The Republic of Argentina, Docket No

Arag-A Limited et al v. The Republic of Argentina, Docket No. 1:16-cv-02238 (S.D.N.Y. Mar 25, 2016), Court Docket

Multiple Documents Part Description 1 5 pages 2 Exhibit 1 3 Exhibit 2 4 Exhibit 3 5 Exhibit 4 6 Exhibit 5 7 Exhibit 6 8 Exhibit 7 9 Exhibit 8 (Part 1 of 2) 10 Exhibit 8 (Part 2 of 2) 11 Exhibit 9 12 Exhibit 10 13 Exhibit 11 14 Exhibit 12 15 Exhibit 13 16 Exhibit 14 17 Exhibit 15 18 Exhibit 16 19 Exhibit 17

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

: ARAG-A Limited, ARAG-O Limited, ARAG-T Limited, ARAG-V Limited, Honero Fund I, LLC, Attestor Value : Master Fund, Bybrook Capital Hazelton Master Fund LP, Bybrook Capital Master Fund LP, MCHA Holdings, LLC, : Red Pines LLC, Spinnaker Global Emerging Markets Fund, Ltd., Spinnaker Global Special Situations Fund LP, Trinity : Investments Limited, White Hawthorne, LLC, White Hawthorne II and Yellow Crane Holdings, L.L.C., :

Plaintiffs, : CIVIL ACTION NO. 16 CIV 02238 (TPG) v. :

The Republic of Argentina, :

Defendant. :

DECLARATION OF STEPHEN SCOTCH-MARMO IN SUPPORT OF ORDER TO SHOW CAUSE FOR A TEMPORARY RESTRAINING ORDER AND A PRELIMINARY INJUNCTION

I, Stephen Scotch-Marmo, pursuant to 28 U.S.C. § 1746, declare:

1. I am an attorney admitted to practice before this Court and a member of the law firm Morgan, Lewis & Bockius LLP, which represents Moving Plaintiffs ARAG-A

Limited (“ARAG-A”), ARAG-O Limited (“ARAG-O”), ARAG-T Limited (“ARAG-T”),

ARAG-V Limited (“ARAG-V”), Attestor Value Master Fund LP (“Attestor”), Honero Fund I,

LLC (“Honero”), MCHA Holdings, LLC (“MCHA”), Trinity Investments Limited (“Trinity”), and Yellow Crane Holdings, L.L.C. (“Yellow Crane”) in the above-captioned litigation. Our co- counsel, Weil, Gotshal & Manges LLP, also represents certain of these Moving Plaintiffs, as well Case 1:16-cv-02238-TPG Document 37 Filed 04/07/16 Page 2 of 5

as Plaintiffs White Hawthorne, LLC (“White Hawthorne”) and White Hawthorne II, LLC

(“White Hawthorne II”), and Bybrook Capital Master Fund LP (“Bybrook Capital”) and

Bybrook Capital Hazelton Master Fund LP (“Bybrook Capital Hazelton”) (collectively,

“Movants”).

2. I submit this declaration in support of an order to show cause for a temporary restraining order and preliminary injunction in the instant action.

3. An order to show cause is necessary because under a normal notice of motion schedule, the motion will likely not be adjudicated before the Second Circuit rules in the pending appeal of Aurelius Capital Master, Ltd. v. Republic of Argentina, No. 16-628(L) (2d

Cir.). Movants have not made a request for this relief previously.

4. Attached hereto as Exhibit 1 is a true and correct copy of the October 19,

1994 Fiscal Agency Agreement governed by New York Law (“FAA”).

5. Attached hereto as Exhibit 2 is a true and correct copy of the July 14, 1998 offering circular governed by German law (the “Offering Circular”).

6. Attached hereto as Exhibit 3 is a true and correct copy of the July 23, 1993

Trust Deed governed by English law (the “Trust Deed”).

7. Attached hereto as Exhibit 4 are a true and correct copy of the settlement proposal publicly issued by the Republic of Argentina (“Argentina” or the “Republic”) on

February 5, 2016 (the “Unilateral Proposal”) and a subsequently-provided English translation of the Unilateral Proposal, which were filed together February 11, 2016, by Argentina as Exhibit J to the Declaration of Michael A. Paskin, NML Capital, Ltd. v. The Republic of Argentina, No.

08-6978 (TPG) (S.D.N.Y.) (Dkt No. 864).

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8. Attached hereto as Exhibit 5 is a true and correct copy of an email received February 6, 2016, by Timothy DeSieno of Morgan, Lewis & Bockius LLP from

Eugenio Bruno, representative of Argentina, attaching an English translation of the Unilateral

Proposal.

9. Attached hereto as Exhibit 6 is a true and correct copy of the Instructions for Bondholders to Accept its Settlement Proposal (the “Instructions”), published by Argentina

February 17, 2016, which previously was filed and included in Exhibit 1 to Movants’ Complaint.

10. Attached hereto as Exhibit 7 are a true and correct copy of the Master

Settlement Agreement (the “MSA”) and an Agreement Schedule, published by Argentina

February 17, 2016, which previously were filed and included in Exhibit 1 to Movants’

Complaint.

11. Attached hereto as Exhibit 8 are true and correct copies of the Second

Supplemental Declaration of Undersecretary of Finance Santiago Bausili in Further Support of the Republic of Argentina’s Motion, by Order to Show Cause, to Vacate the Injunctions Issued on November 21, 2012, and October 30, 2015, dated February 29, 2016 (“Bausili Decl.”), and its

Exhibits 7 (settlement with VR Global Partners) (the “VR Settlement”); 8 (settlement with

Procella Holdings) (the “Procella Settlement”); and 9 (settlement with Red Pines) (the “Red

Pines Settlement”).

12. Attached hereto as Exhibit 9 is a true and correct copy of a letter from P.

Sabin Willett of Morgan, Lewis & Bockius LLP, dated February 29, 2016 (the “February 29

Letter”) and filed in NML Capital, Ltd. v. Republic of Argentina, No. 08 Civ. 6978 (TPG)

(S.D.N.Y.) (Dkt. No. 906).

3 Case 1:16-cv-02238-TPG Document 37 Filed 04/07/16 Page 4 of 5

13. Attached hereto as Exhibit 10 is a true and correct copy of the transcript from the March 1, 2016 hearing in NML Capital, Ltd. v. Republic of Argentina, No. 08 Civ. 6978

(TPG) (S.D.N.Y.).

14. Attached hereto as Exhibit 11 is a true and correct copy of an email dated

March 11, 2016, from P. Sabin Willett of Morgan, Lewis & Bockius LLP to Michael Paskin of

Cravath, Swaine & Moore LLP, which was previously filed and included as Exhibit 3 to

Movants’ Complaint.

15. Attached hereto as Exhibit 12 is a true and correct copy of Argentina’s

Brief for Defendant-Appellee, dated March 21, 2016, in Aurelius Capital Master, Ltd. v.

Republic of Argentina, No. 16-628(L) (2d Cir.) (Dkt. No. 419).

16. Attached hereto as Exhibit 13 is a true and correct copy of the transcript of the February 24, 2016 oral argument before the Second Circuit in Aurelius Opportunities Fund II

LLC v. Republic of Argentina, No. 15-1060 (L) (2d Cir.), as originally filed in NML Capital, Ltd. v. Republic of Argentina, No. 08 Civ. 6978 (S.D.N.Y) (TPG) (Dkt. No. 902-1).

17. Attached hereto as Exhibit 14 is a true and correct copy of Defendant-

Appellee The Republic of Argentina’s Opposition to the Motion of the Amici Curiae Foreign- law Bondholders to Participate in Oral Argument, dated April 6, 2016, in Aurelius Capital

Master, Ltd. v. Republic of Argentina, No. 16-628(L) (2d Cir.) (Dkt. No. 516).

18. Attached to this declaration as Exhibit 15 are true and correct copies of

Clearstream Banking AG’s notices of presentment, made available at:

http://www.clearstream.com/blob/50894/9387655aa344746e2cc81775d64665a9/d074-en-

data.pdf, and

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EXHIBIT 2 Case 1:16-cv-02238-TPG Document 37-2 Filed 04/07/16 Page 2 of 67

Offering Circular July 14, 1998

The Republic of Argentina

DM 1,000,000,000 8%/8.25%/9% Deutsche Mark Step-up Bonds of 1998/2010

Issue Price: 101.84%

Application will be made to list the DM 1,000,000,000 Step-up Bonds of 1998/2010 (the "Bonds") on the Frankfurt Stock Exchange.

Deutsche Bank Aktiengesellschaft

Bayerische Landesbank Girozentrale

Credit Suisse First Boston (Europe) Limited Dresdner Bank Aktiengesellschaft

Morgan Stanley Bank AG Westdeutsche Landesbank Girozentrale Case 1:16-cv-02238-TPG Document 37-2 Filed 04/07/16 Page 3 of 67

No person is authorized to give any information or to make any representation in connection with this Offering Circular, and any information or representation not contained herein must not be relied upon as having been authorized by the Republic of Argentina (hereinafter also referred to as the "Issuer"). The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and include Bonds in bearer form that are subject to U.S. tax law requirements. Subject to certain exceptions, Bonds may not be offered, sold or delivered within the United States or to U.S. persons, This Offering Circular does not constitute an offer or an invitation by, or on behalf of, the Issuer or by, or on behalf of, the Banks (as defined below) to subscribe or purchase any of the Bonds. In connection with this issue, Deutsche Bank Aktiengesellschaft may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level which might not otherwise prevail, to the extent permitted by applicable laws. Such stabilizing, if commenced, may be discontinued at any time.

Table of Contents Page Subject of this Offering Circular 3 General Information 3 Responsibility 3 Documents for Inspection 3 Subscription and Sale 3 Delivery of the Bonds 3 Taxation in the Federal Republic of Germany 3 Sales Restrictions 4 Use of Proceeds 5 Litigation 5 Security Codes 5 Investment Considerations 5 Terms and Conditions of the Bonds 7 The Republic of Argentina 15 Territory and Population 15 Government and Political Parties 15 Foreign Affairs and International Organizations 17 The Argentine Economy 18 Introduction 18 Deregulation of the Economy and Privatizations 22 Gross Domestic Product 25 Principal Sectors of the Economy 26 Employment and Labor 31 Poverty 33 Foreign Trade and Balance of Payments 35 Balance of Payments 35 Foreign Trade 37 Foreign Investment 40 Monetary System 41 The Central Bank 41 Financial Sector 42 Liquidity and Credit Aggregates 43 Inflation 45 Foreign Exchange Rates and International Reserves 45 Securities Markets 46 Public Sector Finances 49 General 49 Public Sector Accounts 50 The 1998 Budget 55 Social Security 55 Public Sector Debt 57 General 57 Description of Debt and Debt Restructuring 60 Debt Record 66

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Subject of this Offering Circular

Subject of this Offering Circular are the DM 1,000,000,000 Step-up Bonds of 1998/2010 (the "Bonds") issued by the Republic of Argentina pursuant to Decree No. 363 passed on April 1, 1998 issued by the National Executive Power of the Republic of Argentina and Resolution No. 309 dated June 29, 1998 of the Secretary of the Treasury of the Republic of Argentina.

General Information Responsibility

The Issuer accepts the responsibility for the information contained in this document and has taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects.

Documents for Inspection

The documents mentioned in this Offering Circular may be inspected during usual business hours on any working day from the date hereof and so long as any of the Bonds remain outstanding at the offices of Deutsche Bank Aktiengesellschaft, Grosse Gallusstrasse 10–14, 60272 Frankfurt am Main.

Subscription and Sale

An international syndicate of banks and financial institutions shown on the cover (the "Banks") and headed by Deutsche Bank Aktiengesellschaft as Lead Manager has purchased the Bonds to which this Offering Circular pertains. The Bonds were offered for sale, subject to availability, at the price of 101.84%. Payment date was July 6, 1998.

For the subscribers of the Bonds the yield is 8.37 % per annum (*) calculated on the basis of the issue price of 101.84%.

Delivery of the Bonds

Until the delivery of definitive Bonds, the issue will be represented by a Global Bearer Bond which will be deposited with the Deutsche Börse Clearing AG, Frankfurt am Main. The Issuer will exchange such Global Bearer Bond for definitive Bonds in due course upon their completion. The printing of definitive Bonds has been arranged for. No claims for delivery of definitive Bonds can be made prior to the date of exchange of definitive Bonds for the Global Bearer Bond.

The Bonds shall bear the issue place and date "Buenos Aires, im Juli 1998". Twelve annual bearer interest coupons (the "Coupons") will be attached to each Bond at the time of issue.

Taxation in the Federal Republic of Germany

In the Federal Republic of Germany, interest payments in respect of Bonds held in custody by a bank in Germany to persons who are tax residents of Germany (or non-residents provided that the interest

On July 13, 1998 the official exchange rate quoted in Frankfurt am Main between Deutsche Mark and U.S.$ was DM 1.8107 = U.S.$ 1. Concerning the exchange rate of the Argentine currency, the Peso, See "Monetary System – Foreign Exchange Rates and International Reserves." (*) The yield was calculated in accordance with the following formula by using an iterative method for solving the equa- tion for the variable (i) (internal rate of return or yield):

CFo = CF1/(1 + i) + CF2/(1 + i)2 + + CF0/(1+i)0

CF0 = means the amount of capital input for the subscription of the Bonds.

CF, to CFn = means the cash inflow as of July 6, of each subsequent year until maturity of the Bonds (interest payments and repayment of principal amount).

n = means the life of the issue in years.

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income falls in a category of income from German sources, such as income effectively connected with a German trade or business; income from the letting and leasing of German property, etc.) are subject to an advanced interest income tax (Zinsabschlagsteuer) of 30%. In addition, there is a solidarity-surcharge tax (Solidaritätszuschlag) of 5.5% on the income tax, so that the total rate is 31.65%. The tax withheld may later be credited as a prepayment for purposes of the income tax assessment.

Interest payments made by a bank in Germany upon over-the-counter presentation of Coupons are subject to such advanced interest income tax at a rate of 35%, regardless of whether or not the recipient is a resident or non-resident for purposes of German taxation, and in addition the solidarity- surcharge tax of 5.5 % on such tax, so that the total rate is 36.925 %.

Accrued interest for the time of ownership is also subject to this withholding tax.

The above summary describes the principal applications of German withholding tax. For their particular case investors should obtain individual tax advice.

Sales Restrictions

The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the "Securities Act") and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Each Bank has represented and agreed that it has not offered or sold, and will not offer or sell, any Bonds constituting part of its allotment within the United States or to, or for the benefit or account of United States persons, except in accordance with Rule 903 of Regulations S under the Securities Act. Accordingly, each Bank has represented and agreed that neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Bonds. Terms used in this paragraph have the meaning given to them by Regulations S.

In addition, under U.S. Treasury Regulations § 1.163-5(c)(2)(i)(C) (the "C Rules"), bonds in bearer form must be issued and delivered outside the United States and its possessions in connection with their original issuance. Each Bank has represented and agreed that it has not offered, sold or delivered, and will not offer, sell or deliver, directly or indirectly, Bonds in bearer form within the United States or its possessions in connection with their original issuance. Further, in connection with the original issuance of bonds in bearer form, each Bank has represented that it has not communicated, and will not communicate, directly or indirectly, with a prospective purchaser if either of them is within the United States or its possessions or otherwise involve its U.S. office in the offer and sale of Bonds in bearer form. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code and regulations thereunder, including the C Rules.

Each of the Banks has represented and agreed that: a) it has not offered or sold and, prior to the date six months after the date of issue of the Bonds, will not offer or sell any Bonds to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1996 (the "Regulations"); b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 and the Regulations with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom; and c) it has only issued or passed on and will only issue or pass on to any person in the United Kingdom any document received by it in connection with the issue of the Bonds if that person is of a kind described in Article 11 (3) of the Financial Services Act 1986 (Investment Advertisements) (Exemp- tions) Order 1996, as amended, or is a person to whom such document may otherwise lawfully by issued or passed on.

As used herein, "United Kingdom" means the United Kingdom of Great Britain and Northern Ireland.

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In addition to the specific restrictions set out above, each Bank has agreed that it will observe all applicable provisions of law in each jurisdiction in or from which it may offer or sell the Bonds or distribute any offering material.

Use of Proceeds

The net proceeds of the issue of the Bonds amounting to approximately DM 988 million will be used by the Issuer for general governmental purposes.

Litigation

Neither Argentina nor any of its governmental agencies is involved in any judicial or arbitration proceedings which could have or have had in the last two fiscal years a material adverse effect on its ability to perform its obligations under the Bonds, and to the best knowledge of the Ministry of Economy and Public Works and Services, no such judicial or arbitration proceedings are pending or threatened.

Security Codes

German Security Code: 248 320 Common Code: 881 953 0 ISIN Code: DE 000 248 320 3

Investment Considerations

Investors considering the purchase of Bonds should decide whether to purchase only after thorough evaluation of the particular risks described below.

The Issuer is a country which, after a debt crisis of at least ten years, comprehensively rescheduled substantially all of the foreign currency denominated commercial bank debt of the Public Sector with approximately 750 international creditor banks in 1993. The claims of commercial banks subject to the rescheduling amounted to U.S.$ 28.5 billion including an estimated U.S.$ 9.2 billion in interest arrears. In connection with the rescheduling, the creditor banks forgave part of their capital claims and refinanced the remainder by accepting partially collaterized securities with maturities of up to 30 years.

The rescheduling effected a reduction of the nominal amount of debt denominated in foreign currency of approximately U.S.$ 2.3 billion or a reduction of the net present value of approximately U.S.$ 5.2 billion.

The gross foreign currency denominated debt of the Public Sector was U.S.$ 63.5 billion at the end of 1992, U.S.$ 88.9 billion at the end of 1996 and U.S.$ 90.8 billion at the end of 1997.

At the beginning of the 1990s, Argentina turned to market economy principles as well as to strict fiscal, monetary and exchange rate policies and has scored acknowledged successes during the last years with the restructuring of its economy, the strengthening of its financial sector, the fight against inflation and the consolidation of the external debt of the Public Sector. Although the relatively small impact of the ongoing Asian crisis on the Argentine economy has shown that Argentina's vulnerabil- ity has diminished, certain risks remain:

• A comparatively high ratio of gross foreign currency denominated debt of the Public Sector to total exports of goods and services of 319% in 1997. On the basis of total external debt (including Public Sector and estimated private sector debt), this ratio would increase to 384% in 1997. • High annual debt service obligations (interest payments of the Public Sector and private sector) in foreign currency which amounted to approximately 24.9% of export of goods and services in 1997.

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• The fact that export sales are relatively low as a percentage of GDP and are influenced by fluctua- tions on the commodity markets as well as by developments in Brazil, Argentina's main trading partner; the range of export products is still small, although expanding. • The fact that the current account deficit continues to increase significantly (from 1.3% of GDP in 1996 to 3.1% of GDP in 1997 and to an estimated 3.8% of GDP in 1998). • A high official unemployment rate of 17.3% as of October 1996, of 16.1 % as of May 1997 and of 13.7% as of October 1997. This does not include underemployment of 13.6%, 13.2% and 13.1%, respectively.

The high repayment obligations in the coming years – from 1998 to 2002 approximately U.S.$ 47.3 billion of external debt of the Public Sector will become due – and rising current account deficits indicate that Argentina will continue to depend on substantial capital imports, including new external debt, in the coming years to fulfill its obligations. Obtaining this funding will require a successful continuation of the country's current economic policy and the avoidance of relapses into the political and economic instability from which Argentina has frequently suffered in recent decades. The commitment to current economic policies will be tested in the run-up to the next presidential and congressional elections scheduled for May 1999.

It should be noted that Argentina still has recourse to IMF assistance.

The maturity of this Bond issue exceeds substantially the tenors at which international commercial bank lending would be available.

In the event that Argentina suffers another political or economic crisis, there can be no assurance that (i) capital flight will not recommence due to a loss of confidence, (ii) necessary capital imports continue, (iii) the fixed exchange rate of 1:1 U.S.$/Peso can be maintained, (iv) the payment obligations on its foreign debt will be met and (v) failures of banks and other enterprises will not occur.

These uncertainties and negative factors are reflected in Argentina's ranking as 58 (September 1997: 58) out of 136 (Federal Republic of Germany was ranked third) in the "1998 Country Credit Ratings" published by Institutional Investor in March 1998.

Outstanding notes and bonds in foreign currency of the Issuer are rated Ba3(1) by Moody's Investors Service ("Moody's") and BB (2) by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S & P").

Payments with respect to bonds and notes issued by Argentina were properly made during the debt crisis of the 1980s and in the wake of the Mexican peso crisis (1994/95). However, this fact cannot be viewed as a guarantee that in a possible future debt crisis, payments with respect to outstanding bonds and notes of Argentina will be made in the same manner. The structure of Argentina's external debt, which has changed as a consequence of the rescheduling – the share of bonds and notes in the external debt has increased considerably - creates a strong possibility that the payment on notes and bonds in foreign currency issued by Argentina may also be adversely affected if serious problems in connection with Argentina's foreign payments and/or budget occur.

Therefore the Bonds are suitable only for speculative investors who are in a position to assess special risks.

(1) Definition by Moody's: "Bonds which are rated Ba are judged to have speculative elements: their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class" Moody's applies numerical modifiers 1, 2 and 3 in each generic rating classification from Aa through B. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a midrange ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category." P) Definition by S & P: "BB, B, CCC, CC, C: Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the lowest degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. BB: Debt rated 'BB' is less vulnerable to non-payment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation"

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The German text of the Conditions of Issue is legally binding. The English translation is for convenience only:

Anleihebedingungen Terms and Conditions of the Bonds

§ 1 5 1 (Form und Nennbetrag) (Form and Denomination) (1) Die Anleihe im Gesamtnennbetrag von (1)The issue in the aggregate principal amount of DM 1.000.000.000,- DM 1,000,000,000 ist verbrieft in unter sich gleichberechtigten, auf den In- is represented by haber lautenden 50.000 Schuldverschreibungen zu je DM 1.000.- 50,000 Bonds of DM 1,000 each Nr. 00 001 - 50 000, Nos. 00 001 - 50 000, 29.000 Schuldverschreibungen zu je DM 10.000.- 29,000 Bonds of DM 10,000 each Nr. 50 001 - 79 000, Nos. 50 001– 79 000, 6.600 Schuldverschreibungen zu je DM 100.000.- 6,600 Bonds of DM 100,000 each Nr. 79 001-85 600, Nos. 79 001– 85 600, (die „Schuldverschreibungen"). (the "Bonds") payable to bearer and ranking pari passu with each other. (2) Jede Schuldverschreibung ist mit zwölf Inhaber-Zins- (2) Each Bond is provided with twelve annual bearer inter- scheinen versehen (die „Zinsscheine"). Die Schuldver- est coupons (the "Coupons"). The Bonds and the Cou- schreibungen und die Zinsscheine tragen die vervielfäl- pons bear the facsimile signature of the Secretary of the tigte Unterschrift des Finanzministers der Republik Argen- Treasury of the Republic of Argentina (the "Republic") tinien (die „Republik") und einen Prägestempel der Repu- and an embossed stamp of the Republic. The Bonds also blik, die Schuldverschreibungen ferner die eigenhändige bear the handwritten signature of a control officer. Unterschrift eines Kontrollbeauftragten.

§ 2 § 2 (Währungsumstellung (Substitution of the Currency, und Kontinuität) Continuity and Redenomination) (1) Die Europäische Wirtschafts- und Währungsunion (1) The European Economic and Monetary Union (the („WWU") sieht die Einführung einer einheitlichen Wäh- "EMU") provides for the introduction of a single currency rung und die Ersetzung der nationalen Währungen der an (the "Euro") and the substitution of the national curren- der Währungsunion teilnehmenden Mitgliedsstaaten vor. cies of the member states participating in EMU. On the Mit dem Zeitpunkt der Einführung der einheitlichen date of the introduction of the Euro for the Federal Repub- Währung (Euro) für die Bundesrepublik Deutschland wird lic of Germany, the currency specified in these Terms and die in diesen Anleihebedingungen bestimmte Währung Conditions of the Bonds and the currency specified for und die für Zahlungen nach diesen Anleihebedingungen payments under these Terms and Conditions of the Bonds bestimmte Währung durch die einheitliche Währung shall be substituted by the single currency and the ersetzt und die Umstellung in die einheitliche Währung changeover into the single currency shall take place. Con- bewirkt. Für die Umrechnung ist der offiziell festgelegte versions shall be based on the officially fixed conversion Umrechnungskurs maßgebend. rate.

(2) Weder die Einführung des Euro noch die Ersetzung der (2) Neither the introduction of the Euro nor the substitu- nationalen Währungen der an der Währungsunion teil- tion of the national currencies of the member states parti- nehmenden Mitgliedstaaten noch die Festlegung des offi- cipating in EMU nor the fixing of the official conversion ziellen Umrechnungskurses noch irgendwelche wirtschaft- rate nor any economic consequences that arise from any lichen Folgen, die sich aus einem der vorgenannten Ereig- of the aforementioned events or in connection with EMU nisse oder im Zusammenhang mit der Europäischen Wirt- shall give rise to any right to prematurely terminate, con- schafts- und Währungsunion ergeben, berechtigt zu einer test, rescind, modify or renegotiate the Bonds, the Terms vorzeitigen Beendigung, Anfechtung, Kündigung, einem and Conditions of the Bonds or any of their provisions or Rücktritt, einer Anpassung oder einer Neuverhandlung to raise any other objections and/or exceptions or to der Schuldverschreibungen oder der Anleihebedingungen assert any claims for compensation. The Bonds and the oder ihrer einzelnen Bestimmungen oder zur Erhebung Terms and Conditions of the Bonds and all their provi- sonstiger Einreden und/oder Einwendungen oder zur sions shall be continued unchanged. Geltendmachung von Ausgleichsansprüchen. Die Schuld- verschreibungen, die Zinsscheine und die Anleihebedin- gungen werden vielmehr mit allen ihren Bestimmungen unverändert fortgeführt.

(3) Unter der Voraussetzung, daß das auf die Schuldver- (3) Provided that the law which applies to the Bonds does schreibungen anwendbare Recht keine abweichende not prescribe a method of redenomination which is differ- Methode zur Umstellung der Schuldverschreibungen auf ent from the method stipulated below and provided that Euro vorschreibt und die nachfolgend beschriebene the method stipulated below is compatible with such law, Umstellungsmethode nicht gegen dieses Recht verstößt, the Issuer reserves the right, on or after the date on which behält sich die Republik das Recht vor, an oder nach dem the Federal Republic of Germany shall have become a par- Tag, an dem die Bundesrepublik Deutschland der Europä- ticipating member state of the EMU that has adopted the ischen Währungsunion beigetreten ist, gemäß § 315 BGB Euro, to determine in accordance with § 315 of the Ger-

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den Nennbetrag der Schuldverschreibungen fortan als in man Civil Code (Bürgerliches Gesetzbuch) that the face der neuen europäischen Währung „Euro" ausgedrückt zu amounts of the Bonds shall henceforth be deemed to be behandeln. Zudem wird die Republik berechtigt sein, den expressed in Euro. The Issuer shall also be entitled to Nennbetrag der Schuldverschreibungen in kleinere Euro- divide the face amounts of Bonds into smaller face Nennbeträge zu unterteilen sowie die neuen Nennbeträge amounts expressed in Euro and round new face amounts bis zu 1/2 Cent pro Schuldverschreibungen nach oben oder up or down by up to 1/2 Cent per Bond or pay out fractional unten zu runden oder Teilbeträge am nächsten Zinstermin amounts of the principal on the next following Interest auszuzahlen. Die neuen Schuldverschreibungen, die auf- Payment Date. The new bonds resulting from the redeno- grund der Umstellung der alten Schuldverschreibungen mination of Bonds into Euro and their division into new in Euro sowie durch die Unterteilung in neue Nennbeträge face amounts shall be governed by these Terms and Con- entstanden sind, unterliegen diesen Anleihebedingungen. ditions of the Bonds. If so determined by the Issuer, the Sofern die Republik dies bestimmt, werden die auf Euro redenominated definitive Bonds shall be deemed to be umgestellten Schuldverschreibungen als Globalurkunden global certificates representing the Bonds resulting from behandelt, die die aus der Umstellung hervorgegangenen such redenomination and/or division into new face umgestellten und/oder in neue Nennbeträge aufgeteilten amounts. The Bondholders shall not have the right to Schuldverschreibungen verkörpern. Ein Anspruch der require the exchange of such redenominated global certi- Anleihegläubiger auf Umtausch derselben in effektive auf ficates for definitive Bonds denominated in Euro. The Euro lautende Stücke besteht nicht. Die Umstellung der redenomination of the Bonds, the division into new face Schuldverschreibungen auf Euro, ihre Aufteilung in neue amounts and the conversion of the Bonds into global cer- Nennbeträge sowie die Umwandlung der Schuldver- tificates shall become effective with their publication by schreibungen in Globalurkunden wird mit Veröffent- the Issuer in accordance with § 12 of these Terms and Con- lichung gemäß § 12 der Anleihebedingungen wirksam. ditions of the Bonds.

53 § 3 (Verzinsung) (Interest) (1) Die Schuldverschreibungen werden vom 6. Juli 1998 (1) The Bonds bear interest at the rate of 8% p.a. from and (einschließlich) bis zum 6. Juli 2002 (ausschließlich) mit including July 6, 1998 until and excluding July 6, 2002, 8 % p.a., vom 6. Juli 2002 (einschließlich) bis zum 6. Juli 8.25% p.a. from and including July 6, 2002 until and 2006 (ausschließlich) mit 8,25% p.a. und vom 6. Juli 2006 excluding July 6, 2006 and 9% p.a. from and including (einschließlich) bis zum 6. Juli 2010 (ausschließlich) mit July 6, 2006 until and excluding July 6, 2010. Interest shall 9% p.a. verzinst. Die Zinsen sind jährlich nachträglich am be payable annually in arrears on July 6 of each year 6. Juli eines jeden Jahres gegen Einreichung der betref- against surrender of the appropriate Coupons. The Bonds fenden Zinsscheine zahlbar. Der Zinslauf der Schuldver- shall cease to bear interest as of the beginning of the day schreibungen endet zu Beginn des Tages, an dem sie zur on which they become due for redemption. Tilgung fällig werden.

(2) Sofern die Republik die Tilgung der Schuldverschrei- (2) Should the Republic fail to redeem the Bonds when due bungen bei Fälligkeit oder, wenn der Fälligkeitstag ein (or, where the due date is a Saturday, Sunday, legal holiday Samstag, Sonntag, gesetzlicher Feiertag oder kein Bankar- or not a Banking Day at the place of performance (as beitstag am Erfüllungsort (§ 13 (2)) ist, am darauffolgen- defined in § 13 (2)), on the next succeeding Banking Day), den Bankarbeitstag unterläßt, endet der Zinslauf nicht am interest shall continue to accrue beyond the due date until Fälligkeitstag, sondern erst mit der Einlösung der Schuld- the actual redemption of the Bonds but not beyond the four- verschreibungen, spätestens jedoch mit Ablauf des vier- teenth day after a notice has been published by the Principal zehnten Tages nach einer Bekanntmachung der Haupt- Paying Agent to the effect that the necessary funds for zahlstelle, daß dieser die zur Tilgung erforderlichen Mittel redemption have been provided to the Principal Paying zur Verfügung gestellt worden sind. „Bankarbeitstag" Agent. "Banking Day" shall mean a day on which banks are bedeutet einen Tag, an dem Banken für Geschäfte allge- generally open for business. mein geöffnet sind.

54 § 4 (Fälligkeit) (Maturity) Die Schuldverschreibungen werden am 6. Juli 2010 zum The Bonds will be redeemed at par on July 6, 2010. Nennbetrag zurückgezahlt.

§ 5 § 5 (Zahlungen) (Payments) (1) Die Republik verpflichtet sich, Kapital und Zinsen bei (1) The Republic undertakes to pay, as and when due, prin- Fälligkeit in gesetzlicher Währung der Bundesrepublik cipal and interest in lawful money of the Federal Republic Deutschland zu zahlen. Die Schuldverschreibungen und of Germany. The Bonds and Coupons shall be paid to the Zinsscheine werden dem Inhaber eingelöst, ohne daß, holder without it being permissible, except for compliance abgesehen von der Beachtung etwaiger Steuer-, Devisen- with applicable tax, foreign exchange or other laws and und sonstiger Vorschriften des Landes der betreffenden regulations of the country where the relevant Paying Zahlstelle die Ausfertigung eines Affidavits oder die Erfül- Agent is located, to require the execution of an affidavit or lung irgendeiner sonstigen Förmlichkeit verlangt werden compliance with any other formality whatsoever. Such darf. Die Zahlungen erfolgen bei folgenden Banken (die payments shall be made at the banks listed below (the „Zahlstellen"): "Paying Agents"): a) in der Bundesrepublik Deutschland: (a) in the Federal Republic of Germany at: Deutsche Bank Aktiengesellschaft, Deutsche Bank Aktiengesellschaft, Taunusanlage 12, Taunusanlage 12, D-60262 Frankfurt am Main, D-60262 Frankfurt am Main, („Hauptzahlstelle") ("Principal Paying Agent")

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b) außerhalb der Bundesrepublik Deutschland durch (b) outside the Federal Republic of Germany by a DM che- einen auf eine deutsche Bank gezogenen DM-Scheck que drawn on a German bank or by crediting a DM oder durch Gutschrift auf einem DM-Konto: account at: Banque de Luxembourg S.A., Banque de Luxembourg S.A., 14, Boulevard Royal, 14, Boulevard Royal, L-2449 Luxemburg. L-2449 Luxemburg. (2) Die Zahlstellen in ihrer Eigenschaft als solche handeln (2) The Paying Agents, in their capacity as such, are acting ausschließlich als Beauftragte der Republik und stehen exclusively as agents for the Republic and do not have any nicht in einem Auftrags oder Treuhandverhältnis zu den relationship of agency or trust with the holders of Bonds Inhabern von Schuldverschreibungen und/oder Zinsschei- and/or Coupons (the "Bondholders"). The Republic may nen (die „Anleihegläubiger"). Die Republik kann im Ein- with the consent of the Principal Paying Agent appoint vernehmen mit der Hauptzahlstelle zusätzliche Zahlstellen additional paying agents and revoke the appointment of ernennen und die Ernennung von in- und ausländischen paying agents provided, however, that the Republic may Zahlstellen widerrufen mit der Maßgabe, daß die Republik not appoint any paying agent located in the United States keine Zahlstelle mit Sitz in den Vereinigten Staaten von of America or its possessions. Such appointment or revo- Amerika oder deren Besitzungen ernennen kann. Ernen- cation shall be published in accordance with § 12. nung und Widerruf sind gemäß § 12 bekanntzumachen.

(3) Die zur Tilgung fälligen Schuldverschreibungen sind (3) Bonds due for redemption shall be presented together mit allen am Tag der Fälligkeit der Schuldverschreibungen with all Coupons which have not matured at the due date noch nicht fälligen Zinsscheinen einzureichen; der Betrag of the Bonds. The amount of any missing unmatured Cou- fehlender, noch nicht fälliger Zinsscheine wird vom Kapi- pon will be deducted from the principal. talbetrag abgezogen. (4) Weder die Republik noch die Zahlstellen sind verpflich- (4) Neither the Republic nor the Paying Agents are obliged tet, die Berechtigung eines Inhabers von Schuldverschrei- to inquire as to the entitlement of any holder of Bonds or bungen oder Zinsscheinen zu prüfen. Coupons. (5) Die Republik kann die von den Anleihegläubigern (5) The Republic may deposit with the Amtsgericht Frank- innerhalb von zwölf Monaten nach Fälligkeit nicht erhobe- furt am Main principal and interest not claimed by Bond- nen Beträge an Kapital und Zinsen bei dem Amtsgericht holders within twelve months after maturity. To the extent Frankfurt am Main hinterlegen. Soweit die Republik auf that the Republic waives its right to withdraw such deposit das Recht der Rücknahme der hinterlegten Beträge ver- the relevant claims of the Bondholders against the Repub- zichtet, erlöschen die betreffenden Ansprüche der Anleihe- lic shall cease. gläubiger gegen die Republik.

