President Javier Milei’s government has vowed to appeal after a judge in the United States ordered Argentina to hand over more than half of the shares in state energy firm YPF.
US District Judge Loretta Preska on Monday ordered Argentina to surrender its majority stake in the energy giant – the latest blow to Buenos Aires in a decade-long international legal saga.
She said the nation must hand over 51 percent of YPF’s shares to partially settle a US$16.1-billion debt owed to two companies affected by the controversial nationalisation of the oil firm in 2012.
Milei promptly vowed to appeal, while blaming the main opposition Peronist movement for the court furore.
The case revolves around the 2012 renationalisation of YPF from the control of Spanish energy giant Repsol, a process carried out during former president Cristina Fernández de Kirchner’s second term in office (2007–2011; 2011-2015).
Two minority shareholders, Petersen Energía and Eton Park Capital, filed suit in 2015 seeking damages for allegedly not receiving proper compensation in the takeover.
Judge Preska ruled in favour of the plaintiffs and, in September 2023, ordered Argentina to pay more than US$16 billion to the firms.
To partially satisfy the outstanding amount, she on Monday ordered Argentina to transfer “51 percent of YPF Class D shares” to an intermediary.
Argentina’s government has 14 days to transfer the shareholding package to a global custody account at the Bank of New York Mellon (BNYM), said Preska, after which ownership will be transferred to the judgment’s beneficiaries or their designees.
‘National interests’
"We will appeal this decision in all appropriate courts to defend national interests," Milei posted on X shortly after the ruling was published.
He pointed the finger at Axel Kicillof, who was deputy economy minister in 2012 under then-president Fernández de Kirchner and led the takeover push. He is now seen as a potential 2027 presidential candidate for the opposition Peronists.
YPF, a century-old and iconic national firm with more than 22,000 employees, was privatised in the 1990s and gradually came under the control of Repsol. It was renationalised in 2012 under Fernández de Kirchner, raising concerns at the time about the security of investments in Argentina.
In 2014, after months of dispute, Repsol reached an agreement with Fernández de Kirchner’s government for compensation of around US$5 billion.
The Petersen Group and Eton Park Capital – which together held 25.4 percent of YPF's capital – filed suit in 2015, arguing that the government had failed to submit a Public Purchase Offer (OPA), or takeover bid, as required by law.
Preska’s ruling found that the government’s takeover violated company bylaws, which obliged it to make a tender offer to all shareholders at a predetermined price.
Kicillof, now the governor of Buenos Aires Province, said at the time that such a requirement would have been a “trap” and that only a “moron” would have expected Argentina or YPF to comply with it.
He was the main proponent of the bill declaring the shares to be of public utility and defended its expropriation in Congress, arguing that Repsol had run it into the ground.
Milei on Monday described the Peronist as a “useless Soviet,” writing on X: “More than 10 years have passed and Argentines are still suffering the consequences of the worst government in our history.”
Kicillof described Monday’s ruling as “nonsense,” branding it a “legal absurdity and an intolerable interference.” He accused Milei of “siding with foreign powers and not with the national interests he should represent and protect.”
The governor described the expropriation of YPF as “one of the most important decisions in our recent history” and said the company had “returned to production, investment, growth and job creation.”
Initial ruling
In September 2023, Preska ordered Argentina to pay US$7.5 billion in damages and US$6.85 billion in interest to Petersen Energía.
She also ordered the country to pay around US$1.7 billion (in damages and interest) to Eton Park Capital, with post-judgment interest accruing at an annual rate of 5.42 percent until the ruling is fulfilled.
Burford Capital, a firm that specialises in acquiring third-party litigation, paid just US$16.6 million to finance the lawsuits. It now stands to gain from 38 percent of the judgement.
News of the court order sent YPF shares tumbling on Wall Street, with the stock falling more than five percent shortly after the ruling was made public.
Argentina has already appealed the YPF case twice.
Last year, under the Milei administration, the country also failed to comply with a court order to post a guarantee while the appeal was being resolved. Under US law, this allowed the judgment’s beneficiaries to seek seizure of YPF shares.
Given Argentina’s non-compliance, the judge has now ordered the shareholding package to be handed over to the beneficiaries of her ruling.
The expropriation case was brought before US courts because YPF is listed on the New York Stock Exchange.
In March 2023, Judge Preska ruled that Argentina was liable for losses stemming from the oil company’s nationalisation. The US Supreme Court had previously rejected Argentina’s request to move the case to its domestic courts, issuing a final decision in June 2019.
The decision was issued without an oral hearing. Judge Preska also rejected the government's request for a postponement and warned that failure to comply could result in civil contempt sanctions or further asset seizures.
Notably, the US government had urged the court in 2023 not to advance with the transfer of YPF shares, warning of potential diplomatic repercussions. Preska’s ruling nonetheless proceeded in favour of the plaintiffs.
In another ruling on Monday, the judge also ordered Argentina to hand over YPF shares to the Bainbridge hedge fund as payment for US$95 million plus interest in a separate case related to defaulted debt.
– TIMES/AFP/NA
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