Argentina said on Friday it had agreed to pay about $500 million to resolve disputes with several European and US corporations as it seeks to rebuild foreign investor confidence amid a bitter court dispute with some bondholders. The payment will be made in sovereign bonds to four companies that filed complaints at the World Bank's International Centre for Settlement of Investment Disputes and one firm that took its case to the UN Commission on International Trade Law, a government statement said Friday.
Five agreements were signed with the companies, which agreed to a 25 percent discount on a total $677 million in claims, a communique from Argentina's economy ministry said. The decision coincides with a sensitive time in the South American country's battle in US courts with hedge funds that refused to take part in two debt restructurings following Argentina's 2002 default.
Argentina hopes the Obama administration will ask the US Solicitor General to present arguments to the US Supreme Court on whether the case merits the court's attention after a lower court ruled in favour of bondholders who will not accept reduced payments under a restructuring agreement. The country is also looking to present its best face in order to help unlock additional credit lines from the World Bank, International Monetary Fund and People's Bank of China in order to support its dwindling foreign currency reserves.
Companies to be paid in the settlement include France's Vivendi SA, US- based water company Azurix and Blue Ridge Investments, a subsidiary of Bank of America Corp. Other companies include CC-WB Holdings LLC, which holds the rights to claims made by Continental Casualty Company, a unit of Chicago-based CNA Financial Corp, and NG-UN Holdings LLC, which holds rights to claims by British electric and gas utility National Grid PLC at the UN commission. Under the terms of the deal, the firms reduced the amount of compensation they were seeking by 25 percent.
"The proposals consist of the cancellation of those claims exclusively with public debt, for amounts which represent ... a significant discount on the requested sums and a reasonable period for repayment," said the government statement. Argentina's government will pay the compensation in US dollar-denominated bonds known as Boden 2015 and Bonar X, which offer a 7 percent annual interest rate. Neither the government statement, issued as an "administrative decision" by the Cabinet chief, nor the economy ministry communique specified the amounts to be paid to each of the companies cited.
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