At May 19, the Group made a restructuring proposal to the Province and, in turn, the May 28, the province responded with a counter-proposal, which it has since released (the “PBA proposal”). Although the Group believes that the province has opportunistically sought more debt relief than its short- and medium-term financial outlook warrants, over June 4, with the aim of resolving in a consensual manner this long-standing default, the Group presented to the Province a proposal (the “Group Proposal”) accepting the total debt service envelope established in the Proposal of the ‘AP. The group’s proposal also provided details regarding the structure and terms of the new notes that would be issued to implement the restructuring. A copy of the group proposal is available at https://www.arg-prov-coalition.org/en/province-of-buenos-aires.

The group proposal was based on the province’s total debt service envelope and offered: (a) substantial relief in early period cash flow through an over 85% reduction in current contractual obligations in under the Notes over the next three years; (b) significant relief in the medium and long term to enable the province to rebuild a sustainable economic framework; and (c) resolution of longstanding defaults under the Notes and related disputes.

Despite the above, the province rejected the group’s proposal citing its dissatisfaction with certain aspects of the structure of the new notes that have virtually no impact on the affordability of the proposal.

A close examination of the facts shows very clearly that the province’s rejection of the group proposal had nothing to do with legitimate concerns about debt sustainability. In fact, the group proposal gave the province more than enough leeway to meet all of its financial needs and offered debt service relief well beyond what other provinces had agreed with their creditors. Simply put, the group proposal was the most generous debt restructuring proposal presented by creditors in any province of Argentina in the current restructuring cycle, as noted above.

It should also be noted that the regrettable rejection by the Province of the group proposal occurred in the context of a rapid recovery in economic activity and tax revenues in Argentina, supported by both standardization and the extraordinary improvement in commodity prices and hence that of Argentina terms of trade. In light of this ongoing economic recovery and normalization, and the province’s continued attempts to behave opportunistically and in disregard of the legitimate expectations of its bondholders, the Group has now officially revoked the Group Proposal.

The Province has been in default of payment under the Notes for over a year. Group members are disappointed that the Province continues to play tactical games with bondholders rather than approaching restructuring negotiations responsibly in a spirit of good faith. As the Province’s economic environment continues to improve, the Panel will expect any future Province proposal to accurately reflect the Province’s true debt service capacity as it develops. it evolves over time, in accordance with the basic principles for the restructuring of the provincial debt by the Coalition of the holders of Argentine provincial bonds. In the meantime, the Group intends to vigorously pursue the legal proceedings initiated in March and fully reserves the right to exercise the additional remedies available at any time.

The members of the Group are represented by White & Case LLP.

White & Case LLP
Erin Hershkowitz in new York
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SOURCE White & Case LLP