§ 6 § 6 (Steuern) (Taxes) Alle Kapital und Zinszahlungen der Republik in bezug auf All payments of principal and interest in respect of the die Schuldverschreibungen erfolgen frei von Abzug oder Bonds by the Republic will be made free and clear of, and Einbehalt gegenwärtiger oder zukünftiger Steuern, Abga- without withholding or deduction for or on account of, ben oder staatlicher Gebühren, gleich welcher Art, die von any present or future taxes, duties, assessments or gov- oder in der Republik Argentinien oder von einer dort zur ernmental charges of whatever nature imposed, levied, Steuererhebung ermächtigten Behörde auferlegt, erho- collected, withheld or assessed by or within the Republic ben, eingezogen oder einbehalten werden (zusammen of Argentina or any authority therein or thereof having „Steuern"), es sei denn, ein solcher Abzug oder Einbehalt power to tax (together "Taxes"), unless such withholding ist gesetzlich vorgeschrieben. In diesem letzteren Fall wird or deduction is required by law. In such event, the Repub- die Republik diejenigen zusätzlichen Beträge zahlen, die lic shall pay such additional amounts as will result in erforderlich sind, damit der den Anleihegläubigern nach receipt by the Bondholders of such amounts as would diesem Abzug oder Einbehalt zufließende Nettobetrag have been received by them had no such withholding or jeweils den Beträgen an Kapital und Zinsen entspricht, die deduction been required, except that no such additional den Anleihegläubigern aufgrund der Schuldverschreibun- amounts shall be payable with respect to any Bond or gen bzw. der Zinsscheine zustehen würden, wenn der Coupon: Abzug oder Einbehalt nicht erforderlich wäre; solche zusätzlichen Beträge sind jedoch nicht zahlbar in bezug auf Schuldverschreibungen oder Zinsscheine:

(a) an einen Anleihegläubiger (oder an einen Dritten zugunsten (a) to a holder (or to a third party on behalf of a holder) eines Anleihegläubigers), wenn dieser Anleihegläubiger in where such holder is liable for such Taxes in respect of bezug auf Schuldverschreibungen oder Zinsscheine einer any Bond or Coupon by reason of his having some solchen Steuer aufgrund einer anderen Beziehung zu der connection with the Republic of Argentina other than Republik Argentinien unterliegt als dem bloßen Umstand, the mere holding of such Bond or Coupon; or daß er Inhaber der betreffenden Schuldverschreibungen oder Zinsscheine ist;

(b) die mehr als 30 Tage nach dem maßgeblichen Datum (b) presented for payment more than 30 days after the zur Zahlung vorgelegt werden, soweit nicht der An- Relevant Date except to the extent that the holder leihegläubiger bei Vorlage zur Zahlung am letzten Tag thereof would have been entitled to additional eines solchen Zeitraums von 30 Tagen ein Recht auf amounts on presenting the same for payment on the Zahlung zusätzlicher Beträge gehabt hätte. last day of such period of 30 days. In dem in diesen Anleihebedingungen verwendeten Sinn As used in these Terms and Conditions of the Bonds, bedeutet „maßgebliches Datum" in bezug auf Schuldver- "Relevant Date" in respect of any Bond or Coupon means schreibungen oder Zinsscheine das Datum, an dem Zah- the date on which payment in respect therof first becomes lungen darauf erstmals fällig werden bzw., falls die Haupt- due or (if the full amount of the money payable has not zahlstelle den gesamten zahlbaren Geldbetrag nicht an been received by the Principal Paying Agent on or prior to oder vor dem betreffenden Fälligkeitsdatum erhalten hat, such due date) the date on which notice is duly given to

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das Datum, an dem den Anleihegläubigern ordnungsge- the Bondholders in accordance with § 12 that such mäß gemäß § 12 bekannt gemacht worden ist, daß die moneys have been received and are available for pay- betreffenden Geldbeträge eingegangen sind und zur Zah- ment. Any reference to "principal" and/or "interest" shall lung bereitstehen. Bezugnahmen in diesen Anleihebedin- be deemed to include any additional amounts which may gungen auf Zinsen und/oder Kapital der Schuldverschrei- be payable under this § 6. bungen schließen gemäß diesem § 6 zu zahlende zusätz- liche Beträge ein.

§ 7 57 (Transfer) (Transfer) Die Republik verpflichtet sich, alle Beträge, die zur Erfül- The Republic undertakes to transfer to the Principal Paying lung der sich aus diesen Anleihebedingungen ergeben- Agent in lawful money of the Federal Republic of Ger- den Zahlungsverpflichtungen erforderlich sind, in gesetz- many all sums required for the performance of the finan- licher Währung der Bundesrepublik Deutschland an die cial obligations arising from these Terms and Conditions Hauptzahlstelle zu transferieren. of the Bonds.

§ 8 58 (Vorlegungsfrist, Verlust von Zinsscheinen) (Presentation Period, Loss of Coupons) (1) Die in 5 801 Absatz 1 Satz 1 BGB bestimmte Vorle- (1) The presentation period provided in 5 801 subpara- gungsfrist wird für die Schuldverschreibungen auf zehn graph 1 sentence 1 German Civil Code is reduced to ten Jahre abgekürzt. years for the Bonds. (2) Der Anspruch gemäß § 804 Absatz 1 Satz 1 BGB wegen (2) The right pursuant to § 804 subparagraph 1 sentence 1 des Verlustes von Zinsscheinen ist ausgeschlossen (§ 804 German Civil Code in respect of lost interest coupons is Absatz 2 BGB). excluded (5 804 subparagraph 2 German Civil Code).

§ 9 § 9 (Status, Negativverpflichtung) (Status, Negative Pledge) (1) Die Schuldverschreibungen und Zinsscheine stellen vor- (1) The Bonds and Coupons constitute (subject to sub- behaltlich der Absätze (2) und (3) unmittelbare, unbedingte, paragraphs (2) and (3)) direct, unconditional, unsecured unbesicherte und nicht nachrangige Verpflichtungen der and unsubordinated obligations of the Republic and shall Republik dar, die untereinander stets in gleichem Rang ste- at all times rank pari passu and without any preference hen. Die Zahlungsverpflichtungen der Republik aus den among themselves. The payment obligations of the Schuldverschreibungen und Zinsscheinen werden vorbe- Republic under the Bonds and the Coupons shall (subject haltlich der Absätze (2) und (3) stets mindestens im gleichen to subparagraphs (2) and (3)) at all times rank at least Rang stehen mit allen ihren sonstigen gegenwärtigen und equally with all its other present and future unsecured zukünftigen unbesicherten und nicht nachrangigen Aus- and unsubordinated External Indebtedness (as defined landsverbindlichkeiten (wie nachstehend definiert). below).

(2) Solange Schuldverschreibungen oder Zinsscheine aus- (2) So long as any Bond or Coupon remains outstanding, stehen, jedoch nur bis zu dem Zeitpunkt, an dem die but only up to the time when, upon maturity of the Bonds, Schuldverschreibungen fällig und alle Beträge an Kapital the payment of all amounts of principal and interest has ordnungsgemäß bereitgestellt worden sind, wird die Repu- been duly provided for, save for the exceptions set out in blik vorbehaltlich der Ausnahmen gemäß Absatz (3) ihre subparagraph (3), the Republic will not create or permit to Vermögenswerte oder Einkünfte insgesamt oder teilweise subsist any lien, pledge, mortgage, security interest, deed keinen Grundpfandrechten, Mobiliarpfandrechten, Hypo- of trust, charge or other encumbrance or preferential theken, urkundlichen Sicherungsrechten oder sonstigen arrangement which has the practical effect of constituting Sicherungsrechten oder Vorrangvereinbarungen, die ein a security interest ("Lien") upon the whole or any part of Sicherungsrecht faktisch begründen („lien"), unterwerfen its assets or revenues to secure any Public External oder den Fortbestand einer solchen Belastung zulassen, um Indebtedness (as defined below) of the Republic unless, eine öffentliche Auslandsverbindlichkeit (wie nachstehend at the same time or prior thereto, the Republic's obliga- definiert) der Republik zu besichern, es sei denn, die Ver- tions under the Bonds and the Coupons are secured bindlichkeiten der Republik aus den Schuldverschreibungen equally and rateably therewith. und Zinsscheinen werden gleichzeitig oder vorher in gleichem Rang und Verhältnis besichert.

(3) Folgende Ausnahmen gelten für die in Absatz (2) (3) The following exceptions apply to the Republic's obli- genannten Verpflichtungen der Republik: gations under subparagraph (2): (i) jedes Sicherungsrecht an Eigentum zur Besicherung (i) any Lien upon property to secure Public External von öffentlichen Auslandsverbindlichkeiten der Repu- Indebtedness of the Republic incurred for the pur- blik, die zum Zweck der Finanzierung des Erwerbs sol- pose of financing the acquisition of such property; chen Eigentums eingegangen wurden; jede Erneue- any renewal or extension of any such Lien which is rung oder Verlängerung eines solchen Sicherungs- limited to the original property covered thereby and rechts, die auf das ursprünglich besicherte Eigentum which secures any renewal or extension of the origi- beschränkt ist und die der Besicherung einer Erneue- nal secured financing; rung oder Verlängerung der ursprünglich besicherten Finanzierung dient;

(ii) jedes Sicherungsrecht, das an solchem Eigentum (ii) any Lien existing on such property at the time of its zum Zeitpunkt von dessen Erwerb zum Zweck der acquisition to secure Public External Indebtedness Besicherung von öffentlichen Auslandsverbindlich- of the Republic and any renewal or extension of any keiten der Republik besteht, und jede Erneuerung such Lien which is limited to the original property oder Verlängerung eines solche Sicherungsrechts, covered thereby and which secures any renewal or die auf das ursprünglich besicherte Eigentum extension of the original secured financing; beschränkt ist und die der Besicherung einer Erneue-

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rung oder Verlängerung der ursprünglich besicherten Finanzierung dient; (iii) jedes Sicherungsrecht, das in Verbindung mit Trans- (iii) any Lien created in connection with the transactions aktionen gemäß dem Finanzierungsplan 1992 der contemplated by the Republic of Argentina 1992 Republik Argentinien vom 23. Juni 1992 (der „Finan- Financing Plan dated June 23, 1992 (the "1992 Finan- zierungsplan 1992") und der Umsetzung der diesbe- cing Plan") and the implementing documentation züglichen Dokumentation bestellt wurde, einschließ- therefor, including any Lien to secure obligations lich der Sicherungsrechte zur Besicherung von Ver- under the collateralised bonds issued thereunder pflichtungen aus in diesem Zusammenhang begebe- (the "Par and Discount Bonds") and any Lien secur- nen, besicherten Schuldverschreibungen (die „Par- ing indebtedness outstanding on the date hereof to und Discount-Schuldverschreibungen") sowie Siche- the extent required to be equally and rateably rungsrechte zur Besicherung von Verbindlichkeiten, secured with the Par and Discount Bonds; die am Datum dieser Vereinbarung ausstehen, soweit diese im gleichen Rang und Verhältnis mit den Par- und Discount-Schuldverschreibungen besichert werden müssen;

(iv) jedes Sicherungsrecht, das am Tag der Begebung (iv) any Lien in existence on the date of issue of the der Schuldverschreibungen besteht; Bonds; (v) jedes Sicherungsrecht zur Besicherung von öffent- (v) any Lien securing Public External Indebtedness of lichen Auslandsverbindlichkeiten der Republik, die the Republic issued upon surrender or cancellation anläßlich eines Rückerwerbs oder einer Entwertung of any of the Par and Discount Bonds or the principal von Par und Discount-Schuldverschreibungen ein- amount of any indebtedness outstanding as of June gegangen werden, oder des Kapitalbetrags von am 23, 1992, in each case, to the extent such Lien is cre- 23. Juni 1992 ausstehenden Verbindlichkeiten, und ated to secure such Public External Indebtedness on zwar jeweils soweit ein solches Sicherungsrecht eine a basis comparable to the Par and Discount Bonds; öffentliche Auslandsverbindlichkeit auf einer mit den Par- und Discount- Schuldverschreibungen ver- gleichbaren Basis besichert;

(vi) jedes Sicherungsrecht an jeglichen Par- und Dis- (vi) any Lien on any of the Par and Discount Bonds; and count-Schuldverschreibungen; und (vii) jedes Sicherungsrecht zur Besicherung von öffent- (vii) any Lien securing Public External Indebtedness lichen Auslandsverbindlichkeiten, die zum Zwecke der incurred for the purpose of financing all or part of Finanzierung oder Teilfinanzierung der Kosten des the costs of the acquisition, construction or develop- Erwerbs, der Errichtung oder Entwicklung eines ment of a project provided that (a) the holders of Projektes eingegangen wurden, vorausgesetzt, daß such Public External Indebtedness expressly agree (a) die Gläubiger einer solchen öffentlichen Auslands- to limit their recourse to the assets and revenues of verbindlichkeit sich ausdrücklich mit einer Beschrän- such project as the principal source of repayment of kung ihres Rückgriffs auf Vermögensgegenstände such Public External Indebtedness and (b) the prop- oder Einkünfte aus einem solchen Projekt als Haupt- erty over which such Lien is granted consists solely rückzahlungsquelle einverstanden erklärt haben und of such assets and revenues. (b) das Eigentum, an dem ein solches Sicherungsrecht gewährt wird, ausschließlich aus solchen Vermögens- gegenständen und Einkünften besteht. (4) Im in diesen Anleihebedingungen verwendeten Sinn (4) As used in these Terms and Conditions of the Bonds: bedeutet: „Auslandsverbindlichkeit" alle Verpflichtungen, mit Aus- "External Indebtedness" means obligations, other than nahme der Schuldverschreibungen, aus aufgenommenen the Bonds, for borrowed money or evidenced by bonds, Geldern oder Verpflichtungen, die in Schuldverschreibun- debentures, notes or other similar instruments denomi- gen oder ähnlichen Wertpapieren verbrieft sind und auf nated or payable, or which at the option of the holder eine andere Währung als die gesetzliche Währung der thereof may be payable, in a currency other than the law- Republik lauten oder bestimmungsgemäß oder nach ful currency of the Republic provided that no Domestic Wahl des Inhabers in einer anderen Währung als der Foreign Currency Indebtedness shall constitute External gesetzlichen Währung der Republik zahlbar sind, wobei Indebtedness; jedoch eine „Inländische Fremdwährungsverbindlichkeit" keine Auslandsverbindlichkeit begründet. „Öffentliche Auslandsverbindlichkeit" in bezug auf jede "Public External Indebtedness" means, with respect to the von der Republik eingegangene oder garantierte Aus- Republic, any External Indebtedness of, or guaranteed by, landsverbindlichkeit der Republik, die (i) in Wertpapier- the Republic, as the case may be, which (i) is publicly märkten öffentlich angeboten oder privat plaziert ist, (ii) in offered or privately placed in securities markets, (ii) is in der Form von Schuldverschreibungen oder anderen Wert- the form of, or represented by, bonds, notes or other secu- papieren verbrieft ist, einschließlich einer Garantie hierfür rities or any guarantees thereof and (iii) is, or was und (iii) an einer Wertpapierbörse, in einem automatisier- intended at the time of issue to be, quoted, listed or traded ten Handelssystem, im Freiverkehr oder einem anderen on any stock exchange, automated trading system or Wertpapiermarkt notiert, eingeführt oder gehandelt wird over-the-counter or other securities market including, oder im Zeitpunkt der Begebung notiert, eingeführt oder without prejudice to the general validity of the foregoing, gehandelt werden sollte, einschließlich, ungeachtet der securities eligible for PORTAL or a similar market for the Allgemeingültigkeit des Vorhergehenden, von Wertpapie- trading of securities eligible for sale pursuant to Rule ren, die zum Handel in PORTAL oder einem ähnlichen 144A under the U.S. Securities Act of 1933 (or any succes- Markt für den Handel von Wertpapieren gemäß Rule 144A sor law or regulation of similar effect); des Securities Act der Vereinigten Staaten von Amerika von 1933 (oder einer gesetzlichen oder sonstigen Nachfol- gebestimmung mit ähnlichem Inhalt) zugelassen sind;

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„Inländische Fremdwährungsverbindlichkeit" bedeutet "Domestic Foreign Currency Indebtedness" means (i) die folgenden Verbindlichkeiten: (a) Bonos del (i) the following indebtedness: (a) Bonos del Tesoro Tesoro, begeben gemäß Dekret No. 1527/91 und issued under Decree No. 1527/91 and Decree Dekret Nr. 1730/91, (b) Bonos de Consolidatión, No. 1703/91, (b) Bonos de Consolidatión issued begeben gemäß Gesetz Nr. 23,982 und Dekret under Law No. 23,982 and Decree No. 2140/91, Nr. 2140/91, (c) Bonos de Consolidation de Deudas (c) Bonos de Consolidatión de Deudas Previsionales Previsionales, begeben gemäß Gesetz Nr. 23,982 issued under Law No. 23,982 and Decree No. 2140/ und Dekret Nr. 2140/91, (d) Bonos de la Tesorería a 91, (d) Bonos de la Tesorería a 10 A???osde Plazo 10 A???os d e Plazo, begeben gemäß Dekret Nr. 211/92 issued under Decree No. 211/92 and Decree No. 526/ und Dekret Nr. 526/92, (e) Bonos de la Tesorería a 5 92, (e) Bonos de la Tesorería a 5 A???os de Plazo issued A???os de Plazo, begeben gemäß Dekret Nr. 211/92 under Decree No. 211/92 and Decree No. 526/92, und Dekret Nr. 526/92, (f) Ferrobonos, begeben (f) Ferrobonos issued under Decree No. 52/92 and gemäß Dekret 52/92 und Dekret Nr. 526/92, (g) Bonos Decree No. 526/92, (g) Bonos de Consolidatión de de Consolidatión de Regalias de Hidrocarburos a 16 Regalias de Hidrocarburos a 16 A???os de Plazo issued A???os de Plazo, begeben gemäß Dekret Nr. 2284/92 under Decree No. 2284/92 and Decree No. 54/93, und Dekret Nr. 54/93, und (h) Bonos del Tesoro a (h) Bonos del Tesoro a Mediano Plazo en Dólares Mediano Plazo en Dólares Estado unidenses, bege- Estado unidenses issued under Law No. 24,156 and ben gemäß Gesetz Nr. 24,156 und Dekret Nr. 340/96, Decree No. 340/96 and (i) Bonos del Consolidation und (i) Bonos del Consolidatión, begeben gemäß issued under Law No. 24,411 and Decree No. 726/97 Gesetz Nr. 24,411 und Dekret Nr. 726/97, und and

(ii) jede Verbindlichkeit, die im Austausch oder als (ii) any indebtedness issued in exchange, or as replace- Ersatz für die vorstehend unter (i) aufgeführten Ver- ment, for the indebtedness referred to in (i) above, bindlichkeiten eingegangen wird, und and (iii) jede andere Verbindlichkeit, die gemäß ihren Bedin- (iii) any other indebtedness payable by its terms, or which gungen oder nach Wahl des Inhabers der Forderung at the option of the holder thereof may be payable, in a in irgendeiner anderen Währung als der gesetzlichen currency other than the lawful currency of the Repub- Währung der Republik Argentinien zahlbar ist und lic of Argentina which is (a) offered exclusively within die (a) ausschließlich innerhalb der Republik Argenti- the Republic of Argentina or (b) issued in payment, nien angeboten wird oder (b) zum Zweck von Zah- exchange, substitution, discharge or replacement of lung, Austausch, Tilgung oder Ersatz von Verbind- indebtedness payable in the lawful currency of the lichkeiten begeben wird, die in der gesetzlichen Republic of Argentina; provided that in no event Währung der Republik Argentinien zahlbar sind, mit shall the following indebtedness be deemed to consti- der Maßgabe, daß in keinem Fall die folgenden Ver- tute "Domestic Foreign Currency Indebtedness": bindlichkeiten „Inländische Fremdwährungsverbind- (x) Bonos Externos de la República Argentina issued lichkeiten" darstellen: (x) Bonos Externos de la Repú- under Law No. 19,686 enacted on June 15, 1972 and blica Argentina, begeben gemäß Gesetz Nr. 19,686, (y) any indebtedness issued by the Republic in in Kraft getreten am 15. Juni 1972 und (y) jegliche exchange, or as replacement, for any indebtedness Verbindlichkeit, die von der Republik im Austausch referred to in (x) above. oder als Ersatz für jede unter (x) genannte Verbind- lichkeit begeben wurde.

§ 10 § 10 (Kündigungsrecht der Anleihegläubiger) (Events of Default) (1) Wenn irgendeines der folgenden Ereignisse (Kündi- (1) If any of the following events ("Events of Default") gungsgründe) eintritt und fortbesteht, ist jeder Inhaber occurs and is continuing, the holder of any Bond may, von Schuldverschreibungen berechtigt, diese Schuldver- upon written notice to the Principal Paying Agent given schreibungen mittels schriftlicher Erklärung gegenüber before all defaults in respect of all of the Bonds shall have der Hauptzahlstelle, die vor Heilung aller Kündigungs- been cured, declare such Bond to be immediately due and gründe bezüglich aller Schuldverschreibungen abgegeben payable together with accrued interest thereon, as of the werden muß, zuzüglich aufgelaufener Zinsen mit Wirkung date on which such notice is received by the Principal ab Zugang der Kündigungserklärung bei der Hauptzahl- Paying Agent: stelle fällig und zahlbar zu stellen:

(a) Nichtzahlung: die Republik unterläßt die Zahlung von (a) Non-Payment: the Republic fails to pay any principal Kapital auf irgendeine der Schuldverschreibungen bei of any of the Bonds when due and payable or fails to Fälligkeit und Zahlbarkeit oder unterläßt die Zahlung pay any interest on any of the Bonds when due and von Zinsen auf irgendeine der Schuldverschreibungen payable and such failure continues for a period of bei Fälligkeit und Zahlbarkeit und dieses Unterlassen 30 days; or dauert über einen Zeitraum von 30 Tagen an; oder

(b) Verletzung anderer Verpflichtungen: die Republik (b) Breach of Other Obligations: the Republic does not erfüllt oder beachtet eine oder mehrere sonstige, sich perform or comply with any one or more of its other aus den Schuldverschreibungen ergebende Verpflich- obligations in the Bonds, which default is incapable of tungen nicht und diese Nichterfüllung ist entweder remedy or is not remedied within 90 days after notice nicht heilbar oder ist nicht innerhalb von 90 Tagen of such default shall have been given to the Principal nach einer Benachrichtigung der Hauptzahlstelle Paying Agent by the holder of any Bond; or durch einen Inhaber von Schuldverschreibungen geheilt worden; oder (c) Cross Default: der Eintritt eines Ereignisses oder einer (c) Cross Default: any event or condition shall occur Bedingung hat die vorzeitige Fälligkeit (mit Ausnahme which results in the acceleration of the maturity (other von wahlweiser oder pflichtgemäßer Rückzahlung than by optional or mandatory prepayment or vor Fälligkeit) einer öffentlichen Auslandsverbind- redemption) of any Public External Indebtedness of lichkeit der Republik im Gesamtnennbetrag von the Republic having an aggregate principal amount of US-$ 30,000,000 oder mehr zur Folge, oder Nichtzah- U.S.$ 30,000,000 or more, or any default in the pay- lung bei Fälligkeit und Zahlbarkeit von Kapital, Auf- ment or principal of, or premium or prepayment

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geld, Gebühr für vorzeitige Tilgung (soweit ein- charge (if any) or interest on, any such Public External schlägig), oder Zinsen auf eine solche öffentliche Indebtedness having an aggregate principal amount Auslandsverbindlichkeit im Gesamtnennbetrag von of U.S.$ 30,000,000 or more, shall occur when and as US-$ 30,000,000 oder mehr, falls eine solche Nichtzah- the same shall become due and payable, if such lung länger als eine gegebenenfalls ursprünglich default shall continue for more than the period of anwendbare Nachfrist andauert; oder grace, if any, originally applicable thereto; or (d) Moratorium: ein Moratorium hinsichtlich der Zahlung (d) Moratorium: a moratorium on the payment of princi- von Kapital oder Zinsen einer öffentlichen Auslands- pal of, or interest on, the Public External Indebtedness verbindlichkeit der Republik wird durch die Republik of the Republic shall be proposed or declared by the vorgeschlagen oder erklärt; oder Republic; or (e) Rechtsgültigkeit: die Rechtsgültigkeit der Schuldver- (e) Validity: the validity of the Bonds shall be contested by schreibungen wird von der Republik bestritten. the Republic. Das Recht, die Schuldverschreibungen fällig zu stellen, The right to declare Bonds due shall terminate as at the erlischt zu dem Zeitpunkt, an dem alle Beträge an Kapital time that all amounts of principal of, and interest on, the und Zinsen auf die Schuldverschreibungen der Hauptzahl- Bonds have been placed at the disposal of the Principal stelle zur Verfügung gestellt worden sind. Paying Agent. (2) Eine Benachrichtigung oder Kündigung gemäß Absatz (2) Any notice, including any notice declaring Bonds due (1) hat in der Weise zu erfolgen, daß der Hauptzahlstelle in accordance with subparagraph (1) shall be made by eine schriftliche Erklärung übergeben oder durch einge- means of a written declaration delivered by hand or regis- schriebenen Brief übermittelt wird. tered mail to the Principal Paying Agent. (3) In jedem der in Absatz (1) (b) bis (d) genannten Fälle (3) In any of the events specified in subparagraph (1) (b) wird eine Kündigung, sofern nicht bei deren Eingang through (d) any notice declaring Bonds immediately due zugleich einer der anderen in Absatz (1) bezeichneten and payable shall, unless at the time such notice is Kündigungsgründe vorliegt, erst wirksam, wenn bei der received, any of the other events specified in subpara- Hauptzahlstelle Kündigungserklärungen von Inhabern graph (1) entitling holders of Bonds to declare their Bonds von Schuldverschreibungen im Nennbetrag von min- due has occurred, become effective only when the Princi- destens DM 100.000.000.– oder (falls dies weniger als pal Paying Agent has received such notices from the DM 100.000.000.– ist) einem Zehntel des Nennbetrages holders of at least DM 100,000,000 in principal amount or der dann ausstehenden Schuldverschreibungen einge- (if this is less than DM 100,000,000) one-tenth in principal gangen sind. amount of the Bonds then outstanding.

§ 11 § 11 (Begebung weiterer Schuldverschreibungen; (Issue of Zusammenfassung mit weiteren Schuldverschreibungen) Additional Bonds/Consolidation) Die Republik behält sich vor, von Zeit zu Zeit ohne Zustim- The Republic reserves the right from time to time without mung der Anleihegläubiger weitere Schuldverschreibun- the consent of the Bondholders to issue additional bonds gen mit gleicher Ausstattung zu begeben in der Weise, with identical terms, so that the same shall be consoli- daß sie mit diesen Schuldverschreibungen zusammenge- dated, form a single issue with and increase the aggregate faßt werden, eine einheitliche Anleihe mit ihnen bilden principal amount of these Bonds. The term "Bonds" shall, und ihren Gesamtnennbetrag erhöhen. Der Begriff in the event of such increase, also comprise such addition- „Schuldverschreibungen" umfaßt im Falle einer solchen ally issued bonds. Erhöhung auch solche zusätzlich begebenen Schuldver- schreibungen.

Die Republik behält sich ferner das Recht vor, die Schuld- The Republic may also from time to time, without the con- verschreibungen jederzeit ohne Zustimmung der Anleihe- sent of the Bondholders consolidate the Bonds with one gläubiger mit einer oder mehreren von ihr begebenen or more issues of other bonds issued by it, which are ori- anderen Schuldverschreibungen zusammenzufassen, ginally denominated in ECU, Euro or a currency substi- welche bei ihrer Begebung auf ECU, Euro oder eine durch tuted by the Euro and are, in respect of all periods subse- den Euro ersetzte Währung gelautet haben. Nach der quent to such consolidation, subject to the same terms Zusammenfassung werden diese denselben Anleihe- and conditions as the Bonds. bedingungen unterliegen wie die Schuldverschreibungen.

Der im Zusammenhang mit den betreffenden Schuldver- The relevant Issuing and Principal Paying Agency Agree- schreibungen zwischen der Republik und der Hauptzahl- ment as between the Republic and the Principal Paying stelle abgeschlossene Zahlstellenvertrag wird entspre- Agent will be amended accordingly. chend angepaßt.

§ 12 § 12 (Bekanntmachungen) (Notices) Alle die Schuldverschreibungen betreffenden Bekannt- All notices concerning the Bonds shall be published in the machungen sind im deutschen Bundesanzeiger und in German Federal Gazette (Bundesanzeiger) and in at least mindestens einem überregionalem Pflichtblatt der Frank- one national newspaper designated by the Frankfurt Stock furter Wertpapierbörse zu veröffentlichen. Zur Rechtswirk- Exchange for such notices. For legal purposes the publica- samkeit genügt die Veröffentlichung im Bundesanzeiger. tion in the Federal Gazette shall suffice.

5 13 § 13 (Anwendbares Recht, Erfüllungsort, (Governing Law, Place of Performance, Gerichtsstand, Immunitätsverzicht) Place of Jurisdiction, Waiver of Immunity) (1) Form und Inhalt der Schuldverschreibungen und Zins- (1) The Bonds and the Coupons, both as to form and con- scheine sowie die Rechte und Pflichten der Anleihegläubi- tent, as well as the rights and duties of the Bondholders,

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ger, der Republik und der Zahlstellen bestimmen sich in the Republic and the Paying Agents shall in all respects be jeder Hinsicht nach deutschem Recht. determined in accordance with German law. (2) Erfüllungsort ist Frankfurt am Main. (2) Place of performance shall be Frankfurt am Main. (3) Die Republik unterwirft sich hiermit unwiderruflich der (3) The Republic hereby irrevocably submits to the non- nicht ausschließlichen Gerichtsbarkeit jedes deutschen exclusive jurisdiction of any German court sitting in Frank- Gerichts mit Sitz in Frankfurt am Main und jedes Bundes- furt am Main and any Federal court sitting in the City of gerichts mit Sitz in der Stadt Buenos Aires ebenso wie Buenos Aires as well as any appellate court of any thereof, deren Berufungsgerichten in jeder Rechtsstreitigkeit, in any suit, action or proceeding against it arising out of or jedem gerichtlichen oder sonstigen Verfahren gegen sie relating to these Bonds. The Republic hereby irrevocably aufgrund oder im Zusammenhang mit den Schuldver- waives - to the fullest extent it may effectively do so - the schreibungen. Die Republik verzichtet hiermit unwiderruf- defense of an inconvenient forum to the maintenance of lich in dem ihr rechtlich weitestmöglichen Umfang auf den such suit or action or such proceeding and any present or Einwand der fehlenden Gerichtsbarkeit zur Durchführung future objection to such suit, action or proceeding eines solchen Rechtsstreits, gerichtlichen oder sonstigen whether on the grounds of venue, residence or domicile. Verfahrens sowie auf jegliche sonstigen gegenwärtigen The Republic agrees that a final judgment in any such oder zukünftigen Einwände gegen solche Rechtsstreitig- suit, action or proceeding in the courts mentioned above keiten, gerichtliche oder sonstige Verfahren auf Grund shall be conclusive and may be enforced in other juris- von örtlicher Zuständigkeit, Wohnsitz oder Zahlungsort. dictions by suit on the judgment or any other method pro- Die Republik erkennt an, daß ein endgültiges Urteil in vided by law. einem Rechtsstreit, gerichtlichen oder sonstigen Verfahren vor den oben genannten Gerichten bindend ist und in anderen Rechtsordnungen im Klageweg oder aufgrund eines anderen Rechtstitels vollstreckt werden kann.

(4) In dem Ausmaß, in dem die Republik derzeit oder zu- (4) To the extent that the Republic has or hereafter may künftig Immunität (aus hoheitlichen oder aus sonstigen acquire any immunity (sovereign or otherwise) from juris- Gründen) von der Gerichtsbarkeit irgendeines Gerichtes diction of any court or from any legal process (whether oder von irgendeinem rechtlichen Verfahren (ob bei through service or notice, attachment prior to judgment, Zustellung, Benachrichtigung, Pfändung, Vollstreckung attachment in aid of execution, execution or otherwise), oder in sonstigem Zusammenhang) in bezug auf sich with respect to itself or its revenues, assets or properties, selbst oder ihre Einkünfte, ihr Vermögen oder Eigentum the Republic hereby irrevocably waives such immunity in besitzt oder erwerben sollte, verzichtet die Republik hier- respect of its obligations under the Bonds to the extent it mit unwiderruflich auf eine solche Immunität in bezug auf is permitted to do so under applicable law. ihre Verpflichtungen aus den Schuldverschreibungen in dem Umfang, in dem sie dazu gemäß anwendbarem Recht berechtigt ist.

Unbeschadet des Vorstehenden werden durch argentini- Notwithstanding the foregoing, attachment prior to judg- sche Gerichte Pfändungen vor einer gerichtlichen Ent- ment or attachment in aid of execution will not be ordered scheidung oder zur Sicherung der Zwangsvollstreckung by Argentine courts in respect of (i) the assets which con- nicht angeordnet im Hinblick auf (i) Vermögenswerte, die stitute freely available reserves pursuant to Article 6 of the entsprechend Artikel 6 des Konvertibilitätsgesetzes frei Convertibility Law, (ii) property of the public domain verfügbare Reserven darstellen, (ii) in Argentinien bele- located in the territory of Argentina included within the gene Vermögensgegenstände, die öffentliches Eigentum provisions of Articles 2337 and 2340 of the Civil Code of im Sinne der Artikel 2327 und 2340 des argentinischen Argentina, (iii) property located in the territory of Argen- Zivilgesetzbuches darstellen, (iii) in Argentinien belegene tina which is dedicated to providing an essential public Vermögensgegenstände, die der Erbringung unverzicht- service, and (iv) property covered by Articles 66 and 67 of barer staatlicher Dienstleistungen gewidmet sind und (iv) the Permanent Supplementary Budget Law. Vermögensgegenstände im Sinne der Artikel 66 und 67 des Haushaltsgesetzes.

(5) Für etwaige Streitigkeiten oder sonstige Verfahren vor (5) For any legal disputes or other proceedings before deutschen Gerichten bestellt die Republik die FIDEUROP German courts, the Republic appoints FIDEUROP Treu- Treuhandgesellschaft für den gemeinsamen Markt mbH, handgesellschaft für den gemeinsamen Markt mbH, Marie-Curie-Straße 30, D-60493 Frankfurt am Main, zum Marie-Curie-Strasse 30, D-60493 Frankfurt am Main, as Zustellungsbevollmächtigten. authorized agent for accepting service of process.

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The Republic of Argentina

Territory and Population

The Republic of Argentina consists of 23 provinces and the federal capital of Buenos Aires. Located at the extreme south of the South American continent, Argentina is the second largest country in Latin America, covering 2.8 million square kilometers (1.1 million square miles), or 3.8 million square kilometers (1.5 million square miles) if territorial claims in the Antarctic and the South Atlantic Islands are included.

The most densely inhabited areas and the traditional agricultural wealth are on the wide temperate belt that stretches across central Argentina. Of a population of approximately 32.6 million in 1991 (the year of the last census), about 10.9 million live in the Greater Buenos Aires area. Six other urban centers - Córdoba, Rosario, Mendoza, San Miguel de Tucumán, Mar del Plata and La Plata – have a population of over 500,000 each. Approximately 79% of the population is urban. The population has a 96% literacy rate. Most of Argentina's population is of European extraction, with citizens of Span- ish, Italian and British descent forming the largest demographic groups. During the 1980 to 1990 period, Argentina's population grew at an average annual rate of 1.4%. Official projections estimate that Argentina's population will reach 37 million by the year 2000.

Government and Political Parties

The Argentine federal constitution (the "Constitution"), adopted in 1853, provides for a tripartite system of government; an executive branch headed by a president (the "President"); a legislative branch made up of a bicameral congress (the "Congress"); and a judicial branch, of which the Supreme Court of Justice (the "Supreme Court") is the highest body of authority.

On August 22, 1994, a new Constitution was enacted that permits the President to serve for two consecutive terms, allows direct elections for President, Vice-President and for the mayor of the federal capital of Buenos Aires, increases the number of Senators, shortens presidential terms from six years to four years and ends the requirement that the President be Roman Catholic.

Under the new Constitution, the President is elected by direct vote and serves for a maximum of two consecutive four-year terms. The President is responsible for the general administration of the country and has the power to veto laws in whole or in part, although Congress may override a veto by a two-thirds vote. General administration of Argentina is implemented by the Chief of the Cabinet, a position created by the new Constitution. The Chief of the Cabinet is chosen by the President and may be removed by Congress.

The Congress is made up of the Senate and the Chamber of Deputies. Prior to the Constitutional reforms of 1994, each province elected two members to the Senate, as did the federal capital of Bue- nos Aires. The new Senate, which assumed office on December 10, 1995, consists of 72 Senators, three Senators for each province and for the federal capital. Two Senators from each province represent the party receiving the largest number of votes and the third represents the party receiving the second largest number of votes. Senators are elected for six-year terms, and serve in staggered terms so that one-third of the electoral districts have elections every two years. The Chamber of Deputies consists of 257 seats which are allocated according to each province's population. Deputies serve for four-year staggered terms so that one-half of the Chamber is elected every two years. Depu- ties are elected by popular vote.

The judicial system is comprised of the federal and provincial trial courts, courts of appeal and supreme courts. The supreme judicial power of Argentina is vested in the Supreme Court, which has nine members who are appointed for life by the President, subject to ratification by the Senate. In addition, in 1994 Argentina's two largest political parties entered into an agreement whereby future Supreme Court justices will be selected from a list of nominees mutually agreed upon by both parties.

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Each province has its own constitution and elects its own governor, legislators and judges without the intervention of the federal Government (the "Government").

The three largest political parties in Argentina are the Partido Justicialista or Peronist Party ("PJ"), which evolved out of Juan Perón's efforts to expand the role of labor in the political process in the 1940's, the Union Civica Radical or Radical Civic Union ("UCR"), founded in 1890 and the Frente del Pais Solidario or Front for a Country in Solidarity (the "Frepaso") formed in 1994 by ex-members of the PJ and a small socialist party. Traditionally, the UCR has had more urban middle-class support and the PJ has received more labor support. Support for both the PJ and the UCR is broadly based. The Frepaso receives most of its support from the federal district of Buenos Aires, where it has won the last two Congressional elections. Smaller parties occupy various positions on the political spec- trum and some are active only in certain provinces.

