Argentina to pay about $500 mln to resolve disputes with foreign firms

Reuters

BUENOS AIRES, Oct 18 (Reuters) - Argentina on Friday said ithad agreed to pay about $500 million to resolve disputes withseveral European and U.S. corporations as it seeks to rebuildforeign investor confidence amid a bitter court dispute withsome bondholders.

The payment will be made in sovereign bonds to fourcompanies that filed complaints at the World Bank'sInternational Centre for Settlement of Investment Disputes andone firm that took its case to the U.N. Commission onInternational Trade Law, a government statement said Friday.

Five agreements were signed with the companies, which agreedto a 25 percent discount on a total $677 million in claims, acommunique from Argentina's economy ministry said.

The decision coincides with a sensitive time in Argentina'sthe South American country's battle in U.S. courts with hedgefunds that refused to take part in two debt restructuringsfollowing Argentina's 2002 default.

Argentina hopes the Obama administration will ask the U.S.Solicitor General to present arguments to the U.S. Supreme Courton whether the case merits the court's attention after a lowercourt ruled in favor of bondholders who will not accept reducedpayments under a restructuring agreement.

The country is also looking to present its best face inorder to help unlock additional credit lines from the WorldBank, International Monetary Fund and People's Bank of China inorder to support its dwindling foreign currency reserves.

Companies to be paid in the settlement include France'sVivendi SA, U.S.- based water company Azurix and BlueRidge Investments, a subsidiary of Bank of America Corp.

Other companies include CC-WB Holdings LLC, which holds therights to claims made by Continental Casualty Company, a unit ofChicago-based CNA Financial Corp, and NG-UN HoldingsLLC, which holds rights to claims by British electric and gasutility National Grid PLC at the U.N. commission.

Under the terms of the deal, the firms reduced the amount ofcompensation they were seeking by 25 percent.

"The proposals consist of the cancellation of those claimsexclusively with public debt, for amounts which represent...asignificant discount on the requested sums and a reasonableperiod for repayment," said the government statement.

Argentina's government will pay the compensation in U.S.dollar-denominated bonds known as Boden 2015 and Bonar X, which offer a 7 percent annualinterest rate.

Neither the government statement, issued as an"administrative decision" by the Cabinet chief, nor the economyministry communique specified the amounts to be paid to each ofthe companies cited.

Argentina faces additional complaints at the World Bankbody, including a claim by Spanish oil firm Repsol SA over the expropriation of its stake in Argentine state-owned oilcompany YPF SA last year. Repsol has said the value ofits stake was about $10 billion, but the company has not yetdisclosed the size of the claim it will make at the arbitrationpanel.

In May 2012, the United States suspended Argentina from theU.S. Generalized System of Preferences program, which waivesimport duties on certain goods from developing countries, afterthe South American nation failed to pay compensation awards indisputes involving Azurix and Blue Ridge Investments. It was thefirst time a country had been suspended from the program forfailing to pay an arbitration award.

The United States imported $477 million worth of goods fromArgentina under the program in 2011, which was about 11 percentof total U.S. imports from the country that year.

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