Argentina agrees to forgo change of exchange offer terms; judge freezes $2.43 billion of assets

By Angela McDaniels

Tacoma, Wash., May 24 - Argentina's declaration that it will not change the terms of its exchange offer once bondholders tender their bonds was accepted by U.S. district court judge Thomas P. Griesa on Thursday, according to a news release from law firm Diaz Reus.

The judge also issued a restraining order that freezes $2.43 billion in Argentine government assets held by Banco de la Nación Argentina.

The ruling was made in a case brought by eight plaintiff class-action groups holding defaulted bonds issued by the republic, and the restraining order was issued in response to their request.

The law firm said that these bondholders won a series of judgments in 2009 that total $2.43 billion plus interest and have not been paid.

The restraining order will allow the plaintiffs to attach all available U.S. assets held by Argentina in the name of its alter ego, Banco de la Nación Argentina, and halts any sale, assignment, transfer or interference with any property in which the government has an interest, according to the release.

No changes

"Now, any class member who wishes to enter into the bond exchange can do so with the certainty that Argentina gave up the right to reduce the terms of the offering," plaintiffs' attorney Guillermo Gleizer of Diaz Reus said in the release.

In the Securities and Exchange Commission filing for the exchange offer, the republic had reserved the right to amend the offer, extend or delay the settlement date or modify the settlement procedure in any way. The settlement date is expected to be 21 to 56 days after the offer expiration, but Argentina warned that it could be "significantly longer."

Holders cannot withdraw their tenders once given unless Argentina extends the offer by more than 30 days or is required to grant withdrawal rights by U.S. laws.

The exchange offer began April 30 and will expire at 5 p.m. ET on June 7.

Equal treatment sought

Michael Diaz, managing partner of Diaz Reus and co-lead counsel in the class-action cases, said that under the exchange offer, bondholders would lose their right to participate in a $2 billion attachment against funds held by Argentina in an account at the Depository Trust & Clearing Corp. in the United States and frozen by a Nov. 19 attachment order.

Under the exchange offer, bondholders would exchange about $300 of their defaulted bonds for about $100 principal amount of new bonds. However, the law firm noted that members of the class-action groups would have to exchange $300 in bonds plus another $150 - their share of the value of the U.S. judgment and the value of the attached bonds.

Diaz said judge Griesa has held that Argentina should treat all recipients of the exchange offer in the same way. "As a result, it may well be that Argentina's offer is a violation of the judge's order and that the bond offer is invalid," he said in the release.

"Argentina should be made to go ahead in compliance with the lawful order of the U.S. judicial system to ensure equal treatment to all bondholders."

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