The following table shows the party composition of the Argentine Chamber of Deputies and Senate following the elections in the years indicated.

Party Composition of the Argentine Congress

Chamber of Deputies Senate Party 1989 1991 1993 1995 (1) 1997 (2) 1986 1989 1992 (3) 1995

PJ 120 117 129 130 120 21 25 30 40 UCR 90 84 83 70 68 18 14 11 22 Frepaso (4). –––28 38 –––1 Others.... 44 56 45 29 31 7779 Total 254 257 257 257 257 46 46 48(5) 72(6)

V) Composition of the Chamber of Deputies as of December 10, 1995, when the Deputies elected in 1995 took office. (2) Composition of the Chamber of Deputies as of December 10, 1997, when the Deputies elected in 1997 took office. (3) Composition of the Senate following elections held in 1992. Subsequently two Senators of the PJ joined the Frepaso. (4) Founded in 1994. (5) The size of the Senate increased due to the granting of provincial status to Tierra del Fuego. (6) The size of the Senate increased pursuant to the new Constitution in 1994. Source: Information Office of Argentine Congress.

On October 26, 1997, Argentina held nationwide elections for 127 of the 257 seats that comprise the Chamber of Deputies, the lower house of Congress. The PJ of which President Menem is the leader, garnered 51 seats and the Alliance or Alianza, a coalition of the opposition parties UCR and Frepaso, won 42 seats. In addition, in those provinces in which the UCR and Frepaso did not act in coalition, the UCR won 17 seats and Frepaso 4 seats. The PJ now holds a total of 120 seats, less than the number required for an absolute majority in the Chamber of Deputies.

In the past, Argentina's political parties had difficulty in resolving the inter-group conflicts that arose out of the Great Depression of the 1930's, the deepening social divisions that occurred under the Perón Government and the economic stagnation of the past several decades. As a result, the military intervened in the political process on several occasions and ruled the country for a total of 22 years between 1930 and 1983. Poor economic management by the military and the loss of a brief war with the United Kingdom over the Malvinas (Falkland) Islands led in 1983 to the end of the most recent military Government, which had ruled the country since 1976.

Four military uprisings have occurred since 1983, the most recent in December 1990. The uprisings, which were led by a small group of officers dissatisfied with military pay scales and with civil prose- cutions of crimes committed under the last military Government, failed due to a lack of support from the public and the military as a whole.

Since 1983, Argentina has had two successive elected civilian Presidents. Raúl Alfonsín, elected in 1983, was the first civilian President in six decades to stay in office until the scheduled election of a successor. His UCR Government re-established civilian rule, including a functioning Congress. The current President, Carlos Menem, has won two consecutive presidential elections, in May of 1989 and 1995.

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President Menem, the leader of the PJ, was first elected with the backing of organized labor and business interests that traditionally supported a closed economy and a large public sector. He took office in July 1989, several months ahead of the scheduled inauguration, in the midst of an economic crisis. Shortly after taking office, however, President Menem adopted market-oriented and reformist policies, including a large privatization program, a reduction in the size of the public sector and the opening of the economy to international competition.

The most recent presidential elections were held on May 14, 1995. President Menem was re-elected for a new term by almost 50% of the total votes and won in all 24 electoral districts in Argentina except Buenos Aires, the federal capital. President Menem's nearest rival, José Octavio Bordon, received just under 30% of the vote. Mr. Bordon was instrumental in creating the Frepaso party. Hor- acio Massaccesi, of the UCR, came in third place with approximately 17% of the votes.

The next elections for the presidency are scheduled to take place in 1999.

Foreign Affairs and International Organizations

Argentina has diplomatic relations with 139 countries and is a member of over 116 international organizations. Argentina is a charter member of the United Nations and is currently a member of its Security Council, as well as a founding member of the Organization of American States. It is also a member of the International Bank for Reconstruction and Development (the "World Bank"), the Inter- national Monetary Fund (the "IMF"), the International Finance Corporation (the "IFC") and the Inter- American Development Bank (the "IADB"). Argentina is a permanent member of the Interim Commit- tee of the IMF (a policy advisory committee), a party to the General Agreement on Tariffs and Trade (the "GATT") and a member of the World Trade Organization (the "WTO").

In April 1990, Argentina signed a trade and cooperation agreement with the European Union (the "EU"), for an initial five-year period, automatically renewable on a yearly basis, which included not only improved trade relations but also covered industrial development and technical and scientific cooperation. This agreement was renewed in 1997 for a period of one year. Argentina has signed over 40 bilateral agreements, approximately half of which have already come into force, for the promotion of direct foreign investment with a variety of countries, including the United States, Canada, Germany, France, Italy, Spain, Switzerland, Sweden and the United Kingdom. Trade with the United Kingdom has also been regularized after disruptions in relations following the Malvinas war. In addition, several tax treaties, both broad and restricted, have been signed with several countries, including the United States, Japan, various European countries and a number of South American countries.

On the regional level, Argentina's relations with the rest of Latin America have emphasized cooperation in trade and investment issues, most notably with the signing of the Treaty of Asunción in March 1991, creating the Mercosur Common Market ("Mercosur") composed of Brazil, Argentina, Paraguay and Uruguay. Chile became an associate member of Mercosur in October 1996 and Bolivia became an associate member in March 1997. The original treaty and the agreements subsequently reached between the four original member countries provide for the gradual integration of their economies and an accompanying harmonization of economic and fiscal policies. In June 1991, the Mercosur countries signed an agreement with the United States which established procedures for consultation on trade and investment issues. Except for the automotive sector which is subject to different treatment, tariff barriers between the Mercosur nations were eliminated on January 1, 1995 and non-tariff restrictions on trade are also in the process of being eliminated for most goods. In December 1995, Mercosur and the EU signed an agreement for the development of free trade between them.

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The Argentine Economy

Introduction

Prior to the adoption of a new economic plan (the "Convertibility Plan") in March 1991, the Argentine economy was characterized by low and erratic growth, declining investment rates and rapid inflation. Despite its strengths, which include a well-balanced natural resource base and a high literacy rate, the Argentine economy floundered through a series of unsuccessful economic plans in the 1980's. The Convertibility Plan set the Argentine economy on a radically different course. With respect to public finance, this plan called for raising revenues, cutting expenditures and reducing the public deficit. The extensive privatization program that commenced in 1989 was accelerated, the domestic economy was deregulated and opened up to foreign trade and the framework for foreign investment was reformed. Since 1990, the Government has succeeded in privatizing, in whole or in part, 74 public sector entities and other assets, including the telephone company, the national airline, roads, railways, ports, water and electrical utilities, media, steel companies, the national gas company and the national oil company, YPF Proceeds from these privatizations (excluding concessions) amounted to U.S.$ 12.4 billion in cash and U.S.$ 15.4 billion in principal amount of debt instruments tendered by March 31, 1998. See "– Deregulation of the Economy and Privatizations". On the legislative front, computerized tracking of tax compliance has been implemented and is being further improved, domestic deregulation of economic activities is progressing, reform of the social security system has been implemented, and certain labor laws have been amended to provide greater flexibility in the negotiation of collective bargaining agreements. These, and other reforms were designed to reduce labor costs and eliminate provincial and municipal distortionary taxes, thus promoting growth and long- term stability.

A cornerstone of the Convertibility Plan is Law No. 23,928, enacted by the Congress on March 27, 1991 (the "Convertibility Law"). This law imposed an obligation on Banco Central, Argentina's central bank, to sell U.S. dollars at a rate of one peso for one U.S. dollar and prohibited Argentina's monetary base from exceeding its international reserves. See "– History and Background – The Convertibility Plan and Government Economic Policy" and "Monetary System – The Central Bank". By limiting the Government's ability to expand the money supply, the Convertibility Law greatly reduced inflation.

Since the implementation of the Convertibility Law, GDP and manufacturing output increased dramatically during the period from 1991 to 1994. The economic growth provoked by the Convertibility Plan was temporarily stalled due in part to the banking and credit crisis which took place in the early part of 1995 in the aftermath of the December 1994 devaluation of the Mexican Peso (the "Mexican Crisis") and in part to reduced consumer demand brought about by rising unemployment. In 1996, the Argentine economy recovered relatively, during which GDP grew 4.3% and growth in manufacturing was 5.2%. In 1997, GDP increased by an estimated 8.4% compared to 1996 and growth in manufacturing was 8.7%. Since the implementation of the Convertibility Plan, the annual inflation rate as measured by the Consumer Price Index ("CPI") has fallen sharply, declining from 1,343.9% in 1990 to 0.3% in 1997.

Significant progress was made from 1991 to 1994 in rescheduling Argentina's debt with both external and domestic creditors, which improved fiscal cash flows in the medium term and allowed a return to voluntary credit markets. Domestic debt owed by the Government to provincial governments, suppliers, retirees, pensioners and other litigants that was incurred prior to April 1, 1991 was rescheduled pursuant to the Debt Consolidation Law of August 1991. Bonds have been issued in respect of all such obligations and may be applied to the acquisition of certain Government assets included in the privatization program.

A breakthrough in relations with foreign creditors occurred in March 1992 when Argentina's standby program with the IMF was replaced by a three-year Extended Fund Facility ("EFF") of approximately 2.48 billion Special Drawing Rights ("SDR") (approximately U.S.$ 3.5 billion). In July 1992, Argentina also reached an agreement with the Paris Club of bilateral official creditors (the "Paris Club") to reschedule an aggregate principal amount of U.S.$ 2.7 billion of debt coming due to such creditors during the period from July 1992 to March 1995. In December 1992, Argentina and its commercial bank creditors signed a debt and debt service reduction package under the auspices of the 1992 Financing Plan (the "Brady Plan"). The first and principal closing for these bond issues took place in April 1993 and the last closing took place in April 1994. As of September 1994, when the Government

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decided to avail itself of external private finance instead of continuing to draw on the EFF, Argentina had drawn down SDR 2.21 billion, leaving an undrawn balance of SDR 278 million for the last two quarters of 1994.

After the onset of the Mexican Crisis, the Government determined that it was necessary to seek further funding through the EFF program, including drawing down on its unused quota. Negotiations with the IMF led to the approval in April 1995 of economic performance waivers for the last two quarters of 1994, an extension of the EFF credit for a fourth year through March 30, 1996, and an increase in the amount of the EFF credit by the equivalent of SDR 1.54 billion (approximately U.S.$ 2.4 billion) to a total of approximately SDR 4.02 billion (approximately U.S.$ 6.3 billion). Together with the undrawn amount of approximately SDR 278 million available under the EFF credit for the third and fourth quarters of 1994, a total of SDR 1.05 billion (approximately U.S.$ 1.6 billion) became immediately available to the Government, and the rest, SDR 768 million (approximately U.S.$ 1.2 billion), was disbursed in three equal quarterly installments in September and December of 1995 and in March of 1996.

On March 13, 1995, the Government announced that, in consultation with the IMF it had devised an U.S.$ 11.1 billion fiscal program. The program consisted in part of loans from the IMF through the extension and expansion of the EFF program, the World Bank and the IADB and from the proceeds of the sale of floating rate notes on concessionary terms ("Argentina Bonds"). The remaining amount was to be generated from a fiscal surplus which the Government planned to achieve through increased tax revenues derived from a temporary increase in the value-added tax ("VAT") and other measures. The proceeds from this package were used in part to rebuild international reserves and to finance two Fiduciary Funds which have been established to aid in the restructuring of both the private and provincial banking sectors and to pay debt amortizations. See "Monetary System - Financial Sector". After the announcement of this plan, however, the Government renegotiated its budgetary targets with the IMF for the third and fourth quarters of 1995 (in part to allow higher expenditures for social services and efforts to reduce unemployment and also to reflect lower than anticipated revenues), to allow for a balanced budget for 1995 rather than a U.S.$ 4.4 billion budget surplus. The Gov- ernment initially planned on achieving this balanced budget by offsetting an anticipated U.S.$ 2.4 billion fiscal deficit with U.S.$ 2.4 billion from proceeds of privatizations carried out during 1995. How- ever, because fewer privatizations were carried out than had been anticipated, the Government only received approximately U.S.$ 1.2 billion in privatization proceeds for 1995, resulting in a fiscal deficit after privatization proceeds of U.S.$ 1.4 billion. Consistent with the IMF plan, this deficit was financed with the proceeds of new debt issues in the international markets.

The sixth standby facility agreement was approved by the ÎMF on April 12, 1996 and authorized drawings up to the equivalent of SDR 720 million (approximately U.S.$ 1.04 billion) over the following 21 months. On September 16, 1996, the Government and the IMF agreed to a performance waiver with respect to the federal deficit target for 1996 and established new deficit targets for 1996 and 1997 of U.S.$ 6 billion and U.S.$ 4.5 billion, respectively. See "Public Sector Finances - Public Sector Accounts".

On December 20, 1996, the Government entered into its seventh standby agreement with the IMF, which set the fiscal deficit target for 1997 at U.S.$ 4.5 billion and authorized Argentina to make drawings up to the equivalent of SDR 107 million in each of four tranches during 1997. See "Public Sector Debt - Description of Debt and Debt Restructuring.

On February 4, 1998, the IMF approved a three-year EFF for Argentina in the amount of U.S.$ 2.8 billion. As condition of this facility, targets for Argentina's public fiscal deficit and trade deficit were set. Argentina has reserved the EFF for use in special or urgent circumstances and does not otherwise intend to draw down on the EFF in the normal course of operations. See "Public Sector Debt - Description of Debt and Debt Restructuring".

Total deposits (in pesos and dollars) in the banking system and gross international reserves have steadily increased since 1995, marking a reversal of the capital flight that had been triggered by a combination of the Mexican Crisis and the May 1995 presidential elections. See "Monetary System - Financial Sector" and " - Foreign Exchange Rates and International Reserves". In December 1996, Banco Central instituted standby credit facilities in the form of repurchase agreements with 13 major

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financial institutions to bulwark the banking system in the event of a liquidity crisis, such as the one that occurred after the Mexican Crisis. See "Monetary System - The Central Bank."

The credit shortage and economic downturn sparked by the Mexican Crisis have further exacerbated the budgetary problems of Argentina's provincial governments. A number of the provincial governments have used deficit spending in past years to support large-scale public sector employment. Since 1991, the Government has sought to reduce the provincial government deficits by ceasing to make loans to provincial banks that finance this deficit spending and by encouraging the privatization of provincial enterprises such as regional banks and utilities. As of December 1997, 14 provincial banks have been privatized. Seven provinces (including the City of Buenos Aires) have signed an agreement to merge their pension systems with the national plan and four other provinces are in the final stages of signing this agreement.

The Government believes that a continuation of the Convertibility Plan, together with labor flexibility, tax and social security reforms, growth in agricultural and manufacturing exports and other factors, should contribute toward continued economic growth and a reduction in the federal deficit over the medium term.

Stabilization and Economic Reforms under the Menem Government

The Menem Government inherited an economy in mid-1989 which had succumbed again to hyperinflation and had entered into a deep recession. Relations with external creditors were at a low point; interest payments on commercial bank debts had gone into arrears in April 1988; IMF and World Bank programs had lapsed; and payments to the World Bank and the IADB were frequently late. The objec- tives of the new Government were to stabilize prices, introduce credible reforms, reduce the public debt and improve relations with external creditors.

The Government's initial stabilization efforts included a devaluation of the austral, a fixed exchange rate, wage and price controls and a sharp increase in public utility rates. The stabilization effort quelled hyperinflation, bringing the monthly inflation rate down to 7.2% on average from September to November 1989.

However, the Government's efforts proved inadequate, and foreign exchange markets declined sharply in anticipation of a new bout of hyperinflation. The Government adopted a new set of stabilization measures in December 1989 which abandoned attempts to control wages, prices and the exchange rate and sought to restrain the public deficit - the principal cause of Argentina's chronic inflation. The new measures featured, among other things, tax reforms, a tighter rein on public enterprises and restrictions on the lending activities of public sector banks, personnel cuts and a reliance on cash income generated by privatizations to reduce the public sector deficit. The Government also eliminated all restrictions on foreign exchange transactions. In addition, the Government froze fixed rate, short-term bank deposits pursuant to which holders of seven- to 30-day deposits were permitted to withdraw no more than the equivalent of approximately U.S.$ 1,000 from their accounts, with the balance made payable only in ten-year U.S. dollar-denominated Government bonds ("Bonex 89"). It also provided for the compulsory exchange of certain domestic currency denominated bonds for Bonex 89.

This stabilization effort succeeded in ending temporarily the period of hyperinflation, but not in ending the Argentine economy's susceptibility to inflation. In late 1990, a deterioration in the finances of the social security system and of the provincial governments led to an expansion of credit by Banco Central. Banco Central loaned funds to the social security system to allow it to meet year-end payments and also funded provincial banks suffering deposit runs. The provincial banks continued to lend to provincial governments to finance their deficits. The credit expansion led to downward market pressure on the austral, culminating in a depreciation in the austral from 5,590 australes per dollar as of December 28, 1990 to 9,430 australes per dollar as of January 31, 1991 and a resurgence of price inflation. The Government responded by installing a new economic team headed by Economy Minis- ter Domingo Cavallo, which acted to reduce the public sector deficit by increasing public utility rates and taxes and by developing a new stabilization program.

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The Convertibility Plan and Government Economic Policy

The Government's current stabilization program is built around the Convertibility Plan announced by former Economy Minister Cavallo on March 20, 1991 and approved by Congress through passage of the Convertibility Law, as amended and supplemented. The Convertibility Plan has sought to reduce inflation and restore economic growth through reforms relating to the tax system, privatizations and the opening of the economy that are intended to address underlying structural problems that had distorted fiscal and monetary policy.

Although some of the Convertibility Plan's goals have already been achieved and its initial success has attracted international attention, a number of issues remain to be resolved before the economy of Argentina can achieve long-term stability.

The Convertibility Plan is centered on two fundamental principles:

(1) full international reserve backing for the monetary base. The monetary base (consisting of currency in circulation and peso deposits of financial entities with Banco Central) is not to exceed Banco Central's gross international assets at a fixed rate of one peso per U.S. dollar. Gross international assets include Banco Central's holdings of gold, foreign exchange (including short-term investments), U.S. dollar-denominated Government securities (in a percentage not to exceed one third of Banco Central's unrestricted reserves) and net Asociacion Latinoamericana de Integracion ("ALADI") claims (except overdue claims), all freely available and valued at market prices. Under this arrangement, in which the peso is fully convertible into the U.S. dollar, the money supply can only be increased when backed by increases in the level of international reserves, and not whenever the public sector deficit or the financial sector need to be financed; and

(2) the prohibition of financing the fiscal deficit through Banco Central's loans, the reduction in the fiscal deficit and the achievement of a surplus in the primary balance in order to provide funds for the Government to service its debt and thereby eliminate the need for further borrowings.

The Convertibility Plan has simplified fiscal and market regulations and reallocated state activities to the private sector, thereby reducing state expenditures, increasing the amount of Government revenues and at the same time encouraging domestic private sector initiative and foreign investment. On the income side, the main impact has been the reduction in the level of tax evasion and expansion of the application of the VAT, each of which has led to increased revenues. With respect to reduction of expenditures, the size and the scope of state institutions and businesses have been the main focus for reduction of costs. This has principally involved the privatization of public sector enterprises, which has itself led to increased tax revenues and a reduction in the number of employees of the public sector. The Government has also entered into agreements with the provinces on revenue apportionment and decentralization of certain areas such as high school education and health services. See "Public Sector Finances - Public Sector Accounts - Revenues".

The IMF supported the establishment of the Convertibility Plan and designed the financial program for the Argentine public sector, pursuant to which Argentina's right to make drawings under certain facilities is contingent upon it satisfying economic performance criteria agreed to by Argentina and the IMF and reviewed by the IMF on a quarterly basis. See " - Introduction", "Public Sector Finances - Public Sector Accounts" and "Public Sector Debt - Description of Debt and Debt Restructuring - IMF, IADB and World Bank".

On July 30, 1996, Dr. Roque Fernández, the President of the Central Bank since 1991, replaced Mr. Cavallo as Economy Minister. Since assuming office, Mr. Fernandez, who had been closely associated with the implementation of the Convertibility Plan since its inception, has continued with the basic economic policies that form part of this plan.

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Deregulation of the Economy and Privatizations

Deregulation of the Economy

Deregulation of the domestic economy, liberalization of trade and reforms of investment regulations are prominent features of Argentina's structural adjustment program. In order to achieve the free functioning of markets, the Government has undertaken an extensive program for the removal of economic restrictions and regulations and the promotion of competition.

The process of deregulation and liberalization is being continued through the privatization process, the reform of the social security system, the regional integration resulting from Mercosur and further labor law reforms. See "- Privatizations", "- Employment and Labor", "Public Sector Finances - Social Security" and "Foreign Trade and Balance of Payments - Foreign Trade- Exports and Imports".

Privatization

In 1989, the State Reform Law declared certain state enterprises eligible for privatization and, on August 31, 1994, the Government announced the start of a round of privatizations and state reforms in which the Government planned to sell all remaining major state-owned concerns. All airports, the national post office, the mint, Argentina's largest petrochemical plant and the hydroelectric plants were among the enterprises scheduled for privatization, in addition to selling the remaining shares it holds in various privatized companies.

Excluding share offerings and concessions, the Government completed 46 major privatizations from 1990 to year-end 1997.

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The following table sets forth the principal privatizations that took place from January 1, 1990 through March 31, 1998 (3).

Retired Company Date Cash Debt (millions of U.S. dollars) Telecommunications (ENTel) - Telefónica 1990-1991 $ 952.1 $ 2,720.0 - Telecom 1990-1992 1,326.9 2,309.0 Airlines - Aerolíneas Argentinas S.A Nov. 1990 190.1 1,313.8 Airports - 33 airports including Ezeiza and Jorge Newbery Feb. 1998 Petrochemicals - 7 petrochemical companies 1990-1995 410.7 131.1 Carbochemicals - Carboquimica Argentina Sept. 1993 0.3 0.8 Oil - YPF (assets sales) oil fields, refineries, oil pipelines 1990-1994 272.7 0.0 - YPF (86 marginal areas) 1990-1993 1,806.8 0.0 - YPF (enterprise privatization) July 1993 3,040.0 3,201.2 Electric Utilities - SEGBA - 7 companies 1992-1996 1,584.5 1,439.3 - Agua y Energía Eléctrica - 7 companies 1992-1993 88.0 222.9 - Transportadoras de Energía Eléctrica - 4 companies 1993-1994 36.0 318.9 - Hydroelectric Power - 8 companies 1993-1995 621.9 578.9 - Centrales Térmicas - 2 companies 1994 10.6 0.0 Postal office V) 30-year operating concession Aug. 1997 Gas (Gas del Estado) - 8 distribution and 2 transportation companies 1992-1995 1,469.7 3,116.2 Steel mills - 2 steel mills 1992-1993 147.4 30.0 Railways - 11 railway and subway lines(1) 1991-1994 Highways - Vialidad Nacional (1) Sept. 1990 - 3 toll roads (1) Sept. 1993 Water Utility (Obras Sanitarias de la Nación) - 1 water utility (1) Dec. 1992 Grain Elevators and Port Facilities - 6 grain elevator terminals (2) and 2 Port Administrations 1992-1993 9.7 0.0 Military and Naval Production - 1 ship builder Dec. 1991 59.8 0.0 - 6 arms manufacturers 1993-1994 18.8 3.3 Media - 2 television stations (1) Jan. 1990 - 28 radio stations (1) Feb. 1991 Hotel - Hotel Llao-Llao May 1991 3.2 13.0 Horse Racetrack - Hipodromo Argentino (1) Sept. 1992 Real estate - 1,081 properties 1991-1994 203.2 0.0 Foundry - Forja Aug. 1991 1.7 0.0 Livestock market - Mercado de Hacienda de Liniers (1) June 1992 Ships - Buques ELMA 1994 14.8 0.0 Financial Entities - Caja Nacional de Ahorro y Seguro April 1994 86.3 0.0 Agriculture - CAP Cuatreros May 1994 1.9 0.0

Total $ 12,357.1 $ 15,398.4

(1) Enterprises privatized through granting of concessions. (2) Five grain elevators are under concession. (3) The U.S.$ 21.5 million in privatization proceeds received in 1997 stem from various companies and are not accounted for in the table because they are part of Employee Share Ownership Programs. Source: Ministry of Economy and Banco Central.

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As of December 31, 1997, the Government retained share ownership in the following privatized companies. Percentage of State Enterprises Ownership Agua y Energia Eléctrica Central Termica Guemes 30.0 Central Termica Patagónica 39.0 Central Dique S.A. 39.0 Transener 25.0 Hidroélectrica Alicurá 19.5 Hidroélectrica Piedra del Aguila 39.0 Aerolíneas Argentinas S.A. 15.0 YPF (1) 20,3 Gas del Estado Distribuidora de Gas Pampeana S.A. 20.0 (1) Current legislation requires the Government to maintain a share ownership of at least 20%. Source: Ministry of Economy.

As a consequence of the Government's privatization program, subsidies and transfers to public sector enterprises were systematically reduced from U.S.$ 827 million in 1992 to U.S.$ 88 million in 1996, and were eliminated in 1997.

As of December 31, 1997, the Government's privatization program has almost been completed, and total proceeds from privatizations for 1997 were U.S.$ 21.5 million (excluding the sale of tax receivables).

On July 22, 1997, President Menem promulgated legislation providing for the privatization of Banco Hipotecario Nacional, the national mortgage bank, The privatization will be effected by an international equity offering, and the proceeds will be used to finance federal and provincial public works.

On August 1, 1997, Argentina completed the privatization of the postal service, The Government awarded a 30-year concession in competitive bidding to a consortium which will pay approximately U.S.$ 51.6 million every six months for the first 20 years and 1.0% of gross revenues for the remaining ten years for the right to provide mail and other services through Argentina's postal network.

On April 24, 1997, President Menem issued a decree authorizing the privatization of Argentina's main airports, including the international and domestic airports of Buenos Aires. On July 9, 1997, an Argen- tine federal appellate court ruled that the executive decree authorizing the privatization of the airports is unconstitutional and ordered the suspension of the bidding process for the airport-operating concessions. The Menem Administration appealed the decision to the Argentine Supreme Court on July 16, 1997. On August 28, 1997, President Menem issued an emergency decree authorizing the sale of a concession to operate Argentina's airports. On January 23, 1998, the Government selected the winning bidder for the concession to operate the 33 main airports in Argentina for a period of 30 years in exchange for U.S.$ 171 million in annual royalties. The Government entered into the concession contract with the winning bidder on February 9, 1998, and the decree approving the contract was issued on February 13, 1998. On February 27, 1998 the Government raised U.S.$ 82.7 million from the sale of its remaining 20% stake in gas distributor Gas Natural BAN S.A.

In addition to increasing the efficiency of services provided by public sector enterprises, the privatizations have also served to reduce outstanding debt (by applying cash proceeds and through the selec- tive use of debt-equity conversions), increase reserves and increase tax revenues from the new own- ers of the enterprises.

Through both direct sales and share offerings, Argentina's privatization program has allowed the Government to raise approximately U.S.$ 12.4 billion in cash proceeds and reduce the principal amount of its debt by approximately U.S.$ 15.4 billion through March 31, 1998, via the exchange of equity in the enterprises privatized for outstanding Government debt (excluding retirement of pensioners'debt). In addition, principally as a result of the privatization program, there has been a reduction in public sector employment.

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Gross Domestic Product

In 1996, the Argentine economy recovered relatively, during which GDP grew 4.3% and growth in manufacturing was 5.2%. In 1997, preliminary estimates indicate that GDP increased by 8.4% and growth in manufacturing was 8.7%.

Consumption as a percentage of GDP stood at an average annual rate of 82.9% for the period from 1993 to 1996 and 82% in 1997. Gross investment made up an average of 21.7% of GDP each year for the period from 1993 to 1996 and 25.2% in 1997. Imports as a percentage of GDP stood at 16.5% on average annually for the period from 1993 to 1996 and increased to 20.9% in 1997.

Exports of goods and services increased from an average annual rate of 11.9% of GDP for the period from 1993 to 1996 to 13.7% in 1997.

Structural reform of the social security system, which has allowed for private management of pension funds, is expected to raise the national savings rate and to further spur the development of the Argentine capital markets as a result of investment of pension funds. See "Public Sector Finances - Social Security". The Government has acted to further stimulate private savings by granting tax-free treatment to interest and capital gains income, and increasing taxes on consumption items.

The following tables set forth the major components of GDP and expenditures, in pesos and in percentage terms for the periods indicated.

Real GDP and Expenditures

At Constant 1986 Prices 1993 1994 1995 1996 1997 (thousands of pesos) GDP11,931 12,948 12,355 12,881 13,962 Add: Imports of goods and services 1,813 2,221 1,965 2,295 2,919 Total supply of goods and services 13,744 15,169 14,320 15,176 16,881 Less: Exports of goods and services 1,172 1,358 1,667 1,775 1,911 Total goods and services available for domestic expenditures 12,572 13,811 12,653 13,401 14,970 Allocation of total goods and services: Consumption (public and private) 10,062 10,754 10,093 10,629 11,446 Gross investment (public and private) 2,511 3,057 2,560 2,772 3,524 Total domestic expenditures 12,572 13,811 12,653 13,401 14,970 Real GDP growth (%)6.3% 8.5% (4.6%) 4.3% 8.4%

Columns may not add up due to rounding. Source: Ministry of Economy.

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GDP Evolution at Current Prices

Annual Average 1993 1994 1995 1996 1997 (2) (millions) Pesos 257,570 281,645 279,543 297,359 321,384 U.S. dollars (1) 257,828 281,645 279,543 297,359 321,384 Rate of Exchange (Pesos/U.S.$) 0.9990 1.000 1.000 1.000 1.000

(1) Converted at year end exchange rate. (2) Preliminary figures. Source: Banco Central and Ministry of Economy.

Composition of GDP and Expenditures (1)

1993 1994 1995 1996 1997 (2) (percentage of GDP) GDP 100.0% 100.0% 100.0% 100.0% 100.0% Plus: Imports of goods and services 15.2 17.2 15.9 17.8 20.9 Total supply of goods and services 115.2 117.2 115.9 117.8 120.9 Minus: Exports of goods and services 9.8 10.5 13.5 13.8 13.7 Total goods and services available for domestic expenditures 105.4% 106.7% 102.4% 104.0% 107.2% Allocation of total goods and services: Consumption (public and private) 84.3% 83.1% 81.7% 82.5% 82.0 Gross investment (public and private) 21.0 23.6 20.7 21.5 25.2 Total domestic expenditures 105.3% 106.7% 102.4% 104.0% 107.2%

Columns may not add up due to rounding. (1) Based on GDP in constant 1986 prices. (2) Preliminary figures. Source: Ministry of Economy.

Nominal GDP increased in 1996 to an estimated 297.4 billion pesos, which increased Argentina's GDP per capita to approximately 8,449 pesos. In 1997, preliminary estimates indicate nominal GDP increased to 321.4 billion pesos and per capita GDP increased to 9,009 pesos.

Principal Sectors of the Economy

The following table sets forth the composition of Argentina's GDP by economic sector for the periods indicated.

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Real GDP by Sector (1)

1993 1994 1995 1996 1997 (2) (percentage of GDP) Agriculture, livestock, fisheries and forestry 7.2% 6.9% 7.4% 7.2% 6.9% Mining and extractives (including petroleum and gas) 2.5 2.5 2.8 2.9 2.9 Manufacturing 25.4 24.9 24.3 24.5 24.6 Construction 5.7 6.1 5.7 5.5 6.4 Electricity, gas and water 2.0 2.0 2.3 2.3 2.3 Transportation, storage and communication 5.0 5.1 5.3 5.4 5.3 Commerce, hotels and restaurants 16.6 16.6 16.0 16.0 15.9 Financial services, insurance and real estate 15.2 15.8 16.6 16.8 16.9 Community, social and personal services 18.4 18.2 18.7 18.5 17.6 98.0 98.1 99.1 99.1 98.7 Plus import duties less adjustment for banking service 1.8 1.8 1.0 0.9 1.3 Total GDP 100.0% 100.0% 100.0% 100.0% 100.0%

(1) Based on GDP in constant 1986 prices. (2) Preliminary figures, first three quarters. Source: Ministry of Economy.

The following table sets forth the annual change in Argentina's real GDP by sector for the periods indicated.

Real GDP Growth by Sector

1993 1994 1995 1996 1997 (1) Agriculture, livestock, fisheries and forestry 3.1% 3.6% 2.3% 1.6% 3.6% Mining and extractives (including petroleum and gas) 10.0 8.8 6.7 8.1 7.9 Manufacturing 5.1 6.2 (7.0) 5.2 8.7 Construction 11.2 15.2 (10.9) 1.1 24.8 Electricity, gas and water 10.5 9.5 5.6 4.8 7.3 Transportation, storage and communication 5.5 9.6 0.2 5.8 6.4 Commerce, hotels and restaurants 4.2 8.5 (7.9) 4.5 7.9 Financial services, insurance and real estate 9.2 13.1 (0.2) 5.5 9.3 Community, social and personal services 6.2 7.2 (1.9) 3.1 3.4

(1) Preliminary figures, growth in first three quarters of 1997 compared with the first three quarters of 1996. Source: Ministry of Economy.

Agriculture

Argentina has a well-diversified, mechanized agricultural sector which benefits from a favorable cli- mate and some of the world's richest soils. The country is self-sufficient in virtually all agricultural goods, and is a major exporter of grains, meat and oil products. The growth in the agriculture, livestock, fisheries and forestry sector averaged 2.84% during the period from 1993 to 1997 and has his-

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torically accounted for the majority of Argentina's exports. Agriculture (including food and non-food products) generated an average of 60.1 % of the nation's total exports for the period from 1993 to 1996. Agriculture's percentage of total exports was 57.5% in 1997.

The Government has instituted measures to increase Argentina's importance as an agricultural exporter, including decontrolling farm pricing, reducing import barriers and privatizing the railway system. As the Argentine infrastructure improved and freight costs dropped, large investors began purchasing prime land to create modern, large-scale farming operations and commodity companies began improving and upgrading their facilities in Argentina. The combination of a free market and the high global cost for most farm products have resulted in Argentina's agricultural exports increasing from just over U.S.$ 12 billion in 1995 to an estimated U.S.$ 14.6 billion in 1997. Agricultural exports are expected to rise even higher in the near future as transport links between agricultural zones within the Mercosur countries are improved and the Rosario port becomes privatized later this year.

The following table sets forth the annual rate of growth of the primary sector for the periods indicated.

Rate of Growth of the Primary Sector

For the Agricultural Season Ended 1993 1994 1995 1996 1997 (1)

Agriculture 0.9% 7.8% 4.7% 3.3% 2.9% Livestock 3.4 0.3 (0.6) (2.0) 1.8 Fisheries 33.8 (3.0) 4.7 20.7 26.2 Others 5.1 (2.7) 0.1 N/A N/A Total 3.1 % 3.6% 2.3% 1.6% 3.6%

(1) Preliminary figures, first three quarters. Source: Ministry of Economy.

The fisheries sector has experienced significant growth at an annual average rate of 16.8% from 1993 to 1997. Argentine fish exports increased from U.S.$ 427 million in 1993 to U.S.$ 612.8 million in 1997. This increase was due in part to an accord reached between Argentina and the EU permitting greater access and a 50% reduction in tariffs.

Manufacturing

The import substitution-industrialization policies pursued by successive Governments throughout most of the post-World War II period fostered the growth of the manufacturing sector. High tariffs and Government credit subsidies insulated domestic producers from international competition, and production was generally directed at the domestic market. The current Government's market- oriented policies have resulted in deregulation of domestic markets and have encouraged increased competitiveness in, and restructuring of, the manufacturing sector.

Manufacturing represented 24.6% of GDP in the first three quarters of 1997. The largest components of the Argentine industrial sector are food and beverages, chemicals, plastics, coal and oil derivatives and machinery and equipment.

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The following table sets forth annual rate of growth figures of the manufacturing sector for the periods indicated.

Rate of Growth of the Manufacturing Sector

Annual Growth (1) 1993 1994 1995 1996 1997 (2)

Total 5.1 % 6.2% (7.0)% 5.2% 8.7% Food, beverages and tobacco industry (3) (2.0) 4.1 4.2 N/A N/A Textiles, clothes, and leather industry (4) (8.5) 1.6 (8.2) N/A N/A Wood industry and furniture 15.5 1.1 (27.4) N/A N/A Paper industry 12.2 6.2 (6.6) N/A N/A Chemistry, plastics, coal and oil derivatives (5) 5.9 10.2 (6.1) N/A N/A Non-metal minerals 6.2 5.3 (11.6) N/A N/A Basic metal industry (6) 51.8 16.1 2.3 N/A N/A Machinery and equipment 9.2 4.9 (17.1) N/A N/A Others 5.1 0 (7.0) N/A N/A

(1) Growth figures refer to physical volumes. (2) Preliminary figures. (3) Includes premium processed meats, fowl, flour, vegetable oils, oleaginous derivatives, baked goods and alcoholic and non-alcoholic beverages. (4) Includes synthetic and cellulose fibers and yarns. (5) Includes naphtha, PVC, ethylene, polyethylene and polypropylene, crude oil and natural gas. (6) Includes raw steel (cold and hot rolled sheets) and aluminum. Source: Ministry of Economy.

