- Argentina expected to appeal
- Damages still to be decided
Shares in Burford Capital (BUR) jumped by 30 per cent in early trading, following a ruling in a long-running lawsuit. The litigation funder expects “substantial damages” to be awarded after a federal court in New York sided with Burford-backed plaintiffs in a case against Argentina.
The claim relates to the nationalisation of the public shares of energy company YPF by the Argentine government in 2012. Burford has been pursuing the claim since 2015, and said the summary judgment is a “major milestone”, representing a “complete win against Argentina with respect to liability”. YPF was not found liable.
Damages have yet to be calculated. However, investment bank Canaccord Genuity said they could be between $2bn (£1.6bn) and $3.4bn before interest, given that the group is entitled to 40 per cent of potential gross proceeds. This tallies with Peel Hunt estimates of $2bn-$3.2bn.
The plaintiffs can either negotiate a resolution with Argentina, which would likely result in a “substantial discount to the judgment amount in exchange for agreed payment,” according to Burford. Canaccord Genuity said such a settlement could be half of the judgment claim value. Alternatively, the plaintiffs can launch an “enforcement campaign” against Argentina which would “likely be of extended duration”.
Neither option is expected to be quick, however, and cash is unlikely to be forthcoming. A decision on damages will take “some number of months” and Burford said it would be “surprising” if Argentina did not appeal the court’s decision. Both parties then have the option to appeal to the Supreme Court.
Argentina has previously been at the centre of dramatic battles for payment - Elliott Management famously seized one of its navy's ships in Ghana in 2012 in its fight to be repaid after a major bond default.
Canaccord Genuity also flagged that “significant uncertainty” hangs over Burford’s financial statements more generally. Last month, the funder delayed the publication of its audited full-year results, and warned that financial statements in its 2022 annual report “may differ materially from prior disclosures”. This followed a six-month review by the US Securities and Exchange Commission (SEC) into how Burford values its legal finance assets.
