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Hedge Funds Join Forces to Prepare for Argentina Debt Talks

Carolina Millan, Katia Porzecanski, Ben Bartenstein and Jorgelina do Rosario

(Bloomberg) -- Monarch Alternative Capital LP is spearheading a group of hedge funds organizing ahead of debt restructuring talks with Argentina.

Monarch, HBK Capital Management, Cyrus Capital Partners LP and VR Capital Group Ltd. are part of the steering committee, according to people with knowledge of the matter. The group, advised by Dennis Hranitzky at law firm Quinn Emanuel Urquhart & Sullivan, is building an Argentina bondholder group that now totals about 20 funds.

A spokesman for the group declined to comment, as did representatives for HBK, Cyrus and VR. A spokesman for Monarch didn’t respond to an email seeking comment.

The move comes as President Alberto Fernandez’s administration seeks to renegotiate billions of dollars in debt with private creditors and the International Monetary Fund. The government is meeting with officials from the IMF this week and plans on picking financial advisers for debt talks by the end of February.

Hranitzky, when he was with Dechert LLP, helped hedge fund billionaire Paul Singer’s Elliott Management win a 15-year bond battle against Argentina.

The group isn’t the only one preparing for talks with the government. Heavyweight investors including BlackRock Inc. and Fidelity Investments started a bondholder group working with law firm White & Case LLP, while another group of bondholders hired UBS Securities LLC and Mens Sana Advisors as financial advisers.

The group advised by Hranitzky is focused on notes that were part of the nation’s 2005 and 2010 debt exchanges. Those securities have stricter collective-action clauses than those on Argentine bonds issued as of 2016, with holders of just a third of the principal amount of a single bond having the ability to veto any restructuring deal they don’t support.

For those bonds to be modified in a broad debt restructuring, the government needs the consent of 85% of holders of the total principal amount outstanding, as well as 66.7% of holders of each bond involved in the deal, giving a relatively small number of investors the power to veto any accord they didn’t like.

(Updates with details on attorney, discussions starting in second paragraph.)

To contact the reporters on this story: Carolina Millan in Buenos Aires at cmillanronch@bloomberg.net;Katia Porzecanski in New York at kporzecansk1@bloomberg.net;Ben Bartenstein in New York at bbartenstei3@bloomberg.net;Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Daniel Taub, Steve Dickson

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