Construction

The credit crisis in 1995 brought an end to the construction boom as most banks suspended mortgage-backed lending immediately after the Mexican Crisis. As a result, construction activity declined by 10.9% during 1995, but showed a slight increase of 1.1 % during 1996 due to the region recovering from the Mexican Crisis and increased by 24.8% in the first three quarters of 1997 compared to the first three quarters of 1996. The recent growth in the construction sector is also attributable in part to increased lending by private sector banks to finance residential purchases. Rising cement sales suggest that construction activity is beginning to recover.

Mining and Extractives (including Petroleum and Gas Production) Sector

The mining and extractives sector, 2.9% of GDP in the first three quarters of 1997, consists primarily of coal, petroleum and gas production. Argentina is the third largest oil and gas producer in Latin America after Venezuela and Mexico, and has significant gas reserves in relation to current domestic consumption. Several companies, including YPF, are exploring oil fields with a view to increasing oil reserves and are planning to develop opportunities in the export markets. As part of this plan, YPF began operating an oil pipeline to Chile in February 1994. Exports of fuel and energy accounted for 12.1 % of total exports in 1997.

Historically, mineral mining in Argentina had been minimal due to economic instability and an un- favorable tax regime. In order to increase Argentina's development in mining, the Government has reduced the tax impact for development of mining operations, guaranteed fixed taxes for a 30-year period and has instituted an accelerated depreciation on mining equipment. Those reforms have resulted in foreign investments of more than U.S.$ 2.0 billion in mineral mining projects since 1990. Current mineral mining projects include Alumbrera (copper and gold), Pachón (copper and molybde- num), Cerro Vanguardia (gold and silver), Rio Colorado (potassium) and El Salar de Hombre Muerto (lithium).

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The following table shows the established reserves of petroleum and natural gas in Argentina as of the dates indicated.

Proven Reserves

1993 1994 1995 1996

Petroleum (1) 352,441 358,140 379,401 411,491 Natural Gas (2) 516,662 535,526 619,295 688,333

(1) In thousands of cubic meters. (2) In millions of cubic meters. Source: Secretariat of Energy.

Energy

The electricity, gas and water sector accounted for 2.3% of GDP in the first three quarters of 1997. Electricity is produced primarily from hydroelectric sources, gas, coal and nuclear plants. Argentina is a net exporter of energy. A combination of the developing cohesion among the Mercosur countries and foreign investment in the oil, gas and electricity privatizations have contributed to the steady growth in the energy sector.

Services

The services sector accounted for 55.7% of GDP in the first three quarters of 1997. The following table shows the composition of the services sector for the periods indicated at 1986 prices.

Composition of Services Sector

1993 1994 1995 1996 1997 (1) (percentage of total) Commerce, hotels and restaurants 30.1% 29.8% 28.3% 28.4% 28.5% Transportation, storage and communications 9.1 9.1 9.4 9.5 9 5 Finance, insurance and real estate 27.5 28.4 29.3 29.6 30.4 Community, social and personal service 33.3 32.6 33.0 32.6 31 7 Total 100.0% 100.0% 100.0% 100.0% 100.0%

(1) Preliminary figures. Source: Ministry of Economy.

The commerce, hotel and restaurant sector declined by 7.9% in 1995 to constitute 16.0% of GDP due to the recession and the reduction in consumer confidence in the region caused by the Mexican Cri- sis. This sector rebounded from the recession and grew by 4.5% in 1996 and 7.9% in the first three quarters of 1997 compared to the first three quarters of 1996.

The finance sector followed a similar trend. This sector increased from 15.2% of GDP in 1993 to 16.9% of GDP in the first three quarters of 1997, due in part to the liberalization of the Argentine financial markets, the consolidation of Argentine banks, an increased range of services offered by the financial sector, an increase in investment by international banks and the general expansion of the Argentine economy. In addition, companies were required by law to pay salaries through the banking system, which increased the number of consumers. Deposits in the banking system increased 86.9% from April 1995 to February 1998.

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The community, social and personal services sector constituted 17.6% of GDP in the first three quarters of 1997, compared to 18.4% of GDP in 1993, when the Government attempted to control public spending, which accounts for a substantial portion of this sector.

The transportation, storage and communications sector accounted for 5.3% of GDP in the first three quarters of 1997. Argentina has one of the largest railway systems in Latin America, which at the end of 1990 extended 35,745 km. The railway system was built and maintained by the public sector. The Government has granted concessions for more than 23,000 km of railways as part of its economic program. The Government launched a program of maintenance and modernization of the national highway system through public investment and through the granting of concessions for toll roads (which concessions require private operators to maintain and improve such roads). In 1993, the Gov- ernment granted concessions for three major toll roads. In addition, the principal Argentine cities are served by domestic and international airlines, and many smaller communities also benefit from scheduled service by domestic airlines.

As of December 1996, Argentina had approximately 20 telephone lines in service per 100 inhabitants. Telefónica and Telecom provide domestic and international long-distance telephone services in Argentina. In 1990, the Government's national telecommunications enterprise, ENTel, was privatized as part of the Government's economic program. See "- Deregulation of the Economy and Privatiza- tions - Privatizations".

Employment and Labor

The years of rapid economic recovery, 1991 to 1994, were accompanied by a rise in unemployment which is attributable to the privatization of state firms, government downsizing, the inadequacies of the financial infrastructure and high labor costs (due to high labor taxes). Unemployment increased dramatically in 1995, due primarily to the credit shortage sparked by the Mexican Crisis and the resulting slowdown of the Argentine economy. The Government believes that other factors affecting unemployment rates include a shift from labor intensive to more capital intensive production, a decrease in some local production due to competition from imports, an increase in overtime rather than new hires and an increase in the labor participation rate.

Unemployment increased from 16.6% in October 1995 to 17.3% in October 1996 before decreasing to 13.7% in October 1997 for the country as a whole. Unemployment rates in the Greater Buenos Aires area followed the same trend, increasing from 17.4% to 18.8% from October 1995 to October 1996, and then decreasing to 14.3% in October 1997. In major interior cities unemployment decreased gruadually from 15.5% in October 1995 (based on 24 cities) to 15% in October 1996 and 12.8% in October 1997 (each based on 27 cities). The labor participation rate (which measures the percentage of the able-bodied population in the work force) in the Greater Buenos Aires area was 44.9% in Octo- ber 1996 and 45.1% in October 1997 and, in the major interior cities of the country was 37.8% in Octo- ber 1996 and 38.9% in October 1997 (based on 27 cities). Between October 1996 and May 1997, approximately 319,000 new jobs were created in urban areas, of which 130,700 were jobs in the Greater Buenos Aires area.

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The following table shows labor force, employment participation, unemployment and underemployment rates for the periods indicated.

Participation and Unemployment Rates

As of October 31, 1993 1994 1995 1996 1997 (thousands) Greater Buenos Aires Labor force 4,796 4,829 5,009 5,147 5,229 Employment (1) 4,336 4,196 4,137 4,179 4,481 Participation rate (2) 43.3% 43,1 % 44.2% 44.9% 45.1 % Unemployment rate (3) 9.6% 13.1% 17.4% 18.8% 14.3% Underemployment rate (4) 9.1% 10.1% 12.6% 13.8% 13.0% Major interior cities (5) Labor force 3,224 3,299 3,384 3,445 3,628 Employment (1) 2,943 2,942 2,880 2,945 3,174 Participation rate (2) 37.6% 37.6% 38.0% 37.8% 38.9% Unemployment rate (3) 8.7% 10.8% 15.5% 15.0% 12.8% Underemployment rate (4) 9.5% 10.9% 12.4% 13.1% 13.5% Total Participation rate (2) 41.0% 40.8% 41.4% 41.9% 42.3% Unemployment rate (3) 9.3% 12.2% 16.6% 17.3% 13.7% Underemployment rate (4) 9.3% 10.4% 12.5% 13.6% 13.1% (1) To be considered employed a person above the minimum age requirement must have worked at least one hour with remuneration or fifteen hours without remuneration during the preceding week. (2) Labor force as a percentage of the total population. (3) Unemployed population as a percentage of the labor force. (4) Underemployed population as a percentage of the labor force. Workers are defined as underemployed if they work fewer than 35 hours per week and wish to work more. (5) Figures for 1993 to 1995 are based on 24 major interior cities. Figures for 1996 and 1997 are based on 27 major interior cities. Source: Instituto Nacional de Estadisticas y Censos ("INDEC.").

The Government has undertaken various legislative measures to provide for greater flexibility in the terms of labor contracts and therefore encourage employers to increase hiring. Prior to these reforms, most workers in Argentina were required to be hired under employment contracts of indefinite duration and were entitled to generous severance payments which vested as soon as employment commenced. Many economists believed that this policy discouraged employers from hiring new employees in times of economic uncertainty. The new labor laws were intended to alleviate this problem by introducing a variety of short term contracts which facilitate the hiring of temporary, part- time or "at will" employees in certain circumstances and which carry partial or total exemptions from the required retirement contributions. Under the current legislation, the role of unions has been diminished, although in most cases employers are still required to make contributions to the union health care system, the basis of organized labor's financial power.

Another component of the labor law reform package increases the availability of credit to companies with under 40 employees and allows them to enter into employment agreements without gaining union approval. During 1995, Workmen's Compensation legislation was passed by Congress which provides: (i) risk control mechanisms aimed at reducing labor related accidents and (ii) payment and insurance schemes for accident-related compensation.

In December 1996, the Government issued decrees aimed at decentralizing the collective bargaining process in order to encourage employers to hire more workers. The labor reform decrees also provide that if parties to the collective bargaining process are unable to reach a new agreement, the expiring collective bargaining agreement will not be enforced and the Ministry of Labor will mediate the dispute. Prior to the labor reform decrees, the collective bargaining agreement would remain in effect if parties were unable to conclude a new collective bargaining agreement. A general strike was held on December 26, 1996 to protest the decrees and constitutional challenges to the decrees were

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raised in the courts by two political parties, UCR and Frepaso, and by the Federation of Labor Unions (Confederacion de Trabajo or the "CGT"). In each case, the courts declared the decrees unconstitutional. The Government has appealed these decisions and is discussing the scope of further labor legislation with the CGT and representatives of the business community. Congress may amend some of the provisions of the decrees in the future or consider draft legislation reportedly to be jointly sponsored by the Government, the CGT and representatives of the business community. Labor reforms under consideration by the Government include: (i) legislation on the "flexibilization of labor" which would expand the liberalized policies on employment contracts to include large cor- porations, (ii) collective bargaining legislation which would give companies more leeway to negotiate employment contracts with their own staff without union involvement and (iii) legislation which would allow workers to choose among different unions and privately-run health plans. There were a number of strikes in Argentina in 1996 and 1997 to protest high unemployment and labor reform legislation.

In August 1997, President Menem announced a U.S.$ 3.0 billion public works and social program for the period from 1997 through 2000, which includes projects such as the construction and improvement of public roads, improvements in infrastructure and the education system and assistance to certain provincial pension schemes. This program has been put into effect subject to budgetary restrictions. The original schedule was suspended. In 1998, expenditure for this program was budgeted at just U.S.$ 200 million.

As a result of structural reforms to the Argentine economy stemming from the Convertibility Plan and the above-mentioned legislative measures taken by the Government to provide greater labor flexibility in wage bargaining, real wages fell 7.6% between 1991 and 1996. This trend continued in 1997, with real wages declining approximately 0.3% between December 31, 1996 and December 31, 1997.

Poverty

Beginning in October 1994 and continuing through October 1996, poverty rates rose as a result of the general economic recession, which was further compounded by the Mexican Crisis. Due to the recovery from the economic recession, poverty rates in the Greater Buenos Aires Area declined from 20.1 % of households in October 1996 to 19.0% of households in October 1997.

The Government has undertaken various measures to address unemployment, a primary cause of rising poverty in Argentina, such as labor reforms and improvements in the education system. See "- Employment and Labor". In addition, the World Bank and the IADB have committed an aggregate of U.S.$ 700 million in loans to help preserve essential social services for the poor and the unemployed. As of December 1997, U.S.$ 41.2 million of these loans had been disbursed.

The measurement of poverty on an income basis is made based upon a determination of a basket of goods and services (consisting primarily of food, clothing, transportation, health care, housing and education), which is considered the minimum necessary to sustain an individual. The basket is valued at market prices and the resulting threshold is called the poverty line.

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The following table sets forth the percentage of households and of the population in the Greater Buenos Aires Area with annual incomes below the poverty line for the periods indicated.

Poverty in the Greater Buenos Aires Area

Total Greater Buenos Aires Area House- Period (1) holds (2) Population

May 1992 15.1% 19.3% October 1992 13.7 17.8 May 1993 13.6 17.8 October 1993 13.1 16.9 May 1994 11.9 16.1 October 1994 14.2 19.0 May 1995 16.3 22.2 October 1995 18.2 24.8 May 1996 19.6 26.7 October 1996 20.1 27.9 May 1997 18.8 26.3 October 1997 19.0 26.0

(1) Income corresponds to the immediately preceding month. (2) Adjusted poverty line factor (adult equivalent of household). Source: INDEC.

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Foreign Trade and Balance of Payments

Balance of Payments In 1995, Argentina, with technical assistance from the IMF, adopted a revised methodology for calcu- lating balance of payments statistics according to certain agreed international standards. There are two principal differences between the calculation of the current account balance under the revised methodology and under the old methodology. Under the revised methodology, both imports and exports are calculated on a free on board ("f.o.b.") basis, whereas previously exports were calculated on a f.o.b. basis and imports were calculated on a cost, insurance and freight ("c.i.f.") basis. The resulting decrease in the value of imports is offset by an increase in the nonfinancial services account which now includes import freight and insurance fees paid to non-residents. In addition, under the old methodology for determining interest payments, all payments on bonds denominated in foreign currencies were counted as if they were being held by non-residents, including payments on such dollar-denominated bonds as Bonex, Bocones and Botes which are held primarily by Argentine residents. Under the revised methodology, only payments on bonds held by non-residents of Argentina are counted as outflows.

During the first four months of 1998, Argentina recorded a trade deficit of U.S.$ 2.5 billion. During 1997, Argentina recorded a trade deficit of U.S.$ 3.2 billion, during which year exports totaled U.S.$ 25.2 billion and imports totaled U.S.$ 28.4 billion. In 1996, Argentina recorded a trade surplus of approximately U.S.$ 1.6 billion, with exports totalling U.S.$ 23.8 billion and imports totaling U.S.$ 22.1 billion. The Government replaced its old methodology of categorizing the capital account with a breakdown which is consistent with IMF recommended practices. In addition, payments by the Government to Argentine residents on foreign-currency denominated obligations are now counted as capital outflows in the "other capital movements" component of the capital account. Furthermore, under the revised methodology, the change in gross international reserves (referred to under the former methodology as "change in gross Central Bank assets") no longer includes the value of bonds issued by the Government and held as reserves by the Central Bank.

The following table sets forth data on Argentina's balance of payments as compiled pursuant to the revised methodology.

Balance of Payments As of December 31, 1993 1994 1995 1996 1997 (1) (millions of U.S. dollars) Exports (2) $ 13,117 $ 15,839 $ 20,964 $ 23,811 $ 25,223 Imports (2) (15,543) (20,077) (18,726) (22,189) (28,418) Trade balance (2,426) (4,238) 2,238 1,622 (3,195) Nonfinancial services (2,730) (2,941) (2,222) (2,495) (3,069) Interest and dividends (2,927) (3,258) (3,216) (3,248) (4,205) 411 320 432 334 350 Current account (7,672) (10,117) (2,768) (3,787) (10,119) Central Bank (2,818) 307 1,929 849 (800) Other Financial Entities 1,291 1,586 2,431 (1,368) (994) Non Financial Public Sector 7,121 4,097 5,945 8,731 7,331 4,559 4,454 4,923 5,415 9,035 Other Capital movements (4) 1,999 234 (12,529) (6,058) (1,391) Capital account 12,152 10,678 2,699 7,569 13,181 Change in gross international reserves $ 4,480 $ 561 $ (69) $ 3,782 $ 3,062 (1) Preliminary figures. (2) Measured on a f.o.b. basis. (3) Includes foreign direct investment. (4) Consists principally of portfolio investment (inflows), payments on U.S. dollar-denominated bonds to Argentine residents (outflows), unaccounted for capital movements and errors and omissions. Source: Ministry of Economy.

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Current Account

The current account consists of the trade balance, non-financial services (principally transport, tourism and royalties), net payments of interest and dividends, and transfers (principally pension payments by foreign governments to residents of Argentina who have immigrated from abroad). Because the latter three categories have tended to remain relatively constant, the current account deficit or surplus is principally a function of Argentina's trade balance.

Although historically import tariffs and export taxes have constituted an important source of Govern- ment revenue, in recent years the Government has taken steps to greatly reduce these taxes and to liberalize trade generally. In late 1992 and mid-1993, after reducing import tariffs and eliminating most non-tariff barriers in early 1991, the Government further reduced import tariffs on manufactured and intermediate goods to an average of 15% on manufactured goods (20% on automobiles) and 10% on intermediate goods with minor exceptions. As a result, Argentina's average tariff rate applicable to non-Mercosur countries was reduced from 18% to 10%. Export taxes, which had averaged 11%, were (with the exception of taxes on sunflower seeds and soybeans) eliminated on March 22, 1991. On March 13, 1995, the Government announced an increase in import tariffs from non-Mercosur countries. This increase includes a 3% import surcharge (excluding capital goods, data processing and telecommunications equipment and fuels), a 10% tariff on imports of non-Mercosur capital goods and data processing and telecommunications equipment and tariff increases on an additional 69 non-Mercosur items.

Beginning on January 1, 1995, most tariff barriers between the Mercosur nations were eliminated and non-tariff restrictions on trade are also in the process of being eliminated for most goods. The automotive sector is subject to different treatment, however. Automotive imports are subject to annual quotas, although trade liberalization is a goal in this area as well. See " - Foreign Trade-Exports and Imports".

The current account deficit increased to U.S.$ 3.8 billion in 1996 and U.S.$ 10.1 billion in 1997, due largely to the deterioration of the trade balance. Exports totaled U.S.$ 25.2 billion in 1997, an increase of 7.1% over 1996, and imports totaled U.S.$ 28.4 billion in 1997, a 28.1 % increase over the same period.

Capital Account

In 1996, the capital account surplus stood at U.S.$ 7.6 billion and in 1997 at U.S.$ 13.2 billion. This increase over the 1995 surplus reflects the regaining confidence of international investors with regard to the evolution of the Argentine economy.

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Foreign Trade

Exports and imports

Argentina's exports have historically been concentrated in primary products and agricultural goods (including processed agricultural products). Machinery and equipment, together with chemicals and, more recently, vehicles and transport products have accounted for a large percentage of Argentina's imports. The following tables set forth the composition of Argentina's major exports and imports for the periods indicated.

Exports by Groups of Products (1)

1993 1994 1995 1996 1997 (2) (millions of U.S. dollars and percentage of total exports) Primary products Cereal $ 1,454 11.1% $ 1,333 8.4% $ 1,863 8.9% $ 2,560 10.8% $ 2,996 11.8% Seeds and Oilseeds 697 5.3 952 6.0 885 4.2 964 4.0 339.8 1.3 Fish and raw seafood 427 3.3 439 2.8 498 2.4 609 2.6 612.8 2.4 Fruits 215 1.6 244 1.5 417 2.0 476 2.0 500.2 2.0 Vegetables 186 1.4 259 1.6 268 1.3 271 1.1 340.5 1.3 Tobacco 117 0.9 89 0.6 101 0.5 146 0.6 185.3 0.7 Honey 50 0.4 54 0.3 71 0.3 91 0.4 106.6 0.4 Wool 49 0.4 75 0.5 86 0.4 65 0.3 62.0 0.2 Other 76 0.6 291 1.8 628 3.0 637 2.7 525.9 2.1 3,271 25.0 3,736 23.5 4,817 23.0 5,819 24.4 5,669.7 22.3 Manufactured goods of agricultural origin Residues 1,451 11.1 1,349 8.5 1,254 6.0 2,367 9.9 2,464.6 9.7 Oils and fats 1,079 8.2 1,534 9.7 2,097 10.0 1,891 7.9 2,228.1 8.7 Meat 748 5.7 918 5.8 1,229 5.9 1,074 4.5 1,007.7 4.0 Hides and skins 618 4.7 763 4.8 937 4.5 889 3.7 963.4 3.8 Vegetable and fruit products 166 1.3 160 1.0 321 1.5 400 1.7 359.7 1.4 Processed fish and seafood 279 2.1 286 1.8 416 2.0 395 1.7 418.9 1.6 Processed wool 96 0.7 113 0.7 116 0.6 121 0.5 116.1 0.5 Other 495 3.8 684 4.3 1,103 5.3 1,303 5.5 1,411.0 5.5 4,932 37.6 5,807 36.6 7,473 35.8 8,440 35.4 8,969.4 35.2 Manufactured goods of industrial origin Basic metals 703 5.4 760 4.8 1,214 5.8 1,190 5.0 1,276.2 5.0 Chemicals 559 4.3 728 4.6 973 4.6 980 4.1 1,063.1 4.2 Machinery and equipment 755 5.8 867 5.5 983 4.7 962 4.0 1,096.8 4.3 Transport equipment 719 5.5 918 5.8 1,308 6.2 1,642 6.9 2,651.3 10.4 Plastics 133 1.0 181 1.1 341 1.6 340 1.4 305.4 1.2 Textiles 165 1.3 210 1.3 384 1.8 305 1.3 308.5 1.2 Footwear 92 0.7 87 0.5 102 0.5 73 0.3 90.9 0.4 Other 553 4.2 897 5.7 1,200 5.7 975 4.1 957.2 3.8 3,679 28.2 4,648 29.3 6,505 30.9 6,467 27.1 7,749.4 30.4 Fuel and energy 1,236 9.4 1,651 10.4 2,169 10.3 3,089 13.0 3,083.3 12.1 Total (3) $ 13,118 100.0% $ 15,842 100.0% $ 20,964 100.0% $ 23,815 100.0% $25,471.6 100.0%

Columns may not add up due to rounding. (1) Measured on an f.o.b. basis. (2) Preliminary figures. (3) Total results differ from those presented in the "Balance of Payments" table herein due to differences in methodology used by each of Banco Central and INDEC in preparing the information presented in each table. Source: INDEC.

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Imports by Groups of Products (1)

1993 1994 1995 1996 1997 (2) (millions of U.S. dollars and percentage of total imports) Machinery and equipment $ 5,814 34.6% $ 7,446 34.5% $ 6,449 32.3% $ 7,552 31.8% $ 9,958.8 32.7% Vehicles and transport products 2,686 16.0 3,794 17.6 2,484 12.4 3,435 14.5 4,956.4 16.3 Chemicals 2,017 12.0 2,594 12.0 3,027 15.2 3,729 15.7 4,032.1 13.3 Metals 960 5.7 1,280 5.9 1,348 6.7 1,461 6.1 2,051.3 6.7 Plastics and rubber 934 5.6 1,115 5.2 1,308 6.6 1,519 6.4 1,929.4 6.3 Paper 587 3.5 697 3.2 896 4.5 936 3.9 1,138.6 3.7 Textiles (including clothing) 811 4.8 830 3.8 704 3.5 872 3.7 1,065.8 3.5 Optics and precision equipment 536 3.2 708 3.3 601 3.0 708 3.0 870.3 2.9 Footwear, hats and umbrellas 165 1.0 178 0.8 139 0.7 135 0.6 203.8 0.7 Minerals 565 3.4 818 3.8 987 4.9 1,111 4.7 1,168.2 3.8 Agricultural 273 1.6 346 1.6 380 1.9 456 1.9 736.0 2.4 Food 455 2.7 595 2.8 587 2.9 548 2.3 636.6 2.1 Fats and oils 19 0.1 25 0.1 32 0.2 40 0.2 54.0 0.2 Leather and hides 36 0.2 45 0.2 45 0.2 69 0.3 82.0 0.3 Wood and cork 111 0.7 140 0.6 116 0.6 135 0.6 178.2 0.6 Other products 815 4.9 979 4.6 866 4.3 1,055 4.4 1,358.5 4.5 Total (3) $ 16,784 100.0% $ 21,590 100.0% $ 19,969 100.0% $ 23,761 100.0% $ 30,419.8 100.0%

Columns may not add up due to rounding. (1) Measured on a c.i.f. basis. (2) Preliminary figures. (3) Total results differ from those presented in the "Balance of Payments" table herein due to differences in methodology used by each of Banco Central and INDEC in preparing the information presented in each table. Source: INDEC.

Argentina's largest trading partners are Brazil and the United States. Argentina also conducts a substantial amount of trade with The Netherlands, Germany, Italy and with other member countries of the Latin America Integration Association (Asociación Latinoamericana de Integración, or "ALADI") and the EU. The following table provides data on Argentina's geographic distribution of trade for the periods indicated.

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Geographic Distribution of Trade

1993 1994 1995 1996 1997 (1) (millions (percen- of U.S. tage of (percentage of total) dollars) total) Exports Brazil 21.3% 22.8% 26.1% 27.8% 7,752.9 30.4% United States (2) 9.7 10.9 8.6 8.2 2,041.1 8.0 Germany 4.8 3.9 3.1 2.4 496.0 1.9 Italy 3.9 4.1 3.5 3.0 731.8 2.9 Japan 3.6 2.8 2.2 2.2 553.6 2.2 China 1.2 1.4 1.4 2.6 862.5 3.4 Netherlands 9.7 7.5 5.7 5.1 882.5 3.5 Russia 0.80.3 0.4 0.6 211.2 0.8 Rest of ALADI (2) 18.9 20.9 19.7 19.3 4,593.8 18.0 Rest of EU 9.5 9.1 9.0 10.7 1,875.4 7.4 Rest of World 16.5 16.2 20.3 18.2 5,470.7 21.5 Total 100.0% 100.0% 100.0% 100.0% 25,471.6 100.0%

Imports Brazil 21.3% 19.9% 20.8% 22.4% 6,907.9 22.7% United States (2) 23.0 22.9 20.9 19.9 6,062.5 19.9 Germany 6.1 6.4 6.3 6.0 1,658.1 5.5 Italy 5.8 6.6 6.3 6.3 1,741.1 5.7 Japan 4.0 2.9 3.6 3.1 1,128.0 3.7 China 1.3 1.0 3.0 2.9 1,008.1 3.3 1.3 1.6 1.1 0.9 257.0 0.8 Netherlands 0.3 0.3 0.4 0.4 128.3 0.4 RestRussia of ALADI (2) 11.1 10.7 8.0 8.5 2,431.6 8.0 Rest of EU 11.4 14.0 16.5 18.9 4,668.5 15.3 Rest of World 14.4 13.8 13.1 10.6 4,428.7 14.6 Total 100.0% 100.0% 100.0% 100.0% 30,419.8 100.0%

Columns may not add up due to rounding. (1) Preliminary figures. (2) Figures for the United States include Puerto Rico, (3) May exclude some Latin American countries. Source: INDEC.

Trade among the Mercosur countries has increased considerably since the inception of the organization, from U.S.$ 2.7 billion in 1990 to U.S.$ 16.6 billion in 1997. Argentina's exports to fellow Mercosur members rose 35.7% in 1997. Sales to Brazil in 1997 represented about 86.2% of Argentina's Merco- sur exports. Brazil is currently Argentina's main export market.

Trends in the trading relationship between Argentina and Brazil, the two largest member countries of the Mercosur, are difficult to predict as a result of differences in the economic policies adopted by both countries. Up to the end of 1992, Argentina ran a trade deficit with Brazil, due to economic diffi- culties in the latter country which depressed both demand for imports and the prices of Brazilian exports. In 1993, Argentina's trade deficit with Brazil narrowed to U.S.$ 3.6 billion due to an increase in exports to that country facilitated by improving economic conditions in Brazil, lower interest rates and stabilization of the Brazilian currency. The same tendency continued in 1994, as the trade deficit declined further to U.S.$ 700 million. Argentina achieved a trade surplus with Brazil of approximately U.S.$ 1.3 billion in both 1995 and 1996, and U.S.$ 1.7 billion in 1997.

In December 1994, Argentina and Brazil signed an agreement covering trade in automobiles and automotive components. Argentina agreed to treat Brazilian automotive parts as if they were of local origin and Brazil agreed not to impose duties or quotas on the import of vehicles from Argentina. Several foreign automobile manufacturers subsequently announced plans to set up car-assembly

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plants in Argentina, with a view to selling part of their output to Brazil. However, in June 1995, Brazil announced that it intended to impose quotas on car imports from its Mercosur partners, including Argentina. Following negotiations between the two countries to resolve this issue, Brazil has agreed to exempt Argentina from such quotas.

On April 1, 1997, Brazil, Argentina's principal trading partner, implemented restrictions requiring importers to pay cash for all imports, except for limited classes of imports and imports with financing terms greater than 360 days. On April 3, 1997, Brazil granted Argentina and certain other countries in the region a partial exemption from these restrictions, permitting imports from these countries valued at no more than U.S.$ 40,000 and having financing terms of less than 90 days. On January 26, 1998, Brazil announced that these exemptions will be extended for an indefinite period of time. Although it is Argentina's largest export market, exports to Brazil constitute just 30% of Argentina's total exports, equivalent to approximately 3% of GDP. Of those exports, more than 20% are automobiles and automotive components which are not subject to Brazil's trade restrictions. A large part of Argentina's exports to Brazil which are subject to the trade restrictions are commodities, for which there is an international market.

In December 1995, Mercosur and the EU signed an agreement for the development of free trade between them. The United States Trade Representative's Office announced in April 1997 its decision to withdraw preferential treatment with respect to U.S.$ 260 million of Argentine goods that enter the United States under the Generalised System of Preferences Programme, resulting in the importation of an additional tariff of approximately 5%. This measure was taken in response to the view of United States officials as to Argentina's inadequate protection of intellectual property rights. On May 2, 1997, the United States Department of Commerce removed countervailing duties on several products from Argentina, including leather, wool, oil country tubular goods and carbon steel cold-rolled flat products. The countervailing duty orders on these products were issued pursuant to former Section 303 of the Tariff Act of 1930, as amended, which gave the Department of Commerce the right to levy duties without an injury determination on imports that were from countries that were not "countries under the Agreement". Argentina became a "country under the Agreement" on September 20, 1991, when it signed the Understanding between the United States and the Republic of Argentina Regard- ing Subsidies and Countervailing Duties. In October 1997, Argentina and Canada dropped their respective trade barriers with respect to pork and beef products.

Foreign Investment

As a part of the Convertibility Plan, the Government enacted structural reforms designed to make foreign investment in Argentina more attractive, such as the adoption of a legislative framework that ensures equal treatment of foreign and local investors, privatization of state enterprises and foreign access to all economic sectors. Foreign investments in Argentina generally do not require prior governmental authorization, and foreign investors are not required to register investments with the Gov- ernment and can freely remit their profits and capital investments abroad. Foreign investors are, however, required to register investments with the Government.

Foreign investment has increased significantly since the implementation of the Convertibility Plan, rising from approximately U.S.$ 4.78 billion in 1995 to U.S.$ 6.33 billion in 1997. North America (the United States, Canada and Mexico) and Europe are the greatest sources of foreign investment. These regions accounted for approximately 40.6% and 27.0% of foreign investment, respectively, during the period from 1993 through 1996.

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Monetary System

The Central Bank

Banco Central, which was founded in 1935, functions as an independent entity apart from the Govern- ment. In accordance with the Financial Institutions Law, Banco Central supervises and controls the Argentine banking system and maintains Argentina's international reserves. Pursuant to the terms of the Convertibility Plan, Congress approved certain amendments to the Carta Orgánica, Basic Law, of Banco Central in September 1992, providing that (a) Banco Central's principal objective is to maintain the value of the currency, (b) it may only finance the Government indirectly (through the purchase on the open market of Government securities, provided that such securities do not exceed one third of its unrestricted reserves at any time and may not be increased by more than 10% in any one year), (c) it may only fund Argentina's banking sector for liquidity purposes and then only on a temporary and secured basis and (d) its Board of Directors must operate independently of the Government except in certain matters of policy where Banco Central's actions are subject to approval of the Congress.

Banco Central requires financial institutions to submit periodic financial reports in order to monitor each institution's business practices. Banco Central has the power to grant and revoke banking licenses; authorize the establishment of branches of foreign financial institutions in Argentina; approve bank mergers, certain capital increases and transfers of stock; fix minimum capital, liquidity and solvency requirements; grant certain financial facilities to financial institutions in cases of temporary liquidity problems and promulgate other regulations that further the intent of the Financial Institutions Law.

In accordance with its powers under the Financial Institutions Law, Banco Central promulgated a number of measures on January 12, 1995, to stem the substantial capital flight from the Argentine financial system following the Mexican Crisis. Pursuant to these measures Banco Central will convert dollars into pesos, and vice versa, on a one-to-one basis (previously Banco Central sold dollars at a strict one-to-one convertibility rate but purchased dollars at the prevailing bank rate, which at times had fallen to 0.998). In addition, pursuant to these measures, banks' reserve requirements on deposits are allowed to be maintained in the currency of choice, eliminating Banco Central's regulation of the denomination of reserves. Lastly, reserve requirements on U.S. dollar and peso deposits were lowered and standardized (they had been stricter on peso accounts), injecting liquidity into the system. Subsequently, Banco Central issued a requirement that all banks provide an amount equivalent to 2% of their deposits to the Banco de la Nación Argentina, the largest state-owned bank, in order to establish a fund to provide short term loans to financially distressed financial institutions.

In April 1995, Congress amended the Carta Orgánica of Banco Central and the Financial Institutions Law in order to allow Banco Central to (i) incur external indebtedness, and extend the term and increase the amount of secured financial assistance which may be granted to financial institutions, both without commitment of international reserves, (ii) transfer or sell assets of financial entities experiencing liquidity problems, (iii) extend to 120 days the maximum time of a bank suspension and (iv) increase to U.S.$ 5,000 the maximum level of deposits to be included in the preferred creditors list in the event of a bank closing. At the same time, Congress also created a private deposit insurance program. Under this program, private banks are to contribute between 0.03% and 0.06% of their total deposits (as determined by Banco Central) to an insurance fund. The insurance program currently covers sight deposits and 30-day time deposits up to Ps.10,000, and 90-day time deposits up to Ps.20,000.

In November 1995, Argentina moved from a reserve system based upon currency deposits held by Banco Central to a new liquidity system wherein bank liabilities are backed by a portfolio of assets in the form of (i) Letras de Liquidez Bancaria ("Bank Liquidity Notes"), a new instrument issued by the Government, the proceeds of which are invested with the same restrictions applicable to international reserves and dedicated exclusively to the repayment of the Bank Liquidity Notes, (ii) deposits in foreign low-risk institutions, and (iii) securities issued by member states of the Organization for Economic Cooperation and Development with an investment-grade rating or other instruments with low risk and high liquidity.

The new system offers three advantages over the former deposit-based reserve system. First, it imposes reserve requirements on most bank liabilities (including negotiable obligations and short- term credits) and not merely on deposits, thus strengthening the stability of the system. Second, the

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new requirements are uniform and eliminate the distortions created by the old system which imposed different reserve requirements on different types of deposits. Third, the new system is less costly to the banking sector because it allows reserves to be maintained in the form of productive assets rather than in non-interest bearing deposits with Banco Central.

In December 1996, Banco Central instituted standby credit facilities in the form of repurchase agreements with 13 major financial institutions. In exchange for Argentine Government securities, the facilities will provide Banco Central, with access to funds in an aggregate amount of up to U.S.$ 6.1 billion for a period of at least two years to bulwark the banking system in the event of a liquidity crisis. Banco Central does not expect to draw on these facilities, but believes that having them at its disposal sends a positive message to global investors with respect to Argentina's ability to deal successfully with a liquidity crunch in the banking system such as the one that occurred after the Mexi- can Crisis in December 1994. The program was augmented by U.S.$ 1.3 billion on December 23, 1997.

Financial Sector

As of December 31, 1997 the Argentine financial system consisted of 138 financial institutions, of which 20 were state-owned banks. As a result of failures and mergers, Argentina had 77 fewer financial institutions in December 1997 than it did at the end of 1991.

The following table presents data on the Argentine financial system as of the dates indicated.

The Argentine Financial System

As of December 31, As of December 31, 1995 1996 1997 1997 Number Number Number Loans Deposits (percentage of total) Financial Institutions State-owned (1) 2920 20 32.9% 33.8% Private 129 127 118 67.1 66.2 Total 158 147 138 100.0% 100.0%

(1) National, provincial and municipal. Source: Banco Central.

Commercial banks offer customers demand deposits, savings accounts and fixed-rate deposits that pay market rates of interest. Beginning in August 1989, Argentine banks were permitted to offer U.S. dollar denominated accounts. Since their inception, such accounts have attracted a growing share of deposits and by December 31, 1997, U.S. dollar denominated accounts amounted to approximately 54% of total deposits. Loans are generally extended by commercial banks to non-bank borrowers and other banks, and are often collateralized with liquid assets.

The Government has implemented a series of reforms of the financial system with particular emphasis on the public sector. International trade financing was transferred from Banco Central to Banco de Inversión y Comercio Exterior S.A. (BICE). Banco Nacional de Desarrollo, which financed industrial development, has been absorbed by Banco de la Nación Argentina. Banco Hipotecario Nacional, which was active in financing housing construction, has been transformed into a wholesale bank.

