Nicola Stock, Associazione per la Tutela Degli, Investitori in Titoli
Argentini, +3906-676-7603, both for GCAB