The national savings bank Caja Nacional de Ahorro y Seguros was privatized in April 1994. In addition, as of December 1997, 14 provincial banks had been privatized. See "The Argentine Economy - Deregulation of the Economy and Privatizations - Privatizations".

Since May 12, 1995, the capital flight has reversed, and as of May 29, 1998, total deposits (in pesos and U.S. dollars) stood at an amount equivalent to U.S.$ 74.3 billion (47.8% of which are in pesos and 52.2% of which are in U.S. dollars), an increase of 21.0% over the level recorded on May 29, 1997. This

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represents a return of an amount well in excess of the total amount of deposits that had been withdrawn from December 31, 1994 to May 12, 1995.

As a consequence of the Mexican Crisis, the total number of financial institutions decreased from 205 to 158 between December 31, 1994 and December 31, 1995. During this period, Banco Central revoked the licenses of 16 banks. In addition, during the same period, 33 banks were dissolved as a result of 14 mergers involving 47 financial institutions. The effect of the Mexican Crisis continued through 1996 resulting in a decrease in the total number of financial institutions from 158 to 147. In 1997, a number of important private domestic-owned banks were acquired by foreign financial institutions resulting in the rise in foreign investments in the balance of payments. The number of financial institutions had decreased to 138 by the end of 1997.

In March 1995, the Government created two Fiduciary Funds to support the transformation of the Argentine banking sector in an effort to overcome the effects of the Mexican Crisis. The first fund (the "Provincial Fiduciary Fund"), which had capital of U.S.$ 1.25 billion as of June 30, 1997, was created to, among other things, (i) make secured loans to provincial banks experiencing temporary liquidity or delinquent loan problems, (ii) provide liquidity to provincial banks through the purchase of assets at a discount, (iii) advance to the provinces up to 70% of the expected proceeds of the sale of any public company or asset, and (iv) finance programs to reduce staff in preparation for privatization. The second fiduciary fund, which had capital of U.S.$ 668 million as of June 30, 1997, was established to help finance the transfer of viable assets and liabilities of struggling banks to stronger financial institutions. These Funds received financing from the World Bank, the IADB and from the proceeds of the Argentine Bonds.

Liquidity and Credit Aggregates

The following tables set forth the composition of Argentina's monetary base (expressed in terms of Banco Central's monetary liabilities) and international reserves for the periods indicated.

Monetary Base and Central Bank International Reserves (1)

As of December 31, 1993 1994 1995 1996 1997 (millions of U.S. dollars) Currency including cash in vaui Its at banks $ 12,173 $ 13,317 $ 13,050 $ 14,030 $ 15,966 Other (2) $ 3,016 $ 2,950 $ 4,268 $ 6,381 $ 6,435 Monetary base (3) $ 15,189 $ 16,267 $ 17,318 $ 20,411 $ 22,401 International reserves $ 17,223 $ 17,930 $ 18,506 $ 21,538 $ 24,308

(1) All figures are at market value as of the date indicated. (2) Up to January 17, 1995, includes reserves required in pesos for peso deposits in commercial banks. Since January 17, 1995, includes only reserves required in U.S. dollars for peso deposits. Since August 31, 1995, it also includes "Bank Liquidity Notes". (3) Up to January 17, 1995, includes currency in circulation plus reserve requirements in pesos for peso deposits. Since January 17, 1995, includes only currency in circulation plus reserves required in U.S. dollars for peso deposits. Since August 31, 1995, it also includes "Bank Liquidity Notes". Source: Banco Central.

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Liquidity and Credit Aggregates

1993 (1) 1994 (1) 1995 (2) 1996 (2) 1997 (2) Liquidity aggregates (millions of U.S. dollars) Monetary base - Traditional definition (3) $ 14,801 $ 16,069 $ 13,050 $ 14,030 $ 15,966 Currency (4) 11,187 12,255 13,050 14,030 15,966 M1 15,320 17,525 21,158 25,116 25,144 M2 28,876 32,718 30,330 36,315 45,123 M3 (5) 46,968 56,163 53,743 64,509 82,353 Loans (at period end) Private sector credit 39,429 47,125 46,756 51,233 60,167 Public sector credit (6) 11,602 5,150 5,632 6,358 7,019 Total loans $ 51,031 $ 52,275 $ 52,388 $ 57,592 $ 67,187

Columns may not add up due to rounding. (1) December averages. (2) End of period. (3) Currency plus reserve requirements at Banco Central. (4) Includes cash in vaults at banks. (5) M2 plus deposits in foreign currency, principally dollars, (6) Since 1994, credit to the public sector excludes public bonds, commercial paper and other securities. Sources: Banco Central and Ministry of Economy.

The narrow money aggregate M1, defined as the sum of currency in circulation excluding cash in vaults plus demand deposits, increased from 5.1% of GDP in 1993 to 7.8% of GDP in 1997.

The broad money aggregate M2, which includes M1 plus savings and time deposits in pesos, increased from 11.2% of GDP in 1993 to 7.8% of GDP in 1997. Nevertheless, this ratio underestimates the amount of monetary aggregates by excluding deposits in foreign currency which averaged U.S.$ 35.3 billion or 111.1 % of total deposits in pesos in December 1997. These additional foreign currency deposits are significant to system liquidity because of their size and high rate of growth and because of the ease of convertibility between U.S. dollars and pesos.

As of May 29, 1998, the monetary base (consisting of currency in circulation, reserves required in U.S. dollars for peso deposits, Bank Liquidity Notes and repurchase agreements between Banco Central and commercial banks) was U.S.$ 22.5 billion, representing a 13.0% increase from the level recorded on May 29, 1997.

The reserve requirement increased one percentage point to 19% on August 1, 1997 and increased to 20% on February 1, 1998.

Credit granted to non-financial institutions increased by 19.6% in 1997.

Credit Granted to Non-Financial Institutions (1)

1993 1994 1995 1996 1997 (millions of U.S. dollars) Agriculture, forestry, hunting and fisheries $ 5,723.3 $ 4,281.2 $ 3,853.5 $ 3,971.0 $ 4,704.4 Mining and extractives (including petroleum and gas) 226.7 225.2 225.9 462.8 524.4 Manufacturing industries 9,360.1 8,215.5 8,724.8 10,343.6 11,356.8 Electricity, gas and water 1,211.1 1,146.4 1,241.7 1,305.3 1,497.0 Construction 2,016.1 2,019.5 1,924.8 2,175.4 2,195.9 Wholesale and retail trade 8,156.6 7,080.8 5,453.2 5,545.9 6,377.0 Services and finances 10,357.6 12,711.3 13,171.9 15,900.0 18,734.5 Other 11,035.3 13,246.5 10,929.9 12,879.2 17,467.4 Total $ 48,086.8 $ 48,926.4 $ 45,525.7 $ 52,583.2 $ 62,857.4 V) Credit in a normal situation. Source: Banco Central.

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Inflation During the year 1997, inflation, as measured by the Consumer Price Index (the "CPI"), increased by 0.3% and, as measured by the Wholesale Price Index (the "WPI"), decreased by 0.9%. As of May 31, 1998, the CPI increased by 1.2% and the WPI decreased by 2.3% from levels recorded on May 31, 1997. Although from 1991 through 1993 the rate of increase in the WPI was significantly below the rate of increase of the CPI, in 1994 this trend reversed because domestic competition and weak demand prevented increases in international commodity prices paid by wholesalers, a major contributor to increases in the WPI, from being passed along to the Argentine consumer.

Inflation Consumer Prices, Wholesale Prices, Increase over Increase over Previous Period (1) Previous Period (1)

1992 17.5 3.2 1993 7.4 0.1 1994 3.9 5.8 1995 (2) 1.6 6.0 1996 (2) 0.1 2.1 1997 (2) 0.3 (0.9) 1998 January 0.6 (0.1) February 0.3 0.2 March (0.1) (0.3) April 0.0 0.1 May (0.1) 0.0

(1) Rate of change shown in percentages. (2) In 1996, a new index was introduced called the Indice Precios Internos al por Mayor (IPIM). The IPIM is broadly similar to the index formerly used to determine wholesale price inflation, but varies slightly as to the weighted average of the goods measured in the index. The 1995 figures were also recalculated using the new IPIM index. Source: INDEC.

Foreign Exchange Rates and International Reserves

In December 1989, a free exchange rate was established for all foreign currency transactions. Prior to that time, various exchange restrictions of varying severity were in effect. However, U.S. dollars could be remitted abroad legally through the purchase of Bonex (U.S. dollar-denominated, ten-year notes issued by the Government) with Argentine currency and subsequent sale of Bonex for U.S. dollars abroad. See "Public Sector Debt - Description of Debt and Debt Restructuring - Bonex". Under the Government's medium-term program with the IMF, the Government has agreed to maintain the present fixed exchange rate of one peso per dollar. Banco Central is an active participant in the foreign exchange market, acting to maintain the peso-U.S. dollar exchange rate by selling, and since January 1995 purchasing, U.S. dollars at a one-to-one rate, in order to regulate market liquidity and purchase dollars for Argentina's international reserves. Major banks, exporters and importers are also key participants in this market. Due to the ease of convertibility between the peso and the U.S. dollar as a result of the Government's exchange rate policies, changes in U.S. interest rates constitute a significant factor in determining peso-U.S. dollar capital flows.

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The following table shows the international reserves of Banco Central as of the dates indicated.

International Reserves (1)

As of December 31, 1993 1994 1995 1996 1997 (millions of U.S. dollars) Assets Gold $ 1,672 $ 1,651 $ 1,679 $ 1,611 $ 120 Cash 86 100 176 42 50 Deposits (2) 382 612 1,496 1,166 161 Demand deposits 536 577 559 562 167 Interest-bearing deposits 12,632 13,032 12,032 16,334 22,267 ALADI claims (net) (22) 57 22 31 42 Argentine Government notes 1,909 1,864 2,543 1,793 1,826 Other 27 37 0 0 0 Total international reserves 17,223 17,930 18,506 21,539 24,308 (3) Liabilities 15,189 16,267 17,318 20,411 22,401 Net official reserves $ 2,034 $ 1,663 $ 1,188 $ 1,128 $ 1,907

(1) All figures are at market value as of the date indicated. (2) Commercial bank deposits held at Banco Central. (3) Total international reserves do not add up because Demand deposits and Interest-bearing deposits include Govern- ment deposits at Banco Central, which are excluded in Total International Revenues. Source: Banco Central.

From 1993 through 1997, Argentina's gross international reserves grew from U.S.$ 17.2 billion with liabilities of U.S.$ 15.2 billion to U.S.$ 24.3 billion with liabilities of U.S.$ 22.4 billion. Through 1994, the increases were due largely to an increase in private capital flows, and these relatively large international reserves facilitated the Government's maintenance of the fixed exchange rate established in March 1991. Despite the large capital outflows in early 1995 described above, gross international reserves have since recovered. As of May 31, 1998, gross international reserves (including gold deposits and approximately U.S.$ 1.8 billion of public bonds) stood at U.S.$ 24.3 billion, representing a 14.4% increase over the level recorded on May 29, 1997.

Securities Markets

Argentina has active Government bond and equities markets and a developing corporate bond market. The market capitalization of the securities market as of December 31, 1997 was U.S.$ 42.7 billion for government bonds, U.S.$ 3.8 billion for corporate bonds and U.S.$ 59.0 billion for equities, totaling U.S.$ 105.5 billion. The recent instability in global capital markets which began in October 1997 as a result of the currency devaluations and other economic problems in several Asian countries, affected the share prices of Argentine companies listed on the Buenos Aires Stock Exchange (the "Bolsa") and caused a widening in the spreads of Argentine government bonds traded in the secondary market. Between October 22, 1997 and December 31, 1997, the Bolsa declined 20.3% and the spread on Argentina's Brady par bonds traded on the secondary market increased by 188 basis points. Between January 2, 1998 and May 29, 1998, the Bolsa decreased 13.3% and the spread on the Republic's Brady par bonds traded on the secondary market increased by 2 basis points. The market capitalization of Argentina's securities markets as of May 31, 1998 was U.S.$ 41.6 billion for Govern- ment bonds, U.S.$ 5.6 billion for corporate bonds and U.S.$ 53.6 billion for equities, totaling U.S.$ 100.8 billion.

The markets are regulated by the Comisión Nacional de Valores ("National Securities Commission" or "CNV"), which was organized along the lines of the Securities and Exchange Commission of the United States in 1937 and became autonomous in 1968. It regulates all agents which carry out transactions in public securities markets and has the authority to regulate and control the public offering of all securities other than the primary issue of Government securities.

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Substantial reforms have been introduced in the capital markets to promote foreign investment. The capital markets have been liberalized through the elimination of restrictions on foreign capital movements. A framework has been devised to permit the introduction of new, non-bank financial products into the capital markets, including projects for the creation of a futures and options market. To promote activity in the stock market, the Government has ceased the regulation of brokerage fees and has eliminated transfer taxes and stamp taxes on securities transactions. Legislation was passed by Congress in 1992 which allows greater flexibility in the permitted investment portfolios of mutual funds. In addition, several rating agencies have been in operation since November 1, 1992.

Government Bonds and Treasury Bills

The Argentine bond market which until 1995, had been dominated by Bonex, U.S. dollar-denominated bonds traded primarily in the over-the-counter market, is now dominated by Government securities, especially the Bocones and Brady Bonds. See "Public Sector Debt-Description of Debt and Debt Restructuring"

The Government announced on August 11, 1994 the establishment of a Treasury bills market, to be supervised and managed by the Treasury. Prior to the establishment of the Argentine Treasury bills market, the short- to medium-term peso debt market was comprised exclusively of certificates of deposit. One of the Government's goals in establishing the Treasury bills market was to set bench- marks for short-term interest rates. The Government raised U.S.$ 515 million through its sales of Treasury bills in 1994. The total amount of Treasury bills outstanding at December 31, 1994 was U.S.$ 400 million. In February 1995, all outstanding Treasury bills were fully repaid and new Treasury bills for an amount of U.S.$ 230 million were issued. Privately held Treasury bills were fully repaid in May 1995. As of June 30, 1998, there were no Treasury bills outstanding.

In April 1996, the Treasury announced new measures designed to improve the functioning of the Treasury bills market. A clearing house was created to handle all Treasury bill transactions and a timetable for the regular public auction of Treasury bills was established. Under the new Treasury system, short-term issues of three, six or 12 month maturities are known as Letes and bonds of medium- and long-term maturity are known as Bontes. Letes and Bontes may be denominated in either pesos or U.S. dollars. The first auction of Letes was held on April 18, 1996. As of December 31, 1997, there were U.S.$ 3.0 billion of Letes outstanding. Since April 1996, Argentina placed two U.S. dollar-denominated issues (each consisting of two tranches) of Bontes in an aggregate principal amount of U.S.$ 3.1 billion. As of December 31, 1997, an aggregate principal amount of U.S.$ 3.1 billion of Bontes remains outstanding.

Corporate Bonds

In July 1988, legislation was passed for the development of the corporate bond market in Argentina. Corporate bonds (denominated "Negotiable Obligations" under Argentine law) are issued in bearer or registered form and may be repaid in local or foreign currency, according to the terms and conditions of their issuance. Rates on corporate bonds may be fixed or floating, and vary substantially with market conditions and the creditworthiness of the issuer. Most corporate bonds are denominated in U.S. dollars.

Equities

The Argentine equities market is regulated by the CNV, the Boisas de Comercio (Stock Exchanges) and the Caja de Valores S.A (clearing house). There are twelve stock exchanges in Argentina, of which seven are authorized to quote securities: Buenos Aires, La Plata, Cordoba, Mendoza, Santa Fe, Rio Negro and Rosario. The oldest and largest is the Bolsa, founded in 1854. The Argentine equities market, although exhibiting considerable volatility, has increased nearly three-fold in terms of capitalization since 1992. Although the number of listed companies in Argentina declined from 165 in December 1993 to 129 in December 31, 1997, newly privatized entities of substantial size, such as YPF, were listed on the Bolsa for the first time during this period, leading to a significant expansion of the equities market both in terms of market capitalization and volume of trading.

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Argentine Equities Market

As of December 31, 1993 1994 1995 1996 1997 Market capitalization (billions of dollars) $ 43.0 $ 36.5 $ 37.1 $ 44.4 $ 59.0 Volume (billions of dollars) (1) S 58.6 $ 125.8 $ 102.6 $ 166.0 $ N/A Number of listed companies 165 157 144 140 129

V) On the Bolsa and the Electronic Open Market (currently a market for the trading of Government and corporate bonds. Prior to May 1993, the EOM handled both bond and equity trading). Source: CNV.

Individuals constitute the largest group of investors in Argentina's equity markets. Investment by banks and insurance companies in the equity markets is limited by law. While Argentina's mutual funds currently control only a very small portion of the market, it has grown substantially in the last year. The increase in the assets of Argentine institutional pension funds as a result of the reform of the social security laws and the development of mutual funds are expected to create a deeper market and increase the level of activity on the Bolsa. See "Public Sector Finances - Social Security".

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Public Sector Finances

General

Argentina's public sector consists of the Government (including special accounts and decentralized agencies), the social security system and nonfinancial public sector enterprises. Government transfers to provincial governments are included in total transfers. Revenue collected by the provincial governments, exclusive of transfers from the Government, and provincial expenditures are not included in the public sector accounts. Also included in the overall balance is the net amount of interest paid by Banco Central on foreign debt and interest earned on Banco Central's international reserves. Since the implementation of the new Carta Orgánica of Banco Central in September 1992, the overall balance between interest paid on foreign currency and interest earned on foreign currency by Banco Central has been positive.

The legal authority to impose taxes is shared between the Congress, the provincial legislatures and, within certain limits, the municipalities. The precise distribution of taxing authority, however, is not clearly defined. The Supreme Court, in interpreting the Argentine Constitution, has concluded that taxes on external trade may be levied only by the Government and that, in general terms, the federal taxing authority is limited to certain indirect taxes and temporary direct taxes levied only under exceptional circumstances. Collection inefficiencies at the provincial level and the adverse effect of inflation on the real value of revenues, however, have led the Government to assume the bulk of the taxing authority.

Federal taxes must be authorized by an act of Congress, although the executive branch is empowered to issue regulations and decrees necessary to implement such legislation. The collection of public revenues is the responsibility of the Ministry of Economy, mainly through the Direccion General Impositiva or the General Directorate of Taxes ("DGI"). Currently, the Government imposes, on an exclusive basis, income and other taxes (which the Constitution permits the provinces to raise) and then shares the revenue with the provinces. The shared taxes ("co-participated taxes") include income taxes, VAT and excise taxes.

The new Constitution provides that both the Government and the provinces may levy indirect taxes, that the Government may continue to levy direct taxes only in exceptional cases and that any such federal taxes (whether direct or indirect) will constitute co-participated taxes. In 1994, the Govern- ment, the provinces and the federal capital of Buenos Aires, entered into a tax co-participation agreement in accordance with certain parameters set forth in transitional provisions annexed to the Constitution, which provided for the creation of a federal agency to monitor compliance with the co- participation regime. Such agency must include representatives of all the provinces and the City of Buenos Aires. Originally scheduled to expire in December 1996, the co-participation agreement was extended to December 1998.

The responsibility for the preparation of the Government's annual budget rests with the Jefatura del Gabinete de Ministros or the Chief of the Ministry Cabinet, subject to approval by the President and Congress. Once a budget is authorized, funds are provided to the various agencies and to the provinces based upon a system of quarterly quotas. The National General Audit Agency (Auditoria Gen- eral de la Nación) is the Government agency responsible for supervising budgetary compliance by the Government and its agencies. The Public Sector Financial Administration Law prohibits the Gov- ernment from borrowing to meet operating deficits, except in the case of national emergencies. If revenues are less than projected during the budget year, the Government adjusts expenditures to reflect those changes. The budgets for 1992 through 1997 were presented to Congress prior to the September 15 deadline established by law, the first occasion in many years that the budgets had been prepared on schedule. The 1998 budget was submitted to Congress on September 12, 1997, approved on December 9, 1997 and enacted on December 29, 1997.

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Public Sector Accounts

The following table sets forth a summary of public sector accounts (calculated on a cash basis) for the periods indicated. Summary of Public Sector Accounts

1993 1994 1995 1996 1997 (billions of U.S. do llars) Revenues National administration taxes $ 29.04 $ 31.61 $ 31.03 $ 33.18 3$ 38.35 Social security taxes 13.36 14.08 13.70 10.28 12.20 Operating public enterprises Revenues 5.03 1.44 1.09 0.01 0.05 Expenditures.... 4.26 1.58 1.14 0.05 0.01 0.77 (0.14) (0.05) (0.05) 0,04 Non-tax revenues 2.69 3.13 3.21 2.54 3.23 Capital revenues 0.14 0.07 0.08 0.37 0.71 46.00 48.75 47.97 46.37 54.50 Expenditures (excluding interest payments) National administration wages 5.94 6.66 6.64 6.75 7.22 Goods and services 2.13 2.01 2.06 2.14 2.24 12.53 15.24 15.63 15.44 17.20 Social security 13.18 12.54 12.43 13.34 15.18 TransfersOther transfers.... to provinces 3.28 6.21 6.26 6.12 7.46 Other expenditures 0.06 0.09 0.20 0.01 0.01 Capital spending 3.75 3.89 3.22 3.56 3.79 40.86 46.63 46.44 47.37 53.10 Primary balance before privatizations 5.13 2.13 1.54 (1.05) 1.45 Privatization proceeds 0.52 (1) 0.73 1.17 0.37 0.02 Primary balance after privatizations 5.65 2.86 2.71 (0.66) 1.47 Interest payments (2.91) (3.15) (4.08) (4.61) (5.79) Overall balance $5 2.73 $ (0.29) $ (1.37) $ (5.27) 3$ (4.32)

Columns may not add up due to rounding. (1) Does not include proceeds of approximately U.S.$ 3.04 billion from the privatization of YPF, which was applied to debt reduction. Source: Ministry of Economy.

The Government recordered a U.S.$ 4.3 billion deficit (excluding revenues from privatizations and sales of tax receivables and including expenses related to certain provincial social security systems) in its public accounts in 1997, approximately U.S.$ 239 million below the fiscal deficit target set by the IMF for 1997. The Government expects to record a deficit in 1998, on the same basis of U.S.$ 3.5 billion. During the first three months of 1998, the Government recorded a deficit of U.S. 1.3 billion approximately 0.1 billion below the IMF fiscal deficit target for the first quarter of 1998. In April 1998, the Government recorded a deficit of U.S.$ 456 million.

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The following table sets forth a summary of the public sector accounts (calculated on a cash basis) as a percentage of GDP. Summary of Public Sector Accounts

1993 1994 1995 1996 1997 (Percentage of GDP) Revenues National administration taxes 11.4% 11.2% 11.1% 11.2% 11.9% Social security taxes 5.2 5.0 4.9 3.5 3.8 Operating public enterp rises Revenues 2.0 0.5 0.4 0.0 0.0 Expenditures 1.7 0.6 0.4 0.0 0.0 Non-tax revenues 0.3 (0.1) (0.0) 0.0 0.0 1.0 1.1 1.1 0.9 1.0 Capital revenues 0.0 0.0 0.0 0.1 0.2 Total 17.8% 17.3% 17.1% 15.6% 17.0% Expenditures (excluding interest payments) National administration wages 2.3 2.4 2.4 2.3 2.2 Good and services 0.8 0.7 0.7 0.7 0.7 4.9 5.4 5.6 5.2 5.4 Social security 5.2 4.5 4.4 4.5 4.7 Transfers to provinces 1.3 2.2 2.2 2.1 2.3 Other transfersexpenditures 0.0 0.0 0.0 0.0 0.0 Capital spending 1.5 1.4 1.1 1.2 1.2 Total 16.0% 16.6% 16.6% 15.9% 16.5% Primary balance before privatizations. 2.0 0.8 0.5 (0.3) 0.5 Privatization proceeds 0.2 (1) 0.3 0.4 0.1 0.0 Primary balance after privatizations 2.2 1.0 1.0 (0.2) 0.5 Interest payments (1.1) (1.1) (1.5) (1.5) (1.8) Overall balance 1.1% (0.1)% (0.5)% (1.8)% (1.3)%

(1) Does not include proceeds of approximately U.S.$ 3.04 billion from the privatization of YPF, which was applied to debt reduction. Source: Ministry of Economy.

Government expenditures increased 12.1% in current terms in 1997 compared to 1996, while Government expenditure as a percentage of GDP increased from 15.9% to 16.5%. See "- Expendi- tures".

After an initial increase in 1992, transfers to provinces fell in 1994 and stabilized at levels of 4.5% of GDP in 1995 and 1996. The decline in 1994 is attributable both to the decrease in revenues available from national administration taxes during this period and to the impact of the new revenue sharing arrangements adopted in the Pacto Fiscal of 1992. See " - Expenditures".

In 1995 and 1996, the overall deficit increased to 0.5% and 1.8% of GDP, respectively, due primarily to a decrease in tax collection resulting from the slowdown in the economy caused by the Mexican Crisis. The deficit decreased slightly to 1.3% of GDP in 1997 and stood at 0.4% of GDP for the first three months of 1998.

Revenues

The foundation of the Government's tax regime is the VAT, a broadly based value-added tax on goods and services. The VAT is currently set at 21%, but may be lowered by executive decree. The second largest source of tax revenue are the various social security taxes, including: payroll taxes based on

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employee wages and mandatory pension contributions (11 % employee and 16% employer, pursuant to the social security system enacted in September 1993), pensioner's health system tax (2% employee and 3% employer), unemployment insurance (1.5% employers), and employee's health system tax (3% employee, 6% employer). In addition, employers are required to pay 7.5% of wages for various family subsidies to their employees. Income tax, both personal and corporate, is the third most important source of tax revenue, particularly since reforms implemented in 1992 and 1993 have led to an increase in the tax rate on gross corporate profits from 20% to 30% and an increase in the personal income tax rate from a progressive scale of 6% to 30% to a progressive scale of 11 % to 30% of income, plus a reduction of the possible deductions applicable to the latter tax. A worldwide tax on personal property that is not used in a trade or business is another source of revenue.

A primary objective of the Government is improving the performance of public finances and the efficiency of tax collection. In recent years, tax reforms have been carried out with the aim of increasing overall tax revenues while at the same time reducing or eliminating taxes that impede commercial transactions. Thus, export duties, stamp taxes on stock transactions and taxes on foreign exchange transactions have been phased out and VAT revenues have greatly increased.

In 1996, revenues from national administration taxes increased by more than U.S.$ 2.0 billion, while social security taxes fell by U.S.$ 3.4 billion. In 1997, revenues from national administration taxes increased by U.S.$ 5.2 billion and social security taxes increased by U.S.$ 1.9 billion.

Composition of Tax Revenue Budget 1993 1994 1995 1996 1997 1998 (1) (percentage of total) VAT 38.8% 38.5% 40.9% 42.6% 42.7% 39.5% Other taxes on goods and services 11.8 11.1 10.8 11.3 12.1 10.3 Social Security taxes 30.4 29.8 27.8 24.9 22.1 23.4 Income taxes (corporate and personal) 10.2 12.9 14.6 15.8 17.4 16.7 Import and export taxes 6.0 6.4 4.9 5.3 5.9 5.9 Taxes on capital 1.5 1.2 1.1 1.7 1.0 1.2 Other 3.3 2.6 2.6 0.1 0.1 3.0 Gross Total 102.0 102.5 102.6 101.7 101.4 100.0 Drawbacks 2.0 2.5 2.7 1.7 1.4 0.0 Net Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Columns may not add up due to rounding. (1) Preliminary figures. Source: Ministry of Economy.

Since 1991, co-participated taxes, of which the national VAT is the largest component, have accounted for a substantial portion of total tax revenues. The increase in collection of co-participated taxes at the national level during 1991 and 1992 led to a corresponding increase in the amount of revenue shared with the provinces. Prior to the reforms described below, the provincial governments received a fixed percentage (56.7%) of co-participation tax revenues, rather than a fixed sum from the Government.

In August 1992, a new revenue sharing arrangement (the "Pacto Fiscal") was reached with the provincial governments, whereby the provinces agreed to provide 15% of their co-participation revenues to the national social security system and the Government established a minimum monthly level of payments which would be guaranteed to each province as well as a special supplemental fund for certain poorer provinces. This arrangement provided greater budgetary security to the provinces and supplied the Government with resources to increase pension payments to the legal minimum, thereby halting the accrual of arrearages. The 15% contribution requirement will remain in place until superseded by a new Pacto Fiscal or the enactment of the new Co-Participation Law by Con- gress. The Pacto Fiscal was renewed by Congress in June of 1996 (Law 24,671) through December 31,

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1996, and was renewed again through December 31, 1998, with the agreement of all of the provincial governments.

On August 12, 1993, the Government and 16 provincial governments signed the Federal Pact for Employment, Production and Growth (the "Pacto Federal") in order to coordinate tax reforms for the reduction of distortionary taxes in the economic system. The signing provinces agreed to unify taxes on real estate and automobiles and to abolish stamp taxes, transfer taxes on fuel, gas and electricity, taxes on interest on time deposit and savings accounts, taxes on bank drafts and payroll taxes. They also agreed to take steps to deregulate their local economies and to privatize provincial banks and other public enterprises. The Government agreed to abolish the tax on assets used in a trade or business, reduce the social security and other payroll taxes, and adjust the regulations for VAT withholding and advance payments. In addition, the Pacto Federal provides for the voluntary integration of the provinces into the social security system. Although the Pacto Federal originally required provincial governments to enact the aforementioned tax reforms by June 30, 1995, this deadline has been extended by Congress through December 31, 1998.

In February and March of 1995, the Government announced measures designed to raise additional revenue in order to counter the substantial capital flight in early 1995 resulting from investor reaction to the Mexican Crisis. Among the measures that were implemented, the following remain in effect: (i) a one year increase (through April 1996) in the VAT, from 18% to 21 % (which increase has since been extended indefinitely), pursuant to legislation authorizing the Government to increase the VAT to a maximum of 22.5% without prior Congressional approval and exempting the increased revenues from the normal co-participation arrangements with the provinces; (ii) increases in duties on imports from non-Mercosur countries, including the reintroduction of a 3% "statistical" tax on imports (which had been eliminated at the end of 1994) and an increase in import tariffs on capital goods, computer and telecommunications products from 0% to 10%; (iii) a reduction of export subsidies, which previously were set at 1.5% to 2.5%; (iv) a reduction from 1 % to 0.5% of a "wealth" tax on equity of more than U.S.$ 100,000 ("Personal Asset Tax") coupled with a substantial expansion in the scope of this tax so that it now includes most financial assets, including private sector bonds and some public sector bonds, certificates of deposit and shares; (v) a unification of employer social security contribution rates across sectors, involving reductions for the services and tourism sector and a partial roll- back of previous reductions in other sectors, for a total net revenue gain; and (vi) improvements in the administration of the VAT and income taxes by broadening withholdings and creating new facilities for regularizing tax arrears.

In August of 1995, the Government announced further measures designed to counter tax evasion and increase revenues. Such measures included an amnesty on penalties for late payments of taxes and new financial reporting and monitoring measures to reduce corporate tax evasion, such as an end to the practice of permitting corporate shares and other financial instruments to be held anonymously.

In March 1996, the Congress passed the Government Reform II Law which, among other measures, (i) authorizes the executive branch to take a number of actions without further Congressional approval, including eliminating the majority of the current exemptions applicable to the income tax and VAT, reducing the rate of the VAT and eliminating or merging Government agencies, (ii) indefinitely extends the 2 1 % VAT rate, (iii) eliminates the carry-over of unspent budget items, and (iv) freezes the number of senior positions in public administration.

In September 1996, Congress approved new revenue and spending measures which reduced the fiscal deficit (excluding privatizations) to less than U.S.$ 6 billion in 1996. These measures included: (i) establishing a uniform corporate income tax of 33% (an increase of 3%); (ii) increasing personal income taxes by 3%; (iii) imposing an income tax on copyrights; (iv) authorizing the issuance of new indebtedness up to U.S.$ 4 billion and (v) increasing gas, oil and motor fuel taxes, the proceeds of which will be used to reduce the deficit in the social security system and to finance a program, to be budgeted at U.S.$ 200 million, to provide food and transportation vouchers to the poor.

In the second quarter of 1997, there are still some problems; (i) excessive burden on labor; (ii) numerous exemptions alters horizontal and vertical equity; (iii) bias toward indebtedness and low corporate capitalization; (iv) low percentage of income tax in total tax revenues. As a result, the Government sent a tax reform bill to the Congress. The goals of the tax reform are: (i) reduce the relative cost of

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labor; (ii) eliminate the bias against equity relative to borrowing; (iii) broaden the base of income and value added taxes; (iv) improve the distribution of income and horizontal equality; (v) reduce tax evasion; (vi) not affect the distribution of revenues among the Nation and the Provinces.

Since 1991, the Government has significantly improved the collection of tax and the monitoring of taxpayers, including, but not limited to, the implementation of a computerized tracking system. Penalties for non-compliance have been greatly increased. New billing procedures have been implemented in order to facilitate more effective control over the tax collection process. In addition, the Government has significantly upgraded auditing operations to make them more efficient and implemented systems which have been successful in monitoring increasing numbers of the largest taxpayers.

Expenditures

The largest item of Government expenditure has historically been social programs which accounted for 62.6% of total expenditures in 1997. Interest payments on public debt accounted for 13.5% of expenditures in 1997, an increase from 10.0% recorded in the previous year. The following table sets forth a summary of consolidated public expenditures for the periods indicated.

Composition of Public Sector Expenditure

Budget Purpose of expenditure 1993 1994 1995 1996 1997 1998 (percentage of total) General administration 8.8% 9.2% 10.6% 9.6% 8.1% 7.1% Defense and security 9.2 8.4 8.2 8.1 7.8 7.0 Justice 1.4 1.6 1.6 1.7 1.8 1.7 Social Programs 64.8 64.1 63.7 64.3 62.6 63.7 Social security 49.0 48.9 48.8 41.1 39.4 42.1 Culture, education, science and tech- nology 6.7 7.0 7.3 7.5 7.8 7.8 Health 1.6 2.6 2.4 8.7 7.5 6.6 Housing 2.9 2.7 2.4 2.2 2.4 2.2 Social welfare 2.5 2.7 2.6 3.9 4.6 4.1 Labor 2.1 0.2 0.2 0.8 1.0 0.9 Public expenditure on economic infrastructure and services 8.5 8.9 6.5 6.4 6.3 6.6 Public debt 7.2 7.8 9.5 10.0 13.5 13.9 Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: Ministry of Economy.

Reforms to improve the efficiency of Government expenditures have included privatizations, the sale of concessions for certain public services, and reductions in the number of public employees. This process has resulted in greater private sector expenditures on infrastructure and services, thereby reducing public expenditures in this area from an average of 26.0% of total annual public expenditures between 1980 and 1988 to 6.3% of total public expenditures in 1997. During the 1989 to 1994 period, the number of public enterprise employees was reduced by over 240,000 (excluding the defense sector) through the transfer of public sector enterprises to the private sector, attrition and voluntary retirement programs.

The privatization program reduced the overall deficit of public enterprises (operating surplus less net capital spending less interest payments) from U.S.$ 2.0 billion in 1991 to U.S.$ 37.4 million in 1997.

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These reductions permitted a reallocation of expenditures to social programs and general administration.

For several years in the 1980's, social security payments were not fully adjusted to take account of the increase in wages due to inflation. As a result of various court rulings in favor of retirees, the Govern- ment adjusted social security benefit payments to compensate for inflation. This adjustment, plus the aggregate amount owed to retirees who had successfully brought claims for compensation, brought about an increase in social security expenditures from U.S.$ 12.5 billion in 1993 to U.S.$ 17.2 billion in 1997.

This increase in social security expenditures benefited mainly those retirees with higher social security incomes. Government funds became insufficient to cover this increase, and a policy to protect retirees with lower social security income became necessary. The Social Security Solidarity Law ("Ley de Solidaridad Previsional") was therefore passed in March 1995, which: (i) required that pension payments be limited to the funds available in the social security system, (ii) gave priority to payment of current social security payments over the payment of compensation for back payments owed under the above mentioned court judgments, and (iii) established that if sufficient funds became available in the future, pensioners with lower social security incomes would be granted an increase.

The 1998 Budget

On December 9, 1997, the National Congress passed the 1998 Budget, which was enacted on Decem- ber 29, 1997. Under this budget, expenditures and revenues are expected to be 48.7 billion pesos and 45.2 billion pesos, respectively, creating an annual deficit of 3.5 billion pesos (including privatization proceeds which are expected to equal 1.3 billion pesos). These figures represent a 6.9% increase in expenditures and a 10% increase in revenues from the authorized expenditures and projected revenues of the 1997 budget. The projected increase in tax revenues is based in part, on the adjustments in certain taxes and a 5.8% increase in GDP in 1998. The 1998 budget expenditures include an increase in social services, debt service payments and automatic transfers to the provinces. The 1998 budget is based on assumptions of a 5.8% GDP increase, 1.1 % inflation (GDP defactor), and an average six- month LIBOR of 5.8% for 1998.

Social Security

On September 23, 1993, Congress passed a law for the reform of the social security system. The new arrangement, which went into effect on July 1, 1994, replacing the state-operated system, provides (a) a basic pension, equivalent to 2.5 times the employee's average obligatory contributions, payable to those paying contributions for 30 years and (b) an additional pension provided by either a private pension fund or the Government, at the employee's choice. Employees are obligated to contribute 11 % of their wages to their chosen private pension fund or to the state-operated system. Employers continue to contribute 16% of each employee's wages (this amount is being gradually reduced in certain provinces as part of the Pacto Federal) to the state-operated system, regardless of whether or not the employee chooses to remain in the state-operated system. The law also provides for a transitional scheme to compensate employees for contributions which had already been made under the old system. The social security reform will reduce Government revenues to the extent employees choose to contribute to a private pension plan. Besides transferring the bulk of the operation of the plan outside the public sector and introducing a simplified system which is expected to reduce the level of evasion, the reforms are expected to have a significant effect on capital markets, with a transfer of approximately U.S.$ 2.0 billion each year to institutional investors.

Beginning in May 1994, employees were given the opportunity to elect whether to remain entirely in the state-operated system or to invest part or all of their contribution with a private pension fund. As of December 31, 1997, 6.3 million employees had joined a private pension fund. The following table illustrates the yearly evolution, as of December 31, of the amount of assets held in private pension funds since their inception in 1994 through 1997.

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Assets Held in Private Pension Funds

Total Date Funds (millions of U.S. dollars) 1994 $ 519.4 1995 $ 2,497.0 1996 $ 5,325.9 1997 $ 8,827.0

The growth in pension fund assets during this period is due both to the increase in the number of employees participating in the pension system and to the ongoing contributions of participants.

On July 12, 1996, the Government announced two new measures intended to reduce the deficit in the social security system: family subsidy payments were reduced in scope and limited to low income families, and in-kind contributions by employers to employees in the form of meal vouchers, formerly not taxable, are now being treated as income for social security tax purposes.

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Public Sector Debt

General

At December 31, 1997, total net public debt (which includes debt of the Government and public entities but not debt of the provinces or of state-owned banks) was U.S.$ 98.1 billion and total gross public debt was U.S.$ 101.1 billion. As of March 31, 1998, total net public debt was U.S.$ 100.3 billion and total gross public debt was U.S.$ 103.1 billion. At December 31, 1997, 73.2% of the total gross public debt was owed to bondholders (including commercial bank bondholders), 16.7% to multilateral and official creditors and the rest to suppliers and other creditors. Approximately U.S.$ 90.8 billion, or 89.8%, of total gross public debt from 1997 is denominated in currencies other than the peso, principally in U.S. dollars.

In 1992, Argentina began a process of refinancing its foreign Paris Club and commercial bank debt, resulting in important reductions in its overall debt and rescheduling of debt payments. See "-Description of Debt and Debt Restructuring". On March 31, 1992, the IMF approved a three-year SDR 2.48 billion (approximately U.S.$ 3.5 billion at March 31, 1994) EFF to replace Argentina's fifth standby arrangement which was due to terminate in June 1992. The approval was an important preliminary step before agreements were reached with commercial bank and Paris Club creditors in July 1992.

In April 1992, Argentina announced a new refinancing agreement under the Brady Plan relating to medium- and long-term debt to commercial banks. The Brady Plan applied to an estimated U.S.$ 28.5 billion of debt, including an estimated U.S.$ 9.3 billion in interest arrears. The Brady Plan effected a reduction of approximately U.S.$ 3 billion in the nominal amount of foreign debt, as well as a reduction of 35% in the net present value of the interest service. The first closing for the Brady Plan took place on April 7, 1993 and 85% of the amount held in escrow for the Floating Rate Bonds was released on October 29, 1993. The process of releasing the remaining 15% was completed in April 1994.

On July 21, 1992, Paris Club creditors agreed to reschedule part of the principal and interest payments falling due from July 1992 to March 1995. The U.S.$ 2.7 billion rescheduled under this arrangement will be repaid over a 13-year period beginning in May 1996, with a rising amortization schedule.

The agreements reached with both Paris Club and commercial bank creditors have been fully supported by the IMF The IMF and other international financial institutions have provided refinancing for a portion of the cost of the collateral for the Discount Bonds and Par Bonds issued under the Brady Plan.

On February 4, 1998, the IMF appoved a three year EFF for Argentina in the amount of U.S.$ 2.8 billion. As condition of this facility, targets for Argentina's public fiscal deficit and trade deficit were set. Argentina has reserved the EFF for use in special or urgent circumstances and does not otherwise intend to draw down on the EFF in the normal course of operations. See "Public Sector Debt-Descrip- tion of Debt and Debt Restructuring".

Argentina has instituted and intends to maintain various efforts to manage its debt portfolio in order to improve yield and maturity profiles. Proceeds from certain debt issues have been utilized for the purpose of buying back outstanding debt through a variety of methods including public auctions in Argentina and repurchases of debt securities in the international open markets.

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The following table sets forth figures for Argentina's non-financial public sector debt for the periods indicated. Public Debt As of December 31, 1993 (2) 1994 1995 1996 1997 (1) (millions of U.S. dollars) Peso-denominated public debt (2) S 5,567 $ 8,400 S 5,882 $ 8,168 $ 10,286 Foreign currency denominated public debt 64,059 72,279 81,209 88,937 90,816 Collateral (3,208) (3,195) (3,543) (3,450) (2,984) Foreign currency denominated debt (net of collateral) 60,851 69,084 77,666 85,487 87,832 Total net public debt 66,418 77,484 83,548 93,655 98,117 Total gross public debt $ 69,626 $ 80,679 $ 87,091 $ 97,105 $ 101,101 Total net public debt as a % of GDP 25.8% 27.5% 29.9% 31.5% 30.5%

Columns may not add up due to rounding. (1) Preliminary figures. (2) Converted into U.S. dollars at the period-end rate for the year. Sources: The Ministry of Economy.

The following table sets forth a summary of the foreign public debt of Argentina by currency of denomination.

Summary of Public Debt Denominated in Foreign Currency, By Currency

1993 1994 1995 1996 1997(1) 1997 (1) (millions of U.S. dollars) (% of Total) U.S. Dollars $ 50,466 S 53,102 S 54,854 $ 58,547 $ 65,923 72.59 Deutsche Marks 3,498 4,723 6,540 9,429 10,543 11.61 Japanese Yen 1,166 3,366 5,512 5,767 6,818 7.51 Other 8,929 11,088 14,303 15,194 7,532 8.29 Total $ 64,059 $ 72,279 $ 81,209 $ 88,937 $ 90,816 100%

Columns may not add up due to rounding. (1) Preliminary figures. Sources: The Ministry of Economy.

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The following table sets forth outstanding foreign debt for the dates indicated.

Debt Denominated in Foreign Currencies

As of December 31, 1993 1994 1995 1996 1997 (1) (millions of U.S. dollars) IMF $ 3,742 $ 4,326 $ 6,120 $ 6,279 $ 5,908 World Bank and IADB 7,263 7,447 9,264 10,073 10,865 (5) Fonplata 15 17 Paris Club 7,433 (2) 7,978 (2) 8,038 6,725 5,144 Commercial Banks Refinanced principal 0 0 0 0 0 Refinanced arrears 0 0 0 0 0 0 0 0 0 0 41,929 47,957 52,458 60,673 64,554 (3)

Bonds 2,220 2,988 3,578 3,437 2,960 Other 488 518 437 283 731 OtherPrivate bilaterals banks 984 1,064 1,316 1,452 1,423 Gross public debt Suppliers 3,692 4,570 5,331 5,172 5,114 64,059 72,279 81,209 88,937 91,600 (5) Collateral (4) (3,208) (3,195) (3,543) (3,450) (2,984) Net public debt $ 60,851 $ 69,084 $ 77,666 $ 85,487 $ 87,832

Due to rounding the columns do not add up in each case. V) Preliminary figures. (2) Does not include interest capitalized pursuant to an agreement in Round 5 of Paris Club negotiations, whereby the Paris Club creditors consented to capitalize interest on certain Paris Club indebtedness until March 1995. Such interest amounted to U.S.$ 519 million from the end of 1993 until March 1995 and U.S.$ 109 million from the end of 1994 until March 1995. (3) Includes capitalized interest and U.S.$ 192.8 million of coupons from Bonex which were payable but not yet redeemed. (4) The principal of the Par and Discount Bonds has been collateralized with U.S. Treasury Zero Coupon Bonds and Kre- ditanstalt für Wiederaufbau Zero Coupon obligations. In addition, 12 months of interest payments for the Par and Discount bonds denominated in U.S. dollars are fully collateralized while the Deutsche Mark Par and Discount Bonds are currently collateralized for less than 12 months of interest payments. (5) Gross public debt includes U.S.$ 786 million in World Bank and IADB peso-denominated public debt that could not be properly separated from foreign currency denominated public debt. Sources: The Ministry of Economy.

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The following table sets forth a list of Argentine public bonds issued and publicly held as of Decem- ber 31, 1997.

Public Bonds Denominated in Foreign Currencies (1)

Outstanding Public Principal Sector Public Amount Holdings (2) Circulation (millions of U.S. dollars) Eurobonds and other external bonds $ 15,416.5 $ 35.5 $ 15,381.0 Bonex 89 (1) 1,498.2 321.3 1,176.9 Bonex 92 (1) 1,077.1 647.7 429.4 Global Bonds 2027 2,250.0 0.0 2,250.0 Global Bonds 2017 2,500.0 500.0 2,000.0 Global Bonds 2006 1,000.0 0.0 1,000.0 Global Bonds 2003 1,750.0 250.0 1,500.0 Global Bonds 2001 1,000.0 0.0 1,000.0 Global Bonds 1999 750.0 92.1 657.9 Par Bonds 10,011.3 778.8 9,232.5 Discount Bonds 3,058.5 40.2 3,018.3 Floating Rate Bonds 7,749.1 155.0 7,594.2 Spanish Bonds 54.7 0.0 54.7 BOTE III 167.9 0.0 167.9 BOTESO 10 559.0 77.4 481.6 BCRH (3) 60.7 59.3 1.4 BOCON 1st Series (Pensioners) (3) 3,953.8 312.9 3,640.9 BOCON 2nd Series (Pensioners) (3) 4,057.2 673.1 3,384.2 Bocon 1st Series (Suppliers) (3) 2,366.0 231.1 2,135.1 Bocon 2nd Series (Suppliers) (3) 64.7 0.0 64.7 API and New Money Notes 27.5 0.0 27.5 Ferrobonos 5.5 0.0 5.5 LETES 1,761.8 0.0 1,761.8 BONTES 3,128.7 0.0 3,128.7 LETRAS INTRA-SECTOR PUBLICO 93.0 0.0 93.0 Total $ 64,361.2 $ 4,174.4 $ 60,187.2

Columns may not add up due to rounding. (1) Includes capitalized interest but excludes U.S.$ 192.8 million of coupons which were payable but not yet redeemed. (2) Amounts held by Government agencies and Banco Central. (3) Nominal value plus interest accrued for outstanding principal amount. Source: Ministry of Economy.

Description of Debt and Debt Restructuring

Argentina has experienced a number of external payment crises since the 1930's, reflecting, among other things, adverse changes in terms of trade, relatively large debt burdens and the failure of the domestic economy to adjust rapidly and fully to international shocks such as the rapid increase in real interest rates experienced in the 1980's.

Total foreign indebtedness expanded significantly under the military regimes of the 1976 to 1983 period. At the end of 1983, when the civilian Government of Raúl Alfonsin took office, total foreign debt was U.S.$ 45 billion, more than double the level of the late 1970's. During the 1980's, private sector foreign debt was effectively assumed by the Government when the Government was unable to honor the terms of foreign exchange insurance (seguro de cambio) programs initiated in 1981.

Commercial Banks

Major restructurings of existing debt owed to commercial bank creditors were negotiated in 1985 and in 1987, pursuant to which an aggregate of U.S.$ 34.7 billion of commercial bank debt was affected. In

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addition to the banks extending new loans in the aggregate amounts of approximately U.S.$ 3 billion, two small bond issues emerged from this rescheduling: "new money bonds" and "alternative participation instruments" (APIs), of which an aggregate total of approximately U.S.$ 27.5 million was outstanding as of December 31, 1997.

Interest payments to bank creditors ceased in April 1988 and were resumed on a partial basis in June 1990, which on an annual basis covered between 30% and 35%, respectively, of bank interest falling due. The last of four equal installments on new deposits (which Banco Central had exchanged in Sep- tember 1991 for certain outstanding short-term deposits) was paid when due in April 1993. As part of the negotiations for the rescheduling of the foreign debt in early 1992, partial payment of interest to bank creditors was raised in April 1992 (from U.S.$ 60 million per month) to U.S.$ 70 million per month, representing 55% of bank interest falling due.

The Government has also reduced commercial bank debt through the privatization program. As of March 31, 1998, approximately U.S.$ 15.4 billion of Government debt had been tendered in connection with privatizations since 1990, the bulk of it in the sales of ENTel, Aerolíneas Argentinas, SEGBA, Gas del Estado and YPF. See "The Argentine Economy - Deregulation of the Economy and Privatiza- tions - Privatizations".

The Brady Plan

Over 96% of the commercial bank debt was refinanced pursuant to the Brady Plan. The Brady Plan provided for the issuance of Par Bonds, Discount Bonds and Floating Rate Bonds and a cash payout of U.S.$ 700 million in exchange for previously outstanding commercial bank debt of U.S.$ 28.5 billion, including U.S.$ 9.3 billion of interest in arrears. The Par Bonds were issued in an aggregate principal amount of U.S.$ 12.5 billion and DM 284 million. The Par Bonds have a 30-year maturity and pay interest at fixed rates rising from 4% to 6% in the seventh year in the case of the U.S. dollar Par Bonds while the rate of interest of the Deutsche Mark Par Bonds is 5.87%. The Discount Bonds also mature in 30 years and are denominated in U.S. dollars and Deutsche Marks in aggregate principal amounts of U.S.$ 4.1 billion and DM 282 million. The Discount Bonds pay interest at the rate of LIBOR for the relevant currency plus 13/16%. The payment of the principal amount on the Par Bonds and the Discount Bonds at maturity were collateralized with U.S. Treasury and Kreditanstalt für Wiederaufbau Zero Coupon obligations. In addition, interest payments for both the Par Bonds and the Discount Bonds denominated in U.S. dollars were collateralized in an amount equal to 12 months' interest while interest payments for the Deutsche Mark Par and Discount Bonds were collateralized in an amount initially to be less than 12 months' interest. The Floating Rate Bonds were issued in a total amount of U.S.$ 8.5 billion. On April 28, 1994, the release of the Floating Rate Bonds was completed. The Float- ing Rate Bonds carry an interest rate of 13/16% over six-month LIBOR and principal is payable over a 12-year period.

IMF, IADB and World Bank

The IMF, the IADB and the World Bank have provided financial support which is conditional on the Government's compliance with stabilization and reform policies. IMF programs are based on performance criteria aimed at further strengthening the fiscal situation and long term solvency of Argen- tina, limiting expansion of domestic credit and accumulation of new debt denominated in foreign currency, and maintaining or increasing net international reserves. Drawings under the EFF after 1993 were conditional upon the passage of legislation reforming the social security system. The IMF has also provided technical assistance on tax administration and the restructuring of the Central Bank. Generally, the World Bank and the IADB have made the availability of their funds subject to compliance with IMF conditions although additional conditions in support of structural reforms or project lending have been applied for certain loans.

Overall, the Government has entered into a total of seven standby facility agreements with the IMF See "The Argentine Economy - Introduction" and "Public Sector Finances - Public Sector Accounts". The total outstanding amount of the IMF debt as of December 31, 1997 is approximately U.S.$ 5.9 billion. The IMF reviews compliance with loan facilities on a quarterly basis. The first, third and fourth standby agreements were not fully disbursed due to non-compliance with performance criteria.

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Under the first four standby agreements, a total of SDR 4.8 billion was disbursed, including SDR 1.5 billion from the IMF's compensatory financing facility. The fifth standby agreement authorized drawings of up to SDR 780 million to support the Government's stabilization and reform program through June 1992. When the IMF established Argentina's EFF program in 1992, the Government requested the cancellation of the fifth standby agreement under which all quantitative performance criteria for the end of 1991 had been met. See "The Argentine Economy - Introduction".

On April 12, 1996, the IMF approved Argentina's sixth standby agreement, which authorized Argen- tina to make drawings up to the equivalent of SDR 720 million (approximately U.S.$ 1.04 billion) over the following 21 months. Argentina's right to make drawings under the standby facility is contingent upon satisfying economic performance criteria agreed to by Argentina and the IMF and reviewed by the IMF on a quarterly basis. Although the Government met the performance criteria for the first quarter for 1996, figures for the first six months of 1996 indicated that the public account deficit excluding privatizations reached U.S.$ 2.5 billion, approximately U.S.$ 1 billion in excess of the IMF target figure. As a result, on September 16, 1996, the Government and the IMF agreed to a performance waiver with respect to the federal deficit target for 1996 and established new deficit targets for 1996 and 1997 of U.S.$ 6 billion and U.S.$ 4.5 billion, respectively (including in the case of the 1997 deficit figure U.S.$ 1.5 billion associated with provincial pension schemes).

On December 20, 1996, the Government entered into its seventh standby agreement with the IMF for 1997, which established the following targets for 1997: (i) a public sector deficit of U.S.$ 4.5 billion (including approximately U.S.$ 1.0 billion in expenditures associated with the provincial pension schemes and approximately U.S.$ 500 million with respect to severance payments related to the Gov- ernment Reform II Law, but excluding an estimated U.S.$ 1.0 billion of privatization revenues); (ii) a ceiling on non-interest expenditures of U.S.$ 36.5 billion; (iii) a reduction in the net domestic assets of Banco Central of U.S.$ 480 million; (iv) net disbursements in respect of public sector domestic and external debt of U.S.$ 4.9 billion; and (v) a net increase in short-term public sector debt of U.S.$ 1 billion. During the first six months of 1997, Argentina recorded a U.S.$ 1.3 billion deficit (excluding privatizations and sales of tax receivables), as compared with the IMF target of U.S.$ 1.4 billion deficit for such period. The IMF disbursed SDR 107 million on each of March 3, 1997 and June 17, 1997. The Government recorded a deficit in its public accounts for the full year 1997 of U.S.$ 4.3 billion, approximately U.S.$ 239 million below the IMF target.

On February 4, 1998, the IMF approved a three-year extended fund facility (the "IMF Facility") for Argentina in the amount of U.S.$ 2.8 billion. Among other targets, the accord between the IMF and Argentina requires that Argentina not exceed a public fiscal deficit (the overall balance excluding revenues from privatizations) of U.S.$ 3.5 billion for 1998. In addition, the IMF Facility limits the trade deficit of Argentina to no more than U.S.$ 5.0 billion in 1998. If in any month in 1998 the cumulative 12-month merchandise trade deficit (with imports measured on a c.i.f. basis) exceeds U.S.$ 5.0 billion, the Government, in consultation with the IMF, will take appropriate corrective fiscal and/or credit policy measures. During January 1998, Argentina recorded a trade deficit of U.S.$ 0.9 billion, raising the cumulative 12-month merchandise trade deficit to approximately U.S.$ 5.4 billion. As a result, representatives of the IMF met with the Government in late March and early April 1998. Although it was decided that no specific corrective measures needed to be taken at that time, the IMF and the Government agreed to meet in July 1998 to revisit trade deficit issues. The Government expects to record a deficit in 1998, of U.S.$ 3.5 billion. During the first three months of 1998, the Government recorded a deficit of U.S.$ 1.3 billion, approximately U.S.$ 0.1 billion below the IMF fiscal deficit target for the first quarter of 1998.

Argentina has reserved the extended fund facility for use in special or urgent circumstances and does not otherwise intend to draw down on the extended fund facility in the normal course of operations.

World Bank lending to Argentina was modest during the early 1980's, consisting only of disbursements from existing project loans. World Bank operations expanded substantially from 1986 to 1988, with gross disbursements averaging U.S.$ 565 million per year, but they declined to U.S.$ 316 million in 1989 due to the Government's noncompliance with conditions for sector loans supporting reforms in the trade regime and in the banking sector. Disbursements rose to U.S.$ 406 million in 1990. The focus of World Bank support was lending to assist four areas of reform: (1) public enterprises, mainly assisting the privatization process and providing technical assistance in reforming regulatory frame-

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works, (2) administrative reforms in the Government and the Central Bank, (3) provincial finances and (4) continued elimination of barriers to trade. Loans in these areas include two public enterprise adjustment loans for U.S.$ 600 million, a loan for U.S.$ 450 million made in support of the debt and debt service reduction program agreed upon with commercial banks and a U.S.$ 400 million loan to reform the financial sector. In 1993, total loans approved and disbursed by the World Bank to Argen- tina exceeded U.S.$ 1.0 billion. In 1994, the World Bank approved U.S.$ 830 million in loans to Argen- tina earmarked for the education, health, agriculture and mining sectors, of which U.S.$ 414 million was disbursed. In March 1995, the World Bank agreed to provide loans totaling U.S.$ 1.3 billion earmarked to privatize provincial banks, of which U.S.$ 944 million was disbursed. In 1996 the World Bank approved loans totaling U.S.$ 1.3 billion for structural reforms in the health system, environmental protection and the improvement of provincial roads. In August 1997, the World Bank approved loans totaling U.S.$ 300 million to support the financial and social reforms of four provincial governments.

Since 1982, the IADB has made loans to Argentina principally for project financing. The energy sector accounts for approximately 41 % of the lADB's outstanding loans to Argentina, followed by approximately 16% in the agricultural sector. The remainder is concentrated in public health, industry and mining, transportation and communications, education and urban development. The IADB has begun to make loans under its microenterprises support program, which seeks to increase the access of very small entrepreneurs to local currency credit and training programs. The IADB co-financed the World Bank's public sector reform loan with a U.S.$ 325 million loan approved in 1991. In 1992, the IADB approved a U.S.$ 350 million loan to finance reforms in the public sector and national administration and the debt reduction program received an additional support for U.S.$ 400 million. During 1993, total loans approved and disbursed by the IADB to Argentina exceeded U.S.$ 1.5 billion. During 1994, the IADB approved loans in excess of U.S.$ 1.1 billion to refinance projects relating to water, utility, energy and sewers, agricultural development, education and health, of which U.S.$ 240 million was disbursed. During 1995, the IADB granted loans for an amount of U.S.$ 1.3 billion, U.S.$ 500 million of which will be used to support a Fiduciary Fund to finance reforms in the financial sector (see "Monetary System - Financial Sector") and the balance will be used to support special reforms, infrastructure projects and provincial government programs, of which U.S.$ 1.1 billion was disbursed. In 1996, the IADB approved U.S.$ 901 million in loans, one such loan to be used to support social security reforms in the provincial areas and another to support the financial and social reforms of provincial governments.

Paris Club and Official Creditors

Prior to the agreement reached with Paris Club creditors in July 1992 (See "The Argentine Economy - Introduction") official debt due to other governments, principally through their export credit agencies, was restructured in four separate agreements achieved in 1985, 1987, 1989 and 1991, totaling an aggregate amount of U.S.$ 9.0 billion. For the bulk of these operations, new maturities averaged 10 years, with average grace periods of approximately five and one-half years.

Bonex

Bonex are 10-year, LIBOR based, U.S. dollar denominated bonds, which pay interest semi-annually and principal annually. Scheduled interest and principal payments on Bonex have always been fully and promptly paid. Bonex are quoted on the Bolsa and the over-the-counter market and may be transferred freely within and outside Argentina. Of the currently outstanding Bonex (approximately U.S.$ 2.6 billion as of December 31, 1997), the bulk are the 1989 issue, which were issued as part of the Government's 1989 stabilization program and resulted in the involuntary exchange of fixed rate, short-term bank deposits, denominated in australes for Bonex. Proceeds of a new issue of Bonex (called Bonex 92) were allocated primarily to Banco Central as well as to other public sector entities for capitalization purposes. Bonex 92 were later sold in part in the capital markets.

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Bocones

In accordance with the Debt Consolidation Law (Law 23,982), the Government issued six series of Bocones to pensioners and various private creditors in payment for amounts owed to such creditors which had accrued but had not been paid. As of December 31, 1997, U.S.$ 17.4 billion dollars in Bocones (U.S.$ 10.4 billion in dollar-denominated Bocones and U.S.$ 7.0 billion in peso-denominated Bocones) was outstanding. In August 1997, the Government authorized the issuance of a new series of Bocones, on the same terms and conditions as set forth in the Debt Consolidation Law, as repara- tion to the families of those who disappeared under the former military Government during the period from 1976 through 1983 ("desaparecidos").

Sores and Botesos

In 1990 and 1991, the Government issued several floating rate bonds with maturities of five and 10 years in connection with the rescheduling of domestic debt. The most important issues that remain outstanding are the Botes and Boteso 10. In 1994, the Government issued the Bote 3 for the purpose of financing a work program of the Atomic Energy Commission. As of December 31, 1997, the aggregate outstanding principal amount of the Botes series was approximately U.S.$ 0.6 billion. The original holders of these bonds are public sector suppliers and some other public sector entities which were creditors of the Treasury.

Bontes and Letes

New measures designed to improve the functioning of the Argentine Treasury bills market, which was established in August 1994, were announced in April 1996. See "Monetary System - Securities Markets". As of December 31, 1997, there were U.S.$ 3.0 billion of Letes outstanding. Since April 1996, Argentina placed two dollar-denominated issues (each consisting of two tranches) of Bontes in an aggregate principal amount of U.S.$ 3.1 billion. As of December 31, 1997, an aggregate principal amount of U.S.$ 3.1 billion of Bontes remains outstanding. See "Monetary System - Securities Mar- kets - Government Bonds and Treasury Bills".

Debt Service

In 1994 and 1995, Argentina amortized a total of approximately U.S.$ 5.2 billion and U.S.$ 5.4 billion, respectively, of non-financial public sector debt. In 1996, Argentina amortized approximately U.S.$ 6.5 billion of this debt. In 1997, Argentina amortized U.S.$ 8.7 billion of non-financial public sector debt, excluding short-term debt (Treasury bills).

Because the majority of Argentina's foreign debt consists of Government debt, changes in overseas interest rates can have a significant impact on Argentina's current accounts and balance of payments. Argentina's foreign debt remains high in relation to exports. Although lower inflation coupled with deregulation and trade liberalization has increased Argentina's export competitiveness, continuing current account deficits require high capital inflows, including new indebtedness.

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The following table summarizes the amortization schedule of Argentina's public sector foreign debt outstanding at December 31, 1997.

Amortization of Total Public Sector Foreign Currency Debt (1)

Amount outstanding as of Decem- ber 31, 2003- 1997 1998 1999 2000 2001 2002 2027 (Millions of U.S. dollars) A - Bonds Bonex 87 (2) $ 13 $ 13 $ - $ - $ - $ - $ Bonex 89 (3) 1,619 870 749 Bonex 92 (3) 1,136 269 217 217 217 217 Bote 3 168 119 49 Boteso 10 559 224 224 111 - Bocon Prev I 3,953 1,183 1,183 1,183 404 Bocon Prev ll 4,057 254 1,014 1,014 1,014 761 Bocon Prev 2,366 256 256 256 256 256 1,086 Bocon 2d Serie 65 0 0 0 7 7 51 Ferrobono 6 - - - - - 6 Par bonds (U.S.$) 9,852 - - - - - 9,852 Par bonds (DM) 160 - - - - - 160 Discount bonds (U.S.$) 2,900 - - - - - 2,900 Discount bonds (DM) 158 - - - - - 158 FRB 7,749 161 484 1,292 1,292 1,292 3,228 BCRH 61 0 5 6 6 6 38 Spanish Bond 55 - - - - - 55 API 4 - - - - - 4 New Money Bonds 24 12 12 Letes 1,762 1,762 - - - - - Bontes 3,129 - 2,100 1,029 Letras intra-sector Publico 93 - - - - - 93 Eurobonds (4) 24,666 2,288 2,318 1,783 2,284 1,578 14,413 B - International 64,554 7,411 6,511 5,862 5,480 6,217 33,073 Organizations IADB 5,050 (5) 382 362 356 396 382 3,171 Flonplata 17 3 4 4 4 2 1 World Bank 5,816 (5) 363 449 556 663 586 3,198 IMF 5,908 658 837 1,318 1,241 779 1,075 16,790 1,407 1,652 2,234 2,304 1,749 7,444 C - Official Creditors Paris Club 5,144 879 1,034 708 420 288 1,815 Other Bilaterals 2,960 357 373 363 306 284 1,277 8,104 1,236 1,407 1,071 726 572 3,092 D - Other 2,154 447 297 287 223 186 714 E - Total Foreign Currency Debt (A+B+C+D) $ 91,600(5) $ 10,501 $ 9,867 $ 9,455 $ 8,733 $ 8,723 $ 44,321

Columns may not add up due to rounding. (1) Does not include debt pending consolidation nor guarantees given to debtors outside the non-financial public sector. (2) Consists of coupons payable but not yet redeemed. (3) Includes capitalized interest and U.S.$ 192.8 million of coupons which were payable but not yet redeemed. (4) Includes U.S.$ 9.25 billion of Global Bonds. (5) Includes U.S.$ 786 million in World Bank and IADB peso-denominated public debt that could not be properly separated from foreign currency denominated public debt. Source: Ministry of Economy.

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Debt Record

Argentina has defaulted on and rescheduled loans from official creditors, loans from commercial banks, and bonds issued as part of previous debt restructuring with the commercial banks. Other than such defaults, Argentina has not defaulted in the payment of principal of, or premiums or interest on, any foreign currency denominated bonds for over 50 years. Argentina is not currently in default in any of its foreign currency denominated debt.

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EXHIBIT 5 Scotch-Marmo, Stephen

From: Eugenio Bruno Sent: Saturday, February 06, 2016 9:08 PM

To: DeSieno, Timothy B. Case 1:16-cv-02238-TPGDocument37-5Filed04/07/16Page2of8 Subject: Argentina Proposal Attachments: Settlement Proposal February 5 clean FINAL (signature).pdf

Here we go Regards

De: "Eugenio Bruno" Para: "tim desieno" Enviados: Sábado, 6 de Febrero 2016 22:32:15 Asunto: Re: Propuesta en inglés?

Sorry. Yes will send it tonight.

Regards

Sent from Outlook Mobile

On Sat, Feb 6, 2016 at 4:48 PM -0800, "DeSieno, Timothy B." wrote:

Thankyousir. Isthatavailabletodaypossibly? Sorryfortheextramessage. Tim 1 TimothyB.DeSieno Morgan,Lewis&BockiusLLP 101ParkAvenue NewYorkNY10178

+12123096600 Case 1:16-cv-02238-TPGDocument37-5Filed04/07/16Page3of8

From: Eugenio Bruno [mailto:[email protected]] Sent: Saturday, February 06, 2016 02:07 PM Eastern Standard Time To: DeSieno, Timothy B. Subject: Re: Propuesta en inglés?

Tim

Will do.

Regards

Sent from Outlook Mobile

On Sat, Feb 6, 2016 at 11:06 AM -0800, "DeSieno, Timothy B." wrote:

Eugenio, Ihopeyourflightbackwasrestful. Seebelow.CanyoushootmetheEnglishtext.IcanreadtheSpanish,butmanyofmyclientsarestruggling. Thanksagain. Tim TimothyB.DeSieno

2 Morgan,Lewis&BockiusLLP 101ParkAvenue NewYorkNY10178 +12123096600

From: Buchheit, Lee C. [mailto:[email protected]] Case 1:16-cv-02238-TPGDocument37-5Filed04/07/16Page4of8 Sent: Saturday, February 06, 2016 12:17 PM Eastern Standard Time To: DeSieno, Timothy B. Subject: Re: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

Noluck. Eugeniowouldbetheone. ______ LeeC.Buchheit ClearyGottliebSteen&HamiltonLLP Assistant:[email protected] OneLibertyPlaza,NewYorkNY10006 t:+12122252810|f:+12122253999 www.clearygottlieb.com|[email protected]

From: DeSieno, Timothy B. [mailto:[email protected]] Sent: Saturday, February 06, 2016 11:55 AM To: Buchheit, Lee C. Subject: RE: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

No luck, I take it Lee? Should I check with Eugenio, or Andres? Thanks. Tim

From: Buchheit, Lee C. [mailto:[email protected]] Sent: Friday, February 05, 2016 6:36 PM

3 To: DeSieno, Timothy B. Subject: Re: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

Willdo.Assoonassomeonefavorsmewithacopy. ______ Case 1:16-cv-02238-TPGDocument37-5Filed04/07/16Page5of8 LeeC.Buchheit ClearyGottliebSteen&HamiltonLLP Assistant:[email protected] OneLibertyPlaza,NewYorkNY10006 t:+12122252810|f:+12122253999 www.clearygottlieb.com|[email protected]

From: DeSieno, Timothy B. [mailto:[email protected]] Sent: Friday, February 05, 2016 06:35 PM To: Buchheit, Lee C. Subject: RE: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

OK, but presumably there will be one, and kindly send that through soonest. Thanks. Tim

From: Buchheit, Lee C. [mailto:[email protected]] Sent: Friday, February 05, 2016 6:34 PM To: DeSieno, Timothy B. Subject: Re: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

SorryTim,theychangeditoveratDP'satthelastminuteandIhavenotseenafinalEnglishversion. ______ LeeC.Buchheit ClearyGottliebSteen&HamiltonLLP Assistant:[email protected]

4 OneLibertyPlaza,NewYorkNY10006 t:+12122252810|f:+12122253999 www.clearygottlieb.com|[email protected]

From: DeSieno, Timothy B. [mailto:[email protected]] Case 1:16-cv-02238-TPGDocument37-5Filed04/07/16Page6of8 Sent: Friday, February 05, 2016 06:01 PM To: Buchheit, Lee C. Subject: Argy offer - Lee, do you guys have this document in English translation? Thanks. Tim

DISCLAIMER This e-mail message is intended only for the personal use of the recipient(s) named above. This message may be an attorney-client communication and as such privileged and confidential and/or it may include attorney work product. If you are not an intended recipient, you may not review, copy or distribute this message. If you have received this communication in error, please notify us immediately by e-mail and delete the original message.

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EXHIBIT 9 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-10 906 Filed Filed 02/29/16 04/07/16 Page Page 1 2 of of 2 3

P. Sabin Willett Partner +1.617.951.8775 [email protected]

February 29, 2016

Honorable Thomas P. Griesa United States District Court for the Southern District of New York 500 Pearl Street New York, NY 10007-1312

Re: No. 6978: Republic of Argentina Sovereign Debt Litigation

Dear Judge Griesa:

We represent ARAG-A Limited, ARAG-O Limited, ARAG-T Limited, ARAG-V Limited, Yellow Crane Holdings, L.L.C., MCHA Holdings, LLC, Honero Fund I, LLC, Procella Holdings, L.P., Red Pines LLC, Trinity Investments Limited, Spinnaker Global Emerging Markets Fund, Ltd. and Spinnaker Global Special Situations Fund LP (the “Intervenors”), who have moved to intervene in this matter.1 The Intervenors hold foreign law Argentina bonds (principally German and English).2

We are pleased to inform the Court that all twelve of the Intervenors have now reached settlement with the Republic in respect of the above bonds, having accepted the offer Argentina made via its Master Settlement Agreement. Two of these settlements were published today by the Republic in its supplemental filings. See Second Supplemental Declaration of Undersecretary of Finance Santiago Bausili at Ex. 8 (Agreement in Principle between Procella Holdings, L.P. and the Republic of Argentina, executed as of February 19, 2016), and Ex. 9 (Agreement in Principle between Red Pines LLC and the Republic of Argentina, executed as of February 28, 2016). The remaining Intervenors accepted the Republic’s settlement offer on identical terms to Red Pines LLC, on or prior to February 29, 2016.

1 On February 19, 2016, the Intervenors sought to intervene in the lead case of the matters holding the injunctions. See Memorandum of Law in Support of the Motion to Intervene at 1 n.1. Dkt. No. 879. 2 Various Intervenors also hold New York law bonds, some of which were also submitted under the Master Settlement Agreement.

Morgan, Lewis & Bockius LLP

One Federal Street Boston, MA 02110-1726 +1.617.341.7700 United States +1.617.341.7701 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-10 906 Filed Filed 02/29/16 04/07/16 Page Page 2 3 of of 2 3

Honorable Thomas P. Griesa February 29, 2016 Page 2

The Intervenors entered into these settlements in reliance on the Court’s February 19, 2016 Indicative Ruling - and Argentina’s representations made to the Court - and its requirement that the Intervenors are entitled to payment in full in accordance with their settlements as a condition to the lifting of the injunctions. We look forward to working with the other parties to agree to the text and timing of an order that implements this point clearly, including in the possible context of a future bond issuance by Argentina.

Very truly yours,

/s/ Sabin Willett cc: Counsel of Record (via ECF) Case 1:16-cv-02238-TPG Document 37-11 Filed 04/07/16 Page 1 of 61

EXHIBIT 10 Case 1:16-cv-02238-TPG Document 37-11 Filed 04/07/16 Page 2 of 61

1 G31dnmla

1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 ------x NML CAPITAL, LTD., 3 Plaintiff, 4 v. 08 Civ. 6978(TPG) 5 09 Civ. 1707(TPG) THE REPUBLIC OF ARGENTINA, 09 Civ. 1708(TPG) 6 14 Civ. 8601(TPG) Defendant. 14 Civ. 8988(TPG) 7 ------x 8 AURELIUS CAPITAL MASTER, LTD., AURELIUS OPPORTUNITIES FUND II, 9 LLC, AURELIUS CAPITAL PARTNERS, LP, et al., 10 Plaintiffs, 11 v. 09 Civ. 8757(TPG) 12 09 Civ. 10620(TPG) 10 Civ. 1602(TPG) 13 THE REPUBLIC OF ARGENTINA, 10 Civ. 3507(TPG) 10 Civ. 3970(TPG) 14 Defendant. 10 Civ. 8339(TPG) 14 Civ. 8946(TPG) 15 ------x BLUE ANGEL CAPITAL I LLC, 16 Plaintiff, 17 v. 10 Civ. 4101(TPG) 18 10 Civ. 4782(TPG) THE REPUBLIC OF ARGENTINA, 14 Civ. 8947(TPG) 19 Defendant. 20 ------x (Caption continues)

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2 G31dnmla

1 ------x

2 Related cases:

3 10 Civ. 9587(TPG) 10 Civ. 5338(TPG) 4 14 Civ. 8630(TPG) 14 Civ. 8303(TPG) 5 14 Civ. 8242(TPG) 14 Civ. 4092(TPG) 6 14 Civ. 4091(TPG) 14 Civ. 7258(TPG) 7 14 Civ. 10016(TPG) 15 Civ. 1588(TPG) 8 15 Civ. 2611(TPG) 15 Civ. 5886(TPG) 9 14 Civ. 10064(TPG) 14 Civ. 7637(TPG) 10 15 Civ. 2577(TPG) 15 Civ. 5190(TPG) 11 14 Civ. 8739(TPG) 15 Civ. 3932(TPG) 12 11 Civ. 4908(TPG) 14 Civ. 10141(TPG) 13 14 Civ. 5963(TPG) 14 Civ. 1109(TPG) 14 14 Civ. 3127(TPG) 14 Civ. 7739(TPG) 15 15 Civ. 0710(TPG) 14 Civ. 8243(TPG) 16 13 Civ. 8887(TPG) 14 Civ. 9093(TPG) 17 14 Civ. 10201(TPG) 14 Civ. 7171(TPG) 18 14 Civ. 7169(TPG) 14 Civ. 7164(TPG) 19 14 Civ. 7166(TPG) 14 Civ. 9855(TPG) 20 14 Civ. 5849(TPG) 15 Civ. 1470(TPG) 21 15 Civ. 1471(TPG) 15 Civ. 6702(TPG) 22 15 Civ. 1553(TPG) 15 Civ. 1508(TPG) 23 15 Civ. 4767(TPG) 15 Civ. 4654(TPG) 24 15 Civ. 3523(TPG) 15 Civ. 4284(TPG) 25 ------x

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3 G31dnmla

1 ------x

2 Related Cases continued:

3 11 Civ. 8817(TPG) 15 Civ. 2369(TPG) 4 15 Civ. 7367(TPG)

5 ------x

7 New York, N.Y.

8 March 1, 2016 1:34 p.m. 9 Before: 10 HON. THOMAS P. GRIESA, 11 District Judge 12 APPEARANCES OF PARTICIPATING COUNSEL 13 DECHERT LLP 14 Attorneys for Plaintiff NML Capital BY: ROBERT A. COHEN 15 FRIEDMAN KAPLAN SEILER & ADELMAN LLP 16 Attorneys for Aurelius Plaintiffs, Blue Angel BY: EDWARD A. FRIEDMAN 17 DEBEVOISE & PLIMPTON 18 Attorneys for EM, Ltd. BY: MICHAEL B. MUKASEY 19 GIBSON, DUNN & CRUTCHER LLP 20 Attorneys for NML BY: THEODORE B. OLSON 21 HOLWELL SHUSTER & GOLDBERG LLP 22 Attorneys for Montreux Partners, Cordoba Capital, Wilton Capital 23 BY: MICHAEL S. SHUSTER

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4 G31dnmla

1 APPEARANCES CONTINUED

2 CRAVATH, SWAINE & MOORE LLP 3 Attorneys for Defendant Republic of Argentina BY: MICHAEL A PASKIN 4 LATHAM & WATKINS LLP 5 Attorneys for Euro Bondholders for Order BY: CHRISTOPHER J. CLARK 6 MILBERG LLP 7 Attorneys for Plaintiffs in Varela and 10 other actions (small bondholders) 8 BY: MICHAEL C. SPENCER

9 DUANE MORRIS LLP Attorneys for nonsettling plaintiffs group 10 BY: ANTHONY J.COSTANTINI

11 WEIL, GOTSHAL & MANGES LLP Attorneys for Attestor Master Value Fund LP, 12 Bybrook Capital Master Fund LP, Trinity Investments Limited, White Hawthorne, LLC 13 Yellow Crane BY: RICHARD L. LEVINE 14 GLEASON & KOATZ, LLP 15 Attorneys for Fazzolari and Julio Roberto Perez BY: ANU BHARGAVA 16 PROSKAUER ROSE LLP 17 Attorneys for small noteholders BY: JENNIFER R. SCULLION 18 MORGAN, LEWIS & BOCKIUS LLP 19 Attorneys for Red Pines and Trinity Intervenors BY: P. SABIN WILLETT 20 ANDERSEN SLEATER, LLC 21 Attorneys for Intervenor Mohammad Ladjevardian BY: JESSICA J. SLEATER 22 REED SMITH LLP 23 Attorneys for The Bank of New York Mellon as Indenture Trustee 24 BY: ERIC A. SCHAFFER

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5 G31dnmla

1 THE CLERK: Conference on the request for orders

2 granting the Republic's motion, NML Capital limited versus the

3 Republic of Argentina and all affiliated case captions.

4 All parties are present, your Honor.

5 THE COURT: Good afternoon. Please be seated.

6 Today's hearing is to give those who favor my

7 indicative ruling and those who oppose my indicative ruling the

8 opportunity to be heard. So I think that it has been organized

9 to the order of which you'll speak and so forth. So let's

10 proceed with the order that has been established.

11 THE CLERK: Your Honor, speaking for the motion, this

12 first speaker will be Mr. Michael Mukasey.

13 Mr. Mukasey, if you would please stand at the podium

14 and make your presentation.

15 MR. MUKASEY: May it please the Court:

16 Good afternoon, your Honor. I am Michael Mukasey, of

17 Debevoise Plimpton. I'm here for EM Limited, which is one of

18 the plaintiffs that has signed an agreement in principle to

19 settle its claims against Argentina and therefore supports

20 entry of a final order lifting the pari passu injunctions as

21 provided in your Honor's indicative ruling.

22 Before counsel for Argentina present their legal

23 position, I just want to go through a little bit of history

24 that got us here.

25 THE COURT: Could you speak just a little slower so I

SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case 1:16-cv-02238-TPG Document 37-11 Filed 04/07/16 Page 7 of 61

6 G31dnmla

1 can absolutely hear you.

2 MR. MUKASEY: OK. The Court now has before it all of

3 the actions, 62 in all, in which plaintiffs have secured

4 injunctions to specifically enforce the pari passu clause and

5 the 1994 fiscal agency agreement. Argentina has moved before

6 this Court to issue a final order providing that you would

7 vacate the injunctions issued in all of those cases.

8 To use the terminology from your Honor's February 19

9 indicative ruling, Argentina is asking that this Court lift

10 both the original injunctions and the "me too" injunctions, the

11 original injunctions having been entered in February of 2012

12 and the "me too" injunctions in 2015. As the Court correctly

13 stated in the indicative ruling, the Court has to lift the

14 injunctions in all cases in order to avoid harming plaintiffs,

15 like my client EM and others, that have reached agreement in

16 principle with Argentina.

17 Argentine filed motions in this Court seeking relief

18 from the pari passu injunctions because the "me too" injunction

19 was then on appeal in Circuit Court. Your Honor issued an

20 indicative ruling that should the case be remanded from the

21 Second Circuit, your Honor would vacate the injunction based on

22 strong evidence of recently changed circumstances. And on

23 February 19th, after full briefing by plaintiffs and Argentina,

24 your Honor issued an indicative ruling, saying that if the

25 cases were remanded from the Court of Appeals, your Honor would

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7 G31dnmla

1 enter an order conditionally lifting the pari passu injunctions

2 if, and only if, two conditions were met -- that is the Lock

3 Law, that was enacted by the Argentine Legislature that

4 prevented payment, would have to be repealed, and, second, that

5 Argentina would have to make full payment to all plaintiffs who

6 entered into agreements in principle with Argentine on or

7 before February 29, which was yesterday.

8 Argentina then took that indicative ruling to the

9 Second Circuit, asked that Court remand the "me too" cases to

10 this Court so that your Honor could enter a final order

11 conditionally lifting the injunctions. On February 24,

12 Argentina went further and dismissed its appeal pending before

13 the Court of Appeals seeking review of the "me too" injunction,

14 did that with prejudice. On the same day, they dismissed a

15 related appeal contesting the scope of the original injunction,

16 did that with prejudice as well. And the Second Circuit

17 immediately issued a mandate restoring jurisdiction to this

18 Court in all of those cases.

19 In its order dismissing the appeals, the Second

20 Circuit said that dismissal was subject to two conditions,

21 agreed to by the parties: First, that Argentina would request

22 a hearing before this Court at which all parties could be heard

23 before any final order is entered -- and that's why we're here

24 today -- and, second, that any final order vacating the

25 injunctions would be stayed for up to two weeks so that anybody

SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case 1:16-cv-02238-TPG Document 37-11 Filed 04/07/16 Page 9 of 61

8 G31dnmla

1 who opposed the order could take an appeal to the Second

2 Circuit and ask for a further stay if they thought one was

3 warranted. Now, Argentina has moved this Court to enter a

4 final order conditionally vacating the injunctions in all cases

5 and has also asked, as the Second Circuit directed, that this

6 Court hold this hearing.

7 Now, the arguments supporting Argentina's request to

8 lift the pari passu injunctions are, if anything, even stronger

9 today than they were when your Honor issued the indicative

10 ruling on February 19. Argentina has now entered into

11 agreements in principle covering over $8 billion of claims in

12 these cases, but in order for any of those to go forward, the

13 pari passu injunction has to be lifted in all cases.

14 Your Honor unquestionably has the power to vacate an

15 injunction, that being an equitable remedy. You have the power

16 to vacate it in light of changed circumstances. And here the

17 evidence of changed circumstances is overwhelming. Your Honor

18 wrote in the indicative ruling that President Macri's election

19 changed everything, but since then a great deal more has

20 happened.

21 First, the substantial settlement agreements in the

22 records really speak for themselves. After years of

23 obstruction under the prior regime, in a short period of time

24 Argentina has managed to come to terms with the vast majority

25 of its creditors, leaving only a few parties who are holding

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1 out for more while preventing any of the settlements from going

2 forward. These holdouts may or may not agree to the terms

3 offered by Argentina. But whether they do or not, the

4 injunction has clearly served its purpose of encouraging

5 Argentina to engage in meaningful settlement negotiations.

6 Second, since the Court's indicative ruling, Argentina

7 has voluntarily abandoned its appeals challenging the Court's

8 authority to issue the injunctions. That, too, is evidence of

9 changed circumstances.

10 And, finally, Argentina has agreed that any relief

11 from the injunction should be conditioned both on repealing the

12 Lock Laws and payment of the settlements under the agreements

13 that were reached as of yesterday.

14 At this point, I think it's fair to say it's the

15 injunction itself, not Argentina, that stands in the way of

16 resolving this dispute. As your Honor found in the indicative

17 ruling, these changed circumstances have rendered the

18 injunctions inequitable and detrimental to the public interest.

19 The injunction is inequitable because it prevents

20 settling plaintiffs from receiving payment of their claims. My

21 client EM, for example, obtained a final judgment in this Court

22 more than 12 years ago, and it stands to receive approximately

23 $850 million by settling with Argentina. Allowing the

24 injunction to remain in place would only serve to empower

25 plaintiffs who have not settled to hold out for a better deal

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1 while preventing the settling plaintiffs from receiving the

2 settlement that they have agreed to. In order to avoid this

3 inequitable result, the injunction should be lifted in every

4 case in which it is entered because otherwise nothing can go

5 forward in any case.

6 The question before the Court is whether the interests

7 of the remaining holdouts in negotiating a better deal outweigh

8 the interest of the settling plaintiffs in resolving their

9 disputes, the interest of the exchange bondholders from

10 receiving payment of their bonds, and the interest of the

11 Argentine people generally in securing a better economic future

12 for their country.

13 For the reasons that are stated in the Court's

14 indicative ruling, the Court should exercise its discretion to

15 lift the injunctions entered in all cases upon the fulfillment

16 of two conditions, as your Honor set forth in the injunctive

17 ruling -- in the indicative ruling: First, termination of the

18 Lock Laws, and, second, payment to the parties who reached

19 agreements in principle on or before February 29.

20 Unless your Honor has specific questions of me, I'm

21 happy to yield to counsel for Argentina, Michael Paskin, and

22 I'll be happy to respond later on, if necessary, to any points

23 that get made by those who oppose lifting the injunction.

24 Thank you.

25 THE CLERK: Thank you, Mr. Mukasey.

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1 The next speaker will be Mr. Shuster.

2 Mr. Shuster, thank you.

3 MR. SHUSTER: Thank you.

4 Michael Shuster, your Honor, from Holwell Shuster &

5 Goldberg. I represent four of the settling plaintiffs --

6 Montreux Partners, Los Angeles Capital, Cordoba Capital and

7 Wilton Capital -- in four of the separate individual actions.

9 Your Honor, my clients favor the indicative ruling and

10 support Argentina's motion now that the ruling be made

11 permanent. The indicative ruling was correctly decided. My

12 plaintiffs were an early settler. My plaintiffs settled early

13 because it was obvious to them that Argentina had changed

14 dramatically its approach to this dispute, that it was very

15 serious about settling and resolving this and putting the case

16 behind it, and because it made an offer that was fair and

17 reasonable, and because the offer was fair and reasonable my

18 clients accepted it.

19 The case has reached this posture because the lead

20 plaintiffs, and other plaintiffs, have successfully pursued a

21 strategy in this court. We're here because of the Court's good

22 and wise decision making over the course of ten years, and

23 we're here because of the constructive and indispensable role

24 that the Special Master has played in bringing the parties

25 together so that this decade-long litigation can finally be put

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1 behind Argentina, the Court, and the parties.

2 From our perspective, the equities here have shifted

3 dramatically. We are highly sensible of the fact that on the

4 other side of this dispute is a sovereign state, a sovereign

5 state whose public finances have been handcuffed by virtue of

6 the injunctions that have been in place for a decade, properly

7 so given its conduct, but it's conduct has changed. Argentina

8 fought an election over this issue. President Macri was

9 elected in part over this issue. This is a matter of central

10 concern to the national life of a sovereign state -- and not a

11 wealthy state, a state which needs to be able to now gain

12 access to the capital markets so that it can raise capital not

13 only to settle this litigation but so that it can benefit its

14 people who are by no means wealthy.

15 So the government is prepared and has been prepared to

16 settle all of these claims. It has indicated that it will

17 actually repeal legislation that stands in the way of resolving

18 these matters. It is simply doing everything it can to be

19 responsive to the will of this Court, to the needs of the

20 parties, and to its own needs.

21 From our perspective, there are some parties here who

22 seem to want to snatch still more litigation from the jaws of

23 settlement. We think that would be a mistake. We think that a

24 historic resolution of this case is at hand not only for this

25 Court but for the Republic of Argentina and its people. To us

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1 the equities have shifted decisively in favor of lifting the

2 injunction, and for the sake of all concerned we strongly

3 support the motion and your Honor's indicative ruling.

4 THE CLERK: Thank you very much, sir.

5 Mr. Michael Paskin.

6 MR. PASKIN: Good afternoon, your Honor. Michael

7 Paskin from Cravath, Swaine & Moore for Argentina.

8 As Mr. Mukasey and Mr. Shuster have indicated, we are

9 in favor of the motion to convert into an order your Honor's

10 indicative ruling of eleven days ago. The indicative ruling

11 was based on sound findings of fact and an observation of the

12 changed circumstances that have obtained in the time since the

13 original injunctions were entered and, most specifically, in

14 the time since President Macri came into office just over two

15 months ago.

16 The issue to be decided today, your Honor, is really

17 quite simple. It's whether those circumstances that your Honor

18 has found have changed are still the case. And we believe that

19 they are even more so in place because your Honor's indicative

20 ruling also -- subsequent to your Honor's indicative ruling,

21 there have been additional settlements that have been agreed

22 upon, and Argentina has further demonstrated its willingness

23 and eagerness to put these issues behind it because it has

24 withdrawn appeals that were currently pending before the Second

25 Circuit because it is fully invested in the opportunity that

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1 your Honor is presenting them with to resolve these disputes

2 once and for all.

3 There are a few issues that have been raised in the

4 various submissions made over the last several days objecting

5 to the indicative ruling and suggesting that your Honor should

6 not convert it into a final order, and I'd like to address a

7 few of those.

8 Perhaps the most important one is the suggestion that

9 in some way it would be OK if the order vacating the

10 injunctions in place were not done across all cases but were

11 perhaps done on some cases but not others depending on whether

12 a party has agreed to a settlement or not. I submit, your

13 Honor, that while there are injunctions that have been entered

14 in multiple nonconsolidated cases, the injunctive relief in

15 play here is not a plural thing. It is a singular thing that

16 has been prescribing Argentina's conduct, that has been

17 preventing Argentina from boosting its economy through

18 resolving these cases and accessing the international capital

19 markets, and your Honor entered those rulings both in 2012, and

20 subsequently, based on a common set of circumstances that the

21 Court had observed at that time. Those circumstances, which

22 were common at the time to Argentina's conduct, have changed in

23 a way that is common to all cases.

24 So I respectfully submit that to the extent your Honor

25 converts the indicative ruling into a final order, which the

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1 Republic obviously believes should be done, that it be done

2 across all cases regardless of whether a settlement has been

3 reached in that particular case or not. And as a practical

4 matter, your Honor, this issue is critical. The reason that

5 it's critical is because if the injunction remains in place in

6 any single case, then the relief exists exactly as it has for

7 these past several years. It gives any nonsettling party not

8 only a veto power and the ability to exercise its own will to

9 settle or not settle as it sees fit, which, of course, is any

10 party's right, but it allows that party, whether it is a large

11 plaintiff such as NML or any of the smaller individual

12 plaintiffs who your Honor will probably be hearing from today,

13 it gives any one of them the ability to blow apart the entire

14 global settlement across all cases and across all parties,

15 because if the injunction remains in any one case, the relief

16 that the injunction prescribes remains in place regardless of

17 whether the order has been vacated in other cases.

18 Another issue that's been raised, your Honor, is that

19 certain parties have suggested that rather than enter an order

20 following on what the indicative order said that would set

21 conditions upon performance of which the injunctions in place

22 would automatically be vacated, there are certain objecting

23 parties who believe that the Court should hold a separate

24 hearing down the road after those conditions have been

25 satisfied and only at that time make a determination about

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1 whether the injunctions should actually be lifted. Again, we

2 submit, your Honor, that that is not a workable solution.

3 First, there are a lot of issues in play here,

4 including the need to get new legislation through Congress to

5 repeal the laws that have acted for so long as an impediment to

6 settlement in Argentina as well as the likely need to access

7 the capital markets in order to raise financing to fund these

8 settlements. If there is not certainty, your Honor, about the

9 import of your Honor's ruling and the decision that upon the

10 occurrence of certain conditions the injunctions will be

11 lifted, which we fully expect to be quickly briefed and argued

12 before the Second Circuit so that we can get a final answer on

13 that question as quickly as possible, then it becomes much

14 harder to implement those required changes. If there is

15 uncertainty about whether your Honor will ultimately decide to

16 vacate the injunctions even upon those conditions occurring,

17 then there will be uncertainty in the Congress in Argentina,

18 there will be uncertainty within the capital markets, and it

19 becomes more difficult to implement this plan of global

20 settlement than if your Honor does what your Honor has already

21 chosen to indicate in the indicative ruling, which is to put an

22 order in place that would go into effect -- that it would be

23 ordered immediately that would call for the automatic lifting

24 of the injunctions upon the occurrence of those two important

25 conditions, one being the required legislative changes and the

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1 second being payment to those parties who have reached

2 settlements.

3 Another objection that's been made in some of the

4 submissions of the last couple of days, your Honor, relates to

5 the supposed fairness or unfairness of the public settlement

6 proposal that was put forward by Argentina earlier this

7 month -- or, excuse me, on February 5th, because we're now in

8 March. As your Honor correctly observed in the indicative

9 ruling, the question of how fair or not or how reasonable the

10 terms of settlement are, whether the terms that have been

11 offered, the terms that had been accepted and reflected in

12 actual agreements, that is not a question that the Court needs

13 to get involved in or needs to decide in reaching the relief

14 that we are seeking. Those are not the changed circumstances

15 that are required.

16 The fact is -- and your Honor has observed -- that

17 circumstances have changed because of Argentina's general

18 openness towards --

19 THE CLERK: Time, counsel.

20 MR. PASKIN: -- and it's willingness to engage and

21 reflect those agreements with certain parties that have already

22 settled.

23 Thank you, your Honor.

24 THE CLERK: Thank you, Mr. Paskin.

25 Mr. Christopher Clark.

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1 MR. CLARK: Thank you, your Honor.

2 I represent the Euro bondholders and certain

3 affiliated exchange bondholders.

4 Argentina owes my clients billions of dollars. I

5 don't think anyone in this room disputes that it's fairly owed.

6 Your Honor has stressed repeatedly throughout these proceedings

7 that my clients have a right to be paid just as the holdout

8 bondholders have a right to be paid.

9 Your Honor perceived extraordinary circumstances in

10 this litigation and issued an extraordinary remedy, which was

11 an injunction, in a breach of contract case, prohibiting the

12 payment of my clients' due, and that's gone on for years.

13 That's gone on now to the tune of $3.1 billion being withheld

14 from my clients and other exchange bondholders by operation of

15 the injunction.

16 As your Honor indicated in the indicative ruling, the

17 extraordinary circumstances that merited the extraordinary

18 relief the Court granted are gone. Argentina is absolutely

19 engaging with the holdout bondholders. Argentina has settled

20 with the holdout bondholders, or the vast majority thereof.

21 Argentina is ready, willing and able, it seems, to repeal the

22 Lock Law and to pay on the settlements that have been agreed

23 to.

24 And so, as your Honor noted in the indicative ruling,

25 when you look at the equities here, the parties that have

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1 benefited are the holdout bondholders, who have engaged with

2 Argentina and worked out a settlement, and we're left

3 disadvantaged, your Honor. We've done nothing wrong. We hold

4 bonds. We've got payments that Argentina would like to make to

5 us, and at this point the only impediment from that fair and

6 just result is the injunction.

7 And so as your Honor correctly noted in the indicative

8 ruling, the balance of equities has changed; it's changed

9 materially. The facts on the ground have changed in that

10 Argentina has absolutely done the things the injunction was

11 meant to do. It wasn't meant to make them pay a certain amount

12 of money for a settlement that holdouts found acceptable. Your

13 Honor correctly noted, it was made to make them engaged. And

14 through the efforts of the Court and the Special Master and the

15 parties, they have done that. And at this point the equitable

16 result would be to grant the motion, start the process of my

17 clients getting paid their due and what they're owed. At this

18 point in this dispute, we're basically the only people with a

19 multibillion-dollar claim left that's not certain, and that's

20 not equitable, as your Honor noted.

21 So we fully support the granting of the indicative

22 ruling and ask that it be converted to a final order.

23 Thank you, your Honor.

24 THE CLERK: Thank you, Mr. Clark.

25 Now speaking against the motion will be Mr. Robert

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1 Cohen.

2 MR. COHEN: Good afternoon, your Honor. Robert Cohen,

3 from Dechert LLP, on behalf of plaintiff NML Capital.

4 Mr. Olson will be making our substantive argument. I

5 rise just to note for the record that we have withdrawn a

6 declaration that was submitted in support of our proposal, the

7 declaration of Mr. Jay Newman --

8 THE COURT: I am having a little trouble hearing you.

9 Just keep your voice up a little more, please.

10 MR. COHEN: Thank you, your Honor.

11 I rise, your Honor, just to note for the record that

12 we have withdrawn today the declaration of Mr. Jay Newman that

13 was submitted in support of our opposition papers, and we're

14 informed the Clerk's office has withdrawn that. So, we are not

15 relying on that declaration today.

16 THE CLERK: Thank you, Mr. Cohen.

17 Mr. Olson.

18 MR. OLSON: Thank you, your Honor. May it please the

19 Court:

20 My name is Theodore Olson, from Gibson Dunn &

21 Crutcher. I represent NML Capital. I have only one point to

22 make to your Honor. Together, NML Aurelius and Blue Angel and

23 Olifant represent 65 percent of the claims in this litigation.

24 As of yesterday, these plaintiffs entered into an agreement in

25 principle with Argentina to settle their claims in this

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1 litigation. This agreement is a monumental achievement. It is

2 a great tribute to the Court's patient and meticulous

3 supervision. It is also testimony to the tireless effort of

4 the Special Master and to the dedicated engagement of all of

5 the parties on all sides.

6 But the agreement is just at the edge of being

7 successful. Several steps must still occur, as you know,

8 before that success is finally realized. It is imperative that

9 these steps be handled delicately at this critical juncture.

10 Precipitous action now could jeopardize the settlements and

11 generate more litigation. We believe that everyone concerned

12 should want to avoid that possibility at all costs, Argentina

13 particularly. That goal is consistent with preserving this

14 remarkable achievement, and it is consistent with what the

15 Second Circuit sent us here to do.

16 With respect, we are concerned that entering the order

17 suggested in the Court's indicative ruling could well delay the

18 resolution of this case and might even put the settlement in

19 jeopardy. Argentina seems today even to be suggesting an

20 appeal. But as of yesterday morning, approximately 15 percent

21 of the plaintiffs in this litigation have not settled with

22 Argentina. If this Court enters an order that would vacate

23 their injunctions immediately, they are almost certain to

24 appeal from that order. If there are appeals, Argentina has

25 indicated that it might well delay any legislative action in

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1 Argentina to vacate the Lock Law. Appeals could last for

2 several months during which time everyone's settlement would be

3 in limbo and in jeopardy.

4 The far better result would be to postpone any order

5 vacating the injunctions so that these remaining plaintiffs can

6 have an opportunity to negotiate with Argentina. The

7 negotiations have moved quickly for those who are permitted to

8 negotiate. Argentina was able to negotiate settlements of 85

9 percent of the claims in 30 days, but many of those remaining

10 plaintiffs have not yet had an opportunity to negotiate with

11 Argentina either in person or through the Special Master. We

12 submit that with another 30 days Argentina could surely reach a

13 resolution with the remaining plaintiffs.

14 We believe, as this Court has repeatedly reminded us,

15 that settlement is the only way to resolve this litigation, and

16 negotiation is vastly more constructive than litigation, at

17 least now that Argentina is negotiating. Further negotiation

18 is the quickest route to the exit. An order vacating the

19 injunctions immediately is only a route, almost certainly, to

20 the Second Circuit. That should be the last thing that any of

21 us wants, including Argentina.

22 So we ask that the Court allow just 30 additional days

23 for orderly negotiations with the remaining plaintiffs to

24 continue before it takes any action to vacate the injunction.

25 It is a small request given the stake, the time that's already

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1 been invested in this case, and the great risk that if

2 precipitous action is taken.

3 Thank you, your Honor.

4 THE CLERK: Thank you, Mr. Olson.

5 Mr. Edward Friedman, please.

6 MR. FRIEDMAN: Good afternoon, your Honor. May it

7 please the Court:

8 I am Edward Friedman, with the firm of Friedman Kaplan

9 Seiler & Adelman. We represent plaintiffs Aurelius and Blue

10 Angel. My clients are part of the group representing

11 65 percent of the plaintiffs with injunctions who have entered

12 into an agreement in principle with Argentina yesterday along

13 with NML and Olifant.

14 We very much hope, your Honor, to see this settlement

15 consummated and performed. The reason why I am standing now in

16 opposition to the motion of Argentina for entry of an order is

17 that, first of all, we do agree 100 percent with what Mr. Olson

18 said on behalf of NML, that it is important for the Court not

19 to act precipitously and to allow at least 30 days for

20 negotiations to continue, to allow the Congress and Argentina

21 to act, and then there will be time for the Court to consider

22 the landscape and enter an order.

23 Whenever the Court enters an order based on its

24 indicative ruling, we believe there is one very important

25 clarification that is essential, and I did discuss this with

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1 counsel for Argentina a couple of days ago. I was surprised

2 that counsel for Argentina did not agree with my suggested

3 clarification, and I would like to explain to the Court what

4 that is and why we think it is essential in keeping with what

5 your Honor ruled in the indicative ruling.

6 If I may, your Honor, I would like to approach the

7 bench and hand to the Court the last page of the indicative

8 ruling with your Honor's conclusion and also the form of order

9 that we have proposed and the form of order proposed by the

10 Republic. And I have opened the two forms of order to the

11 relevant page.

12 (Pause)

13 I will explain in a moment, your Honor, exactly what

14 is the clarification we are requesting, which is in the

15 plaintiffs' proposed form of order, starting with "for the

16 avoidance of doubt." If I may, I would like to start with what

17 your Honor has already said in the indicative ruling.

18 As your Honor knows and can see, in the conclusion to

19 the Court's indicative ruling, the Court stated that it would

20 vacate the injunctions upon the occurrence of two conditions.

21 The second condition says that for plaintiffs that enter into

22 agreements in principle with the Republic on or before

23 February 29, 2016 -- and I'm going to pause because plaintiffs

24 NML, Aurelius, Blue Angel and Olifant are plaintiffs who have

25 entered into an agreement in principle on or before

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1 February 29, 2016 -- what the Court says for the injunctions to

2 be vacated is that the Republic must make full payment in

3 accordance with the specific terms of each such agreement. I

4 believe, your Honor, that the Court's ruling is very clear.

5 There must be full payment in accordance with the specific

6 terms of each agreement or else the injunctions will not be

7 vacated.

8 The agreement that Aurelius and the other plaintiffs

9 entered into with Argentina spells out the specific terms for

10 payment and other terms and conditions. Under our agreement in

11 principle, if Argentina fails to make full payment by April 14,

12 Aurelius and the other plaintiffs have the right in the

13 agreement to terminate. We hope payment is made. We entered

14 into the settlement agreement because we hope it will be

15 performed. But, obviously, our rights are very important to us

16 if Argentina does not make full payment in accordance with the

17 terms and if we, therefore, in accordance with the terms,

18 terminate the agreement.

19 When I spoke to counsel for Argentina, the

20 clarification that I suggested, which is now before your Honor,

21 says that for the avoidance of doubt, if plaintiffs do not

22 receive full payment in accordance with the specific terms of

23 the agreement in principle for any reason, including if

24 plaintiffs terminate the agreement in principle on or after

25 April 14, 2016, in accordance with the terms of the agreement

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1 in principle, the injunction shall remain in place. We believe

2 that clarification is exactly consistent with what your Honor

3 stated in the indicative ruling, namely, Argentina must make

4 full payment in accordance with the specific terms of the

5 agreement or else the injunctions are not vacated.

6 The position now being taken by Argentina, your Honor,

7 is that if my clients terminate the agreement in accordance

8 with the terms and are not paid, here's the situation they are

9 in according to Argentina, which we think is totally contrary

10 to your Honor's ruling. My clients would be in a situation

11 where they are not paid, Argentina says, but if Argentina goes

12 forward and pays other plaintiffs who have settlement

13 agreements, then the injunctions in favor of NML, Aurelius,

14 Blue Angel and Olifant, 65 percent of the plaintiff group,

15 those injunctions will be terminated, vacated.

16 The reason why we submit that is ridiculous,

17 inequitable and contrary to your Honor's indicative ruling is

18 that if you put aside the plaintiffs I am now speaking about,

19 the plaintiffs who represent 65 percent of the group, then we

20 have, as your Honor heard earlier, 15 percent of the plaintiffs

21 don't have agreements --

22 THE CLERK: Time, Mr. Friedman.

23 MR. FRIEDMAN: I will just finish these two sentences.

24 -- Argentina says, well, we've settled with

25 20 percent, it's actually 10 percent, your Honor, because

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1 10 percent are being paid in full, which was not offered to our

2 client. So the absurdity is if Argentina honors settlement

3 agreements with 10 percent of the plaintiffs, my clients'

4 injunctions are vacated. That is not what the indicative

5 ruling says.

6 Thank you, your Honor.

7 THE CLERK: Thank you, Mr. Friedman. Thank you, very

8 much.

9 Mr. Michael Spencer.

10 MR. SPENCER: Good afternoon, your Honor. Michael

11 Spencer from Milberg LLP. I represent the group that we've

12 called the small bondholders. These are bondholders in 11

13 actions with the caption starting with Varela v. the Republic

14 of Argentina.

15 We are the largest group, your Honor, of the

16 15 percent of the bondholders who have not yet settled. So we

17 are here today, your Honor, with a very specific and urgent

18 perspective, to ask your Honor very strongly, please, do not

19 vacate the injunctions until we have had the opportunity to

20 negotiate with Argentina, because we want to settle as well.

21 We haven't been able to negotiate toward a settlement yet.

22 There is no reason to rush entry of your Honor's indicative

23 order, and we would agree strongly with Mr. Olson's request

24 that the Court stay its hand for 30 days to allow us to

25 negotiate in accordance with the status quo that is presently

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1 in existence. We believe that comports with legality and with

2 the equities of the situation and will not throw us into the

3 Second Circuit, where everything that this Court has tried to

4 create so far might be jeopardized.

5 I have three things specifically to say to your Honor.

6 I would like to describe who we are. I would like to describe

7 why we have not settled, and I'd like to elaborate briefly on

8 exactly what I think the Court should do here today.

9 Your Honor, the claims that my group represents are

10 about $800 million. There are a number of other lawyers in the

11 courtroom today who also represent individual and small fund

12 bondholders who comprise the 15 percent who have not yet

13 settled. Most of us have been litigating since shortly after

14 the default in 2001. Most of these people, your Honor,

15 distinct from the hedge funds you just heard from, are

16 individuals or small funds. Most of them bought, your Honor,

17 predefault for the full face value of the bonds, and,

18 therefore, your Honor, they have a very different perspective

19 on this situation.

20 Most of them bought in small amounts. I get calls

21 every week from a $10,000 bondholder in Argentina who is very

22 nervous about this situation. Many of my clients are from

23 Argentina. Many of them bought the bonds because they were

24 beseeched for patriotic reasons by their country to make the

25 purchases. And, your Honor, they have been hanging on ever

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1 since in about 60 actions for my clients and others for other

2 lawyers that have been brought in this Court.

3 So, your Honor, I suggest we are the people that your

4 Honor has been trying to protect over the years so that we

5 could get to the point where the cases could be settled, and I

6 know your Honor's goal has been that and I know the Special

7 Master's goal has been that. So we were very happy when the

8 Macri administration announced late last year that it was open

9 to settlement. We share the Court's view on that.

10 So my second point, your Honor: Why haven't we

11 settled? And the short answer is, your Honor, due to the

12 circumstances of the negotiations, we have not yet had an

13 opportunity to negotiate with Argentina. As a practical

14 matter, your Honor, I think the main reason for that is that

15 the decision was made to allow the largest bondholders to go

16 first, and that may have been a reasonable approach to this,

17 your Honor. The smaller bondholders tried to get involved in

18 that process but we were told to wait our turn, which we have.

19 So, your Honor, we haven't been intransigent. There

20 is not an impasse. We are not greedy. We just haven't had a

21 chance to negotiate.

22 And I'm here, your Honor, to ask you, please, to give

23 us that chance. With the pari passu injunctions that we have

24 invested so much effort over the past two years to achieve,

25 leave the status quo for a month to give us a fair chance to

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1 negotiate.

2 We were astonished when Argentina on

3 February 11th asked your Honor to vacate the injunctions simply

4 because it was premature to do so, your Honor. Since we

5 haven't negotiated and since Argentina is very aware that we

6 have not had the chance to negotiate yet, it is unfair to

7 change the status quo until we have been allowed to bask in the

8 sunlight that the Macri administration says it has brought to

9 this situation. So far, we have not. So far, we have not been

10 able to negotiate substantively with Mr. Caputo and his team.

11 Your Honor, we will negotiate with them in New York.

12 We will negotiate with them in Buenos Aires. We will do it

13 with the Special Master or in any other way that seems

14 appropriate, but we need the opportunity to sit down with them.

15 And it is unfair and overly hasty, I submit, your Honor, to

16 change the present situation until we have been given that fair

17 opportunity to negotiate.

18 So my proposal, your Honor, is the same as the one

19 that Mr. Olson made, even though I didn't know he was going to

20 say what he said until he was at the podium here. My

21 rhetorical question is: What's the rush, your Honor? Please

22 stay your hand for a month, allow us to negotiate with

23 Argentina, and I believe, your Honor, that we will be able to

24 move the 85 percent that has currently been achieved up to

25 close to or at 100 percent.

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1 Your Honor, if the indicative ruling is entered as an

2 order, I am quite sure that I and the other lawyers

3 representing the 15 percent who have not settled --

4 THE CLERK: Time, Mr. Spencer.

5 MR. SPENCER: -- will have no choice but to appeal to

6 the Second Circuit, and as Mr. Olson and Mr. Friedman said,

7 that could ruin the delicate balance that favors negotiation

8 that we presently have.

9 Thank you.

10 THE CLERK: Thank you, Mr. Spencer.

11 Mr. Anthony Costantini.

12 MR. COSTANTINI: Good afternoon, your Honor. My name

13 is Tony Costantini of the Duane Morris firm. I represent a

14 real mix of plaintiffs. I have 115 individual bondholders in

15 one action, the Adami action. I also represent 10 different

16 institutional investors. So I've seen both

17 judgment/nonjudgment, settlement/nonsettlement, and I want to

18 contribute some thoughts.

19 The first thought that I have -- we will get it over

20 easily enough -- is that I agree entirely with what Mr. Olson

21 suggested in terms of the 30 days over. And as far as my

22 individual bondholder clients are concerned, I don't think I

23 could be as eloquent as Mr. Spencer just was before me, so I

24 will cut those parts of the argument.

25 I want to talk instead about two things. One is

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1 changed circumstances. We hear much from Mr. Paskin on how

2 much circumstances have changed. You have written in the

3 indicative ruling that circumstances have changed. But I think

4 there is a very important circumstance that has not changed.

5 Your Honor has ruled twice, and the Second Circuit has affirmed

6 twice, that the pari passu clause has been violated numerous

7 times by Argentina, that resulted in the payment of billions of

8 dollars to the exchange bondholders who have -- or who are

9 opposing today. That is the first thing.

10 And you have ruled twice, and the Second Circuit has

11 affirmed twice, that there is no money damages that can be

12 pursued because of the prior intransigence, and that

13 intransigence has not been removed. My clients only have an

14 equitable remedy, and to take that equitable remedy away for a

15 clear violation of the law that you've twice recognized is

16 inequitable, and we would oppose lifting the injunction

17 entirely.

18 I understand the concerns that many people have

19 expressed, and that you yourself expressed, in the indicative

20 opinion with regard to lifting the injunction, but I think if

21 you were inclined to do so, even though we would oppose it, I

22 think there are certain things that you need to focus on. One

23 is the conditions precedent. The first one, that Argentina

24 remove certain legislative impediments, I don't think you can

25 do that automatically, at least not to achieve confidence among

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1 the people otherwise. There is going to be a fight in the

2 Argentine legislature as to what gets passed in response to

3 that part of your condition. And you should maintain the right

4 to look at, review the Argentine legislative acts to see if

5 they truly do remove the impediments, particularly the

6 impediment with respect to collecting foreign money judgments

7 in Argentina, which is of great concern.

8 I also think, with respect to the second condition,

9 that that also should be reviewed for many of the reasons that

10 Mr. Friedman has so eloquently stated. I think, also, even

11 though I agree with the 30 days, there is no reason not to

12 extend the time to accept their offer from February 29th,

13 yesterday, for another three- or four-week period.

14 It is obvious from the submissions that have been made

15 from everybody that assuming we will, on everyone's part, that

16 there is confusion, lack of clarity, misunderstanding and

17 miscomprehension, and I don't say this in any way to denigrate

18 the work that has been done by the Special Master, which in my

19 view has been extraordinary, and you are to be complemented for

20 appointing Mr. Pollack as Special Master, but just yesterday I

21 had a client call at 10 o'clock in the morning and say, Tony,

22 you've been great but I'm accepting Argentina's settlement

23 offer. 10 o'clock at night the same client called me and said

24 I accepted their terms and they rejected it; there are

25 additional conditions they're imposing.

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1 Now, what are the merits or demerits of that

2 particular position? And I don't know enough to say it. I

3 think the extra time, both in terms of the protection for the

4 three weeks or the 30 days suggested by Mr. Olson would iron

5 out those kind of differences and get us closer. I also think

6 your Honor should consider if there is an alternative to

7 lifting the entire order. Maybe it can be lifted in stages.

8 I mean, we are certainly very, very sympathetic to the

9 concerns that are expressed by the other settling defendants.

10 They've lasted -- they've held out for as long as our clients

11 have, and we understand that, but we think that there are other

12 holders of external indebtedness who don't need to be treated

13 the same.

14 And the final thing I would suggest is that your Honor

15 is under an automatic stay of two weeks if you decide to lift

16 the order. There is no reason that you can't grant a stay

17 until the Second Circuit appeal is heard. And for my clients,

18 we are willing to agree right here and now to an expedited

19 briefing schedule in the Second Circuit so that this could be

20 accomplished as quickly as possible.

21 Thank you very much for your attention, your Honor.

22 THE CLERK: Thank you, Mr. Costantini.

23 Mr. Richard Levine.

24 MR. LEVINE: May it please the Court:

25 I'm Richard Levine, from Weil, Gotshal, for plaintiffs

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1 Attestor, Bybrook, Trinity, White Hawthorne and Yellow Crane,

2 "me too" plaintiffs. We represent a subset of the client

3 Mr. Costantini represents.

4 Let me say that I concur with almost all the arguments

5 we've heard this morning from Mr. Olson and Mr. Friedman and

6 Mr. Spencer and Mr. Costantini. My clients have not had the

7 opportunity to benefit from the changed circumstances that your

8 Honor has described in the indicative order in that we have not

9 yet had the opportunity to substantively engage with Argentina

10 or through the Special Master. We think that it would be

11 totally inequitable to pull the wool -- the rug out from under

12 us before we have had that opportunity. My clients are

13 slightly in a unique position in that they felt compelled

14 because of the February 29th deadline to be assured of being

15 treated fairly and fully with other settling plaintiffs to

16 tender settlement agreements yesterday. But as Mr. Costantini

17 indicated, there is confusion. There has been some pushback

18 from Argentina with respect to some of them. They don't know

19 exactly what Argentina is agreeing to. They think that all of

20 these things can be resolved if they have a chance to

21 negotiate. And they really think that the proposal to extend

22 the injunctive relief for another 30 days, as proposed by

23 Mr. Olson, the proposal to push forward the

24 February 29th deadline by three weeks, as articulated by

25 Mr. Costantini, are the only ways they can be treated fairly.

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1 There are three main points, your Honor, that I want

2 to briefly cover and otherwise we will rely on the arguments

3 set forth in our brief.

4 First, there is the issue of different treatment,

5 different dollar payments for plaintiffs with injunctive

6 orders, those who have and those who don't have injunctive

7 orders. Some of my clients have injunctive orders. Some of

8 them have made motions to your Honor for a pari passu

9 injunction, which the Court has not yet gotten to. And of

10 course, there are other bondholders out there who have the same

11 contractual rights who have not sought an injunction.

12 We believe that under the pari passu provision it is

13 completely unfair for Argentina to basically force on players,

14 on investors, the settlement which differentiates based on

15 whether or not they have an injunction, whether or not they

16 have moved for an injunction, which is still pending before

17 your Honor, or whether or not other bondholders have not moved.

18 It seems to us that's something which should be resolved

19 through negotiation, but, if not, it is something we think your

20 Honor needs to address. At a minimum, we ask that your Honor

21 enter the injunctive relief that is in pending motions with

22 retroactive effect so at least those who timely filed motions

23 are treated similarly with the plaintiffs who have received

24 injunctions from your Honor. We think that's required by the

25 pari passu provision and your Honor's and the Second Circuit's

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1 prior rulings therefor.

2 A second issue we have, your Honor, is that there

3 seems to be differing treatment by Argentina of the terms of

4 this unilateral order. That can't be. If it makes a

5 unilateral offer and it is accepted, it should be determined

6 and applied by Argentina consistently. So, for example,

7 Argentina in yesterday's submissions indicated it had

8 settlements with VR, Procella, and Red Pines. Each of these

9 plaintiffs have claims that extend back many years, bonds they

10 bought many years ago, and yet they have been accepted into the

11 settlement. Some of my clients have received questions or

12 comments on their settlement acceptance forms suggesting that

13 Argentina is questioning whether some of their older bonds

14 should be able to participate. That's not fair. If they make

15 a unilateral offer and it is accepted, it must be accepted as

16 to all similarly-situated plaintiffs, and we ask that your

17 Honor make clear that is something they are required to do.

18 Finally, just to reiterate on the point made by

19 Mr. Costantini and Mr. Spencer. Yesterday's deadline really

20 was unfair. As I indicated, my clients felt that -- my clients

21 are sophisticated investors. They are big boys. They still

22 felt they had no choice, because of the February 29th deadline

23 built into the offer, to tender settlement agreements yesterday

24 without ever having had the opportunity that 85 percent of the

25 bondholders had to engage with the Special Master, to engage

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1 with Argentina. That's just not fair.

2 Yesterday's deadline should be extended. Argentina

3 should be ordered to engage with all bondholders who want to

4 settle, who want to engage, and none of the injunctions, which

5 are based on pure contractual rights, as your Honor has

6 repeatedly found, should be lifted until at least there is that

7 opportunity to engage.

8 We thank you, your Honor. And we just say that

9 Argentina should not be able to rush this thing through but,

10 rather, your Honor should express the law to them to engage in

11 good faith negotiations with all the bondholders they have not

12 yet negotiated with. We think that's the minimum that equity

13 requires.

14 Thank you, your Honor.

15 THE CLERK: Thank you, Mr. Levine.

16 Attorney Anu Bhargava.

17 MS. BHARGAVA: May it please the Court:

18 Good afternoon, your Honor. Anu Bhargava, from

19 Gleason & Koatz. I represent individual and "me too"

20 bondholders Fazzolari and Julio Roberto Perez.

21 I join and adopt Mr. Olson's argument as our own and

22 on behalf of my clients.

23 Thank you so much, your Honor.

24 THE CLERK: Thank you very much, Ms. Bhargava.

25 The next speaker will be Ms. Scullion, Ms. Jennifer

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1 Scullion. Thank you.

2 MS. SCULLION: Good afternoon. Jennifer Scullion.

3 Your Honor, I represent eight classes of primarily very small

4 noteholders.

5 And let me just begin by saying although we oppose the

6 motion to vacate, if your Honor is still inclined to vacate, we

7 would adopt Mr. Olson's suggestion --

8 THE COURT: Can you start again and speak just a

9 little slower?

10 MS. SCULLION: Sure.

11 THE COURT: I have a little trouble understanding you.

12 MS. SCULLION: Absolutely.

13 Although we oppose, if your Honor does continue to

14 adopt the indicative ruling, we would ask that you adopt

15 Mr. Olson's suggestion of a 30-day period for substantive --

16 substantive -- negotiations with those who have not yet had the

17 opportunity to have those negotiations. Your Honor, those

18 people who have not had an opportunity include my clients. We

19 have tried repeatedly to have substantive negotiations. We

20 have been rebuffed at every turn. So if there is going to be a

21 substantive negotiation, if your Honor is going to order that,

22 I'd request that our classes be included in those substantive

23 negotiations.

24 Your Honor, I just want to address really two points.

25 One is this question of change of circumstances. As I think

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1 others have said, from my clients' perspective, there has been

2 no change of circumstances. You ask yourself, what were the

3 circumstances in 2005 and 2010? And they were that Argentina

4 decided unilaterally to make certain offers on its own terms

5 and on a take-it-or-leave-it basis. If you didn't take that

6 offer, you would not otherwise be paid; that was it.

7 The same circumstance exists today. The only thing --

8 the only thing Argentina has said that my clients are being

9 offered at this time is their unilateral standard offer, which

10 would impose a huge haircut on these classes who have held, by

11 definition, since 2004 at least continuously; frankly, most of

12 them have held much longer than that and bought before the

13 defaults.

14 And if we do not accept that offer, what is our

15 choice? Our choice is to continue to litigate to judgment, but

16 that has not changed. We still do not have Argentina agreeing

17 that if judgments are entered, that they will be honored, and

18 that was a factor that your Honor looked at and the Second

19 Circuit looked at in determining that injunctive relief was

20 necessary to protect rights. So, again, there have been no

21 change of circumstances from our clients' perspective.

22 The second point is a question of public interest, and

23 there is a line of special public interest. We agree that

24 there is a public interest in fostering settlement discussions,

25 but that means actual substantive negotiations. It does not

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1 mean here's an offer and that constitutes a settlement

2 negotiation. Enough has been said about that already.

3 But the other public interest here, I do submit, is in

4 the rule of law, and that's a public interest that serves not

5 only investors like my clients, who can then have some

6 assurance that the contractual rights that they've paid for are

7 going to be honored, but it also serves the interests of

8 Argentina and other sovereign debt issuers. If there is no

9 guarantee that the rule of law will be honored, then they won't

10 be able to issue debt at reasonable rates in the markets.

11 And what is happening right now, your Honor, is we

12 still have an undisputed pari passu violation and intended

13 further violations. There is really no dispute about that.

14 The question is remedy. And what's here right now is there

15 should be no remedy for a violation of your rights. If there

16 is no remedy, then there is no right and the rule of law is not

17 being upheld.

18 Your Honor, we respectfully request that you deny the

19 motion to vacate or adopt Mr. Olson's suggestion, in the

20 alternative, provided that we are included in those substantive

21 negotiations.

22 Thank you very much.

23 THE CLERK: Thank you, Ms. Scullion.

24 Mr. Willett.

25 MR. WILLETT: Good afternoon, your Honor. I'm Sabin

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1 Willett of Morgan Lewis. We represent the plaintiffs in the

2 Red Pines and Trinity cases. Those are Argentine pari passu

3 bonds that are governed by German and English law, and we are

4 intervenors in this proceeding just for purposes of addressing

5 the injunction.

6 I wanted to pick up on a point that creates a

7 technical problem for Mr. Paskin's order that you've heard a

8 lot about this afternoon, the people who tell you they have not

9 been able to negotiate with Argentina yet, and some of my

10 clients are in that same position. I should say, all 12 of

11 them have now settled -- all 12. But it's important that you

12 understand how did a person settle if he couldn't engage with

13 Argentina. And here's how.

14 Argentina published an offer on its website. The only

15 way you could settle, and be afforded the protections of the

16 indicative ruling, was to accept that offer without change by

17 February 29th. And that's what 11 of our clients did. One of

18 our clients did succeed in negotiating with Argentina and

19 reaching its own agreement, but all the rest had to simply take

20 Argentina's terms. Fair enough; it's a contract.

21 But here's the problem with Mr. Paskin's order. The

22 way you accepted that contract was you sent in a form listing

23 your bonds. The form itself provides that those bonds, which

24 are prescribed by the terms of the contract itself, are outside

25 the treatment of the settlement. If you were to enter

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1 Mr. Paskin's order, then Argentina would be able to

2 unilaterally decide which bonds are in and which bonds are out

3 of the settlement. If, on the other hand, your Honor takes up

4 Mr. Olson's suggestion and just waits 30 days, I expect any

5 problems like that could be resolved.

6 There is another way to solve this problem if you're

7 inclined to enter an order today and that picks up on a point

8 that you heard from Mr. Friedman. I have a very brief redline

9 of Argentina's order. If I could approach the bench, I could

10 describe for you this modest change that would be necessary?

11 And I should say, I gave a copy of this to Mr. Paskin

12 and Mr. Cohen before the hearing.

13 (Pause)

14 THE CLERK: Thank you.

15 MR. WILLETT: Your Honor, I turned it to page 6, the

16 last page of the order. And if you edit it simply to say that

17 the injunctions will be vacated upon your finding that the

18 conditions have been met, then all of the concerns that I think

19 you've heard from people on our side, or at least many of them,

20 would be addressed, and, I submit, Mr. Paskin's concerns will

21 be addressed, too.

22 He told us that he was worried that there would be

23 uncertainty if you don't rule today. Argentina would be -- its

24 parliament would be uncertain how to proceed; so would the

25 markets, he said. But they're going to be more uncertain if

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1 you enter an order today which automatically kicks in when

2 things are deemed to occur. No one will know what that means.

3 Whereas if it's up to your Honor, on a short-order of

4 notice brought by Mr. Paskin, who says I have now hit the

5 conditions, we have paid the people we settled with and we have

6 repealed the necessary laws, on very short notice your Honor

7 will be able to then vacate the injunctions. If that doesn't

8 happen, we're going to have the risk that all these people you

9 have heard about who haven't been able to engage, haven't

10 physically met Mr. Pollack, for example, they're going to be

11 stuck with Argentina's unilateral determination of whether a

12 specific bond is prescribed by the terms of its indenture or

13 trustee, as opposed to bringing that issue, if there is to be

14 such an issue, before your Honor.

15 Thank you very much, your Honor.

16 THE CLERK: Thank you, Mr. Willett.

17 Ms. Sleater.

18 MS. SLEATER: Thank you, your Honor, for the

19 opportunity to be heard today. I represent a group of small

20 bondholders who purchased their bonds in the 1990s. They are

21 real people. The largest holder is a 90-year-old man who is

22 disabled and hopes to use the interest from these bonds to

23 support himself.

24 We concur in all of the arguments that have been made

25 in opposition to entering the indicative ruling today.

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1 Our -- my clients don't have an injunction. They

2 filed an action in 2006 and have obtained judgment in 2007.

3 They have been waiting this entire time for Argentina to at

4 least speak to us. We have received no word --

5 THE COURT: I'll tell you, slow down a little bit.

6 MS. SLEATER: OK. We have received no word at all

7 from anybody on Argentina's side. We stand ready, willing and

8 able to enter into any kind of settlement negotiations. We

9 have no intention to blow apart any of the current settlements

10 that are out there. All we ask is for a reasonable amount of

11 time to engage in an opportunity to have these negotiations.

12 The Court has recognized the language in the bonds

13 holding that all bondholders, regardless of size, should

14 receive equal treatment, and this language is what caused your

15 Honor to enter these injunctions in the first place. So we

16 respectfully ask just that the Court grant a reasonable amount

17 of time for all bondholders to engage in negotiations of

18 settlement with Argentina.

19 Thank you.

20 THE CLERK: Thank you very much, Ms. Sleater.

21 Mr. Schaffer.

22 MR. SCHAFFER: Your Honor, Eric Schaffer, from

23 ReedSmith. I'm here on behalf of the Bank of New York Mellon,

24 as Indenture Trustee.

25 Your Honor, our issues are purely administrative.

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1 First, if the Court lifts the injunction, we will need to

2 understand when, how, and what distributions are to be made.

3 We will need guidance with regard to the record date for

4 payments and confirmation of amounts to be paid to the exchange

5 holders. Second, your Honor, we will want to ensure that the

6 Trustees' rights and protections under the indenture and under

7 orders of this Court are not impaired.

8 Your Honor, I believe that a supplemental order will

9 be necessary to deal with all of these mechanical issues, and,

10 your Honor, we have been working with counsel for the Republic

11 and we have received assurance with regard to all of the points

12 we've raised. So, we are hopeful of being able to address all

13 of that in a supplemental mechanical order, if you will.

14 Thank you, your Honor.

15 THE CLERK: Thank you, Mr. Schaffer.

16 Counsel now, the Court will afford time for rebuttal

17 of two minutes, whoever wants to rebut. And I will begin by

18 starting over again in the order in which we began.

19 Mr. Mukasey, do you care to offer two minutes of

20 rebuttal?

21 MR. MUKASEY: OK. Two minutes?

22 THE CLERK: Yes, sir. And you don't have to offer

23 rebuttal if you don't care to.

24 MR. MUKASEY: I care to.

25 With respect to Mr. Friedman's point about that if

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1 only 10 percent settle, there won't be any injunction in place

2 and that wasn't contemplated by the indicative ruling, that was

3 precisely what was contemplated by the indicative ruling

4 because at the time the indicative ruling was issued, we didn't

5 know what percentage of people would settle. The point is the

6 injunctions get lifted and people are free then to negotiate,

7 if they wish. What was not contemplated was that people would

8 be able to stand in the way of settlements that have already

9 been agreed to.

10 With respect to the claim that because there is an

11 appeal, an inequitable injunction should stay in place, there

12 is no basis for doing that. The prospect of an appeal which is

13 in the normal course should not be an excuse for keeping an

14 inequitable injunction in place.

15 Also, the terms of the agreement -- of the settlement

16 that has been reached by NML say essentially that if they don't

17 get paid by April 14th, it's not that the agreement is enforced

18 according to its terms, which is what your Honor put in your

19 indicative order, but, rather, that the agreement dissolves; it

20 is as if it didn't exist. That is not what your Honor

21 contemplated in saying that the agreement was to be performed

22 according to its terms, not if its terms call for

23 self-destruction, which is what the terms of the NML order call

24 for.

25 So for all of the above reasons, I request that the

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1 injunctions be lifted and that the parties be permitted to

2 proceed with this settlement.

3 Thank you.

4 THE CLERK: Thank you, Mr. Mukasey.

5 Mr. Shuster.

6 MR. SHUSTER: Thank you, your Honor. I'll be brief.

7 The way I understand what the lead plaintiffs are

8 saying -- that is, NML, Aurelius, Blue Angel and Olifant --

9 they are saying they have the right to walk away from their

10 agreement if they're not paid by April 14. Presumably, they

11 secured that right for themselves, and they say if they're not

12 paid by April 14, they may terminate, and that could leave them

13 in a vulnerable position if Argentina pays other parties after

14 April 14. And there's one simple answer to that problem for

15 them. Don't terminate. Don't terminate your agreement on

16 April 14. Leave it in place, the same way as every other

17 agreement is in place, and when everybody else gets paid,

18 you'll get paid. So that is an illusory problem and certainly

19 one of their own making.

20 The second point is by securing themselves that right,

21 they have underscored the urgency of untying Argentina's hands

22 in its entirety as soon as possible, because they have left

23 Argentina only six weeks to comply with that payment term. And

24 if indeed they have a right to terminate and take 65 percent of

25 the settlement away, that's all the more reason why Argentina

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1 needs to be freed up as soon as possible to get on with the

2 business of repealing the necessary legislation, accessing the

3 capital markets, and arranging payments for all settling

4 parties.

5 And, finally, as to the request for a further 30-day

6 stay, I will note only that the Second Circuit in its mandate

7 back to this Court was express that there would be a 14-day

8 stay by agreement of all parties, and that included the parties

9 who are now asking for a 30-day stay.

10 Thank you, your Honor.

11 THE CLERK: Thank you, Mr. Shuster.

12 Mr. Paskin.

13 MR. PASKIN: Thank you, your Honor. Mr. Mukasey and

14 Mr. Shuster have made some of these points. I'll be very

15 brief.

16 The issue that NML and Aurelius have raised with

17 respect to the right to terminate their agreement is, as

18 Mr. Shuster said, an illusory one. If they choose to terminate

19 their agreement because the financing can't be raised by

20 April 14th and because payment gets delayed beyond that date,

21 they can either walk away from their deal or they can stick

22 with it. If they walk away from their deal, they are no longer

23 a settling party, so the order and the relief and the

24 conditions contemplated in the indicative ruling no longer

25 include them in the group of people who are entitled to payment

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50 G31dnmla

1 prior to the relief from the injunctions. If they choose to

2 stay in and wait for their payment, that's fine. And they can

3 make that choice whenever they want.

4 If they want to receive their $4.6 billion in

5 settlement proceeds, I would submit that they will likely wait.

6 If they have buyer's remorse and they have decided that those

7 terms are not good enough for them, then I suppose they'll

8 choose to walk away.

9 But what should not be allowed to happen by their

10 choice to walk away from this settlement is to blow up the

11 ability of every other party to settle. Your Honor should not

12 entertain that request. They should not be allowed to impose

13 conditions in the relief sought here that will allow them to

14 express a veto right over the injunctions being lifted.

15 If they wish, after the injunctions are lifted, to

16 pursue their contract remedies, they can do so. That has been

17 apparently an unsuccessful avenue for them for many years. We

18 would think that in reaching this deal they agreed to it

19 because they actually want to get paid. So they should behave

20 that way, and they should not try to interfere with the relief

21 that Argentina and others are now seeking to allow those

22 payments to happen --

23 THE CLERK: Time.

24 MR. PASKIN: -- to allow these settlements to go

25 through, and to allow this dispute to be put to rest.

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1 Thank you, your Honor.

2 THE CLERK: Thank you, Mr. Paskin.

3 Mr. Clark.

4 MR. CLARK: Very briefly, your Honor.

5 Your Honor heard from a number of small parties here

6 who are asking your Honor to give more time so that they can

7 individually negotiate with Argentina. There are thousands of

8 claimants, your Honor. There is one Special Master. He's

9 wired tirelessly. But the idea that a claimant with $10,000

10 worth of bonds is going to sit down individually with the

11 Republic of Argentina and the Special Master to work out a

12 tailored deal for that $10,000 worth of bonds while my clients

13 wait for their $3.1 billion in interest that hasn't been paid

14 for years is, I think, the definition of inequity.

15 Your Honor, it's been a fair process. It's been a

16 transformative process. The Special Master has brought a

17 settlement to the table that all parties could have adopted,

18 should have adopted, and can still maybe adopt. We should no

19 longer be held hostage by small parties who want a better deal

20 than everyone else got.

21 Thank you, your Honor.

22 THE CLERK: Thank you, Mr. Clark.

23 Messrs. Cohen and Olson, one minute apiece, or two

24 minutes.

25 Mr. Olson. Thank you.

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1 MR. OLSON: Thank you. Thank you, your Honor. May it

2 please the Court:

3 We're only making one point. Today, is there going to

4 be an immediate application of this order or is it going to be

5 postponed for 30 days to give the remaining parties an

6 opportunity to negotiate with Argentina to get their claims

7 resolved? We submit, and it's very simple, that if they don't

8 have that opportunity they're likely to appeal. If they

9 appeal, it's going to delay the entire process considerably,

10 and that puts everything at risk.

11 We all want this settlement to go through. We want

12 this litigation to be over. All of us I think in this room

13 hope to see the end and are seeing the light at the end of this

14 tunnel, thanks to the hard work of the Special Master, your

15 Honor, and the parties that have worked for this.

16 What we're suggesting is instead of inviting a

17 virtually automatic appeal by people who have the right to do

18 so -- and this was referred to by the Second Circuit during the

19 argument in that case. One of the judges said you've got a

20 virtually certain winning appeal. So we're saying that give

21 peace a chance, so to speak. Give 30 days to allow these

22 people to bring this to a resolution. If it doesn't happen,

23 we're no worse off. But if they are forced to do this, we are

24 worse off and everything is in jeopardy.

25 So that's all we're suggesting.

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1 THE CLERK: Thank you, Mr. Olson.

2 Mr. Friedman.

3 MR. FRIEDMAN: Your Honor, the indicative ruling

4 issued by this Court makes crystal clear that the goal of the

5 Court is to have the parties enter into settlement agreements

6 and that when the parties do so, if Argentina makes full

7 payment in accordance with the specific terms of those

8 agreements, the injunctions will be vacated. Aurelius, NML,

9 Blue Angel and Olifant entered into an agreement with Argentina

10 which has specific terms. We hope there will be full payment

11 in accordance with those terms, but if there is not, there is

12 no legal or equitable basis for vacating the injunctions in

13 favor of 65 percent of the plaintiff group just because a very

14 small minority of other plaintiffs have settled.

15 In effect, Argentina here is trying to change the

16 terms of the agreement entered into with NML, Aurelius,

17 Olifant, and Blue Angel. Under that agreement the injunctions

18 remain in effect unless these plaintiffs are paid, and at the

19 same time these plaintiffs agree that upon payment the

20 injunctions are vacated. That's what should happen, your

21 Honor.

22 We hope the settlement will be consummated. We hope

23 your Honor will not issue an order today, because that will

24 throw everything into delay and appeals. Thank you.

25 THE CLERK: Thank you, Mr. Friedman.

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1 Mr. Spencer.

2 MR. SPENCER: Your Honor, I think you have two

3 pathways open to you based on the arguments we've heard. One

4 of them is if you do issue an order today, litigation will

5 shift to the Second Circuit, and no one can predict the

6 schedule on which that will unfold or the outcome. And that

7 uncertainty, your Honor, is, unfortunately, almost certain to

8 throw a monkey wrench into the final resolution of these cases.

9 The other pathway, your Honor, is to give us some breathing

10 room so that the negotiation from the remaining 50 percent with

11 Argentina can have a fair chance to conclude.

12 Now, it's obvious from the argument that there is also

13 a dispute between the large settling bondholders, represented

14 by Mr. Cohen and Mr. Friedman, and Argentina. So that needs

15 some time to get resolved, as well.

16 And I think, your Honor, the benefits of staying your

17 hand for 30 days are obvious compared to the "let's go to the

18 Second Circuit" option, which suits no one's interest here.

19 Thank you.

20 THE CLERK: Thank you, Mr. Spencer.

21 Mr. Costantini.

22 MR. COSTANTINI: Your Honor, Tony Costantini again. I

23 have two brief comments to make.

24 One with respect to the Second Circuit mandate that

25 says that the order, if you read this order, shall be stayed at

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55 G31dnmla

1 least 14 days. Your Honor has the power to do otherwise and

2 staying it for longer than 14 days if your Honor thinks it is

3 appropriate. And the suggestion that was made, that you are

4 obligated by the 14 days, you are in a sense but it must be at

5 least 14 days; but if you decide that it should be longer, that

6 would be appropriate.

7 The second point that I want to respond to is the one

8 made by Mr. Clark on behalf of the exchange bondholders. The

9 exchange bondholders have received billions of dollars over ten

10 years that were, by definition, illegal and in violation of the

11 pari passu clause. My clients and a lot of other clients

12 represented in this room have waited 15 years. I don't have

13 any sympathy for making the exchange bondholders wait a little

14 bit longer to get this all resolved.

15 Thank you very much.

16 THE CLERK: Thank you, Mr. Costantini.

17 Mr. Levine.

18 MR. LEVINE: Thank you, your Honor.

19 Following up with what Mr. Costantini was saying about

20 the remand order, the language is "Argentina agrees to a stay

21 of up to two weeks of any district court order formalizing the

22 indicative ruling." So the fact that Argentina has previously

23 agreed I don't think at all limits your Honor's hand in

24 deciding what to do in terms of a longer stay.

25 The other thing I want to point out is that my clients

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56 G31dnmla

1 feel very disadvantaged and treated unfairly by the process to

2 date, because as indicated before, they have not been involved

3 with the Special Master, they have not met with him, they have

4 not met with Argentina, and yet since the indicative order has

5 come out they've seen Argentina begin to retrade. The

6 settlement offer, for example, said nothing about any

7 limitation on claims based on purported statute of limitations

8 defenses, which have never been litigated, never pushed by

9 Argentina, and yet since the indicative order has come out

10 we've begun to see Argentina making noise about that. That's

11 totally -- so, effectively, as I had said before, the rug is

12 being pulled out from under my clients, who have the same legal

13 rights and the same interests as the plaintiffs who have had

14 the opportunity to engage with Argentina.

15 So we think that there should be no doubt that the

16 indicative order should be delayed, whether it is done by a

17 stay, whether it is by moving the February 29th date back a

18 month, whether the order -- whether everything -- somehow time

19 is built in and Argentina is required to engage with the

20 bondholders who have been knocking on its door, who have been

21 reaching out to the Special Master and so far have not had an

22 opportunity. It really is unfair to require them to sit -- to

23 accept the, as they have, the settlement proposal when it's

24 unclear to what extent Argentina means what it says --

25 THE CLERK: Time, Mr. Levine.

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57 G31dnmla

1 MR. LEVINE: Thank you, your Honor. We do need those

2 30 days.

3 THE CLERK: Thank you.

4 Ms. Bhargava.

5 MS. BHARGAVA: May it please the Court:

6 Your Honor, we a hundred percent agree with the 30-day

7 extension, and I join in and adopt Mr. Olson's argument on

8 behalf of my client. Thank you so much.

9 THE CLERK: Thank you very much.

10 Ms. Scullion.

11 MS. SCULLION: Nothing further. Thank you your Honor.

12 THE CLERK: Nothing further. Thank you.

13 Mr. Willett.

14 MR. WILLETT: Your Honor, the arguments of the

15 proponents of the motion come down to two words. Don't delay,

16 they say. Now, we agree with Mr. Olson about this, but if you

17 are not persuaded, if you feel you must enter an order today,

18 the suggestion that we made would not be any slower than

19 Mr. Paskin's order. His order doesn't become effective until

20 the conditions occur, or are deemed to occur. Ours becomes

21 effective and the proposal becomes effective when you find that

22 they have occurred. The difference might be a matter of days.

23 Also, that form of order, if you entered it today,

24 would not be appealable as of right. So we wouldn't have this

25 running around to the Second Circuit, and Argentina would

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58 G31dnmla

1 have -- its parliament would have the clear statement by your

2 Honor that you will lift injunctions upon the occurrence of the

3 conditions.

4 Now, our concern in this regard is not hypothetical.

5 I just refer the Court quickly to the Lee affidavit. It's

6 docket 893. And it shows that one of our clients which had

7 negotiated a deal just before your ruling, on February 19th,

8 had Argentina pull that deal back the following Monday,

9 February 22nd. Honero is the name of that holder, and they had

10 no choice but to accept the bid on February 29th, given the

11 exigencies. The concern is that unless you have some control

12 over whether these conditions had occurred or not, we could

13 have the same kind of renege later.

14 Thank you, your Honor.

15 THE CLERK: Thank you, Mr. Willett.

16 Ms. Sleater.

17 MS. SLEATER: Nothing further.

18 THE CLERK: Thank you.

19 Mr. Schaffer.

20 MR. SCHAFFER: Your Honor, on several occasions the

21 Court has recognized that BNY Mellon acted very responsibly in

22 complying with the injunction. All that we ask now is to

23 maintain the integrity of the indenture in any orders of the

24 Court.

25 Thank you.

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59 G31dnmla

1 THE CLERK: Thank you, Mr. Schaffer.

2 Your Honor, that concludes rebuttal.

3 THE COURT: Let me just say, this has been a

4 remarkable afternoon. Many people have spoken. They have

5 spoken briefly, and substantially. As a judge, I appreciate

6 that very, very much.

7 Now, the Court stands adjourned. Decision is

8 reserved.

10 - - -

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Case 1:16-cv-02238-TPG Document 37-12 Filed 04/07/16 Page 1 of 2

EXHIBIT 11 CaseCase 1:16-cv-02238-TPG 1:16-cv-02238 Document Document 1-4 37-12 Filed Filed 03/25/16 04/07/16 Page Page 2 of 22 of 2

Carter, Christopher Louis

From: Willett, P. Sabin Sent: Friday, March 11, 2016 11:46 AM To: [email protected] Cc: DeSieno, Timothy B.; [email protected]; Levine, Richard ([email protected]); Carter, Christopher Louis Subject: Argentina litigation

Dear Michael --

Thank you for speaking with us this morning. I write to confirm the advice that you provided on our call. I understand from that advice that it is Argentina’s position that:

1. For VR Global Partners, L.P. and Procella Holdings L.P., Argentina’s position is that it is bound by contract and will honor the contracts that were attached to Mr. Bausili’s Second Supplemental Declaration of February 29, 2016 [1:08-cv-06978-TPG, Doc. 904-2] as Exhibits 7 and 8.

2. For Red Pines LLC, Argentina’s position is that it does not have a contract with Red Pines LLC, and that Exhibit 9 to Mr. Bausili’s Second Supplemental Declaration does not constitute a contract binding Argentina.

3. For all of the submissions made by other holders of U.S. and foreign-law bonds, who executed and submitted the form of “Argentina Agreement Schedule” on or prior to February 29, 2016, but did not obtain a countersignature after such submission, Argentina’s position is the same as it is for Red Pines LLC.

If I am incorrect about any of the above, please advise at once.

Kind regards,

1 Case 1:16-cv-02238-TPG Document 37-13 Filed 04/07/16 Page 1 of 76

EXHIBIT 12 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page1 Page of 75 2 of 76 16-628(L) 16-628(CON), 16-639(CON), 16-640(CON), 16-641(CON), 16-642(CON), 16-643(CON), 16-644(CON), 16-649(CON), 16-650(CON), 16-651(CON), 16-653(CON), 16-657(CON), 16-658(CON), 16-659(CON), 16-660(CON), 16-661(CON), 16-662(CON), 16-664(CON), 16-665(CON), 16-666(CON), 16-667(CON), 16-668(CON), 16-669(CON), 16-670(CON), 16-671(CON), 16-672(CON), 16-673(CON), 16-674(CON), 16-675(CON), 16-676(CON), 16-677(CON), 16-678(CON), 16-681(CON), 16-682(CON), 16-683(CON), 16-684(CON), 16-685(CON), 16-686(CON), 16-687(CON), 16-688(CON), 16-689(CON), 16-690(CON), 16-691(CON), 16-694(CON), 16-695(CON), 16-696(CON), 16-697(CON), 16-698(CON)

IN THE United States Court of Appeals FOR THE SECOND CIRCUIT

AURELIUS CAPITAL MASTER,LTD., ACP MASTER,LTD., Plaintiffs-Appellants, v.

REPUBLIC OF ARGENTINA, Defendant-Appellee.

(caption continued on subsequent pages)

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

BRIEF FOR DEFENDANT-APPELLEE

BANCROFT PLLC CRAVATH,SWAINE &MOORE LLP 500 New Jersey Avenue NW Worldwide Plaza Seventh Floor 825 Eighth Avenue Washington, DC 20001 New York, NY 10019 (202) 234-0090 (212) 474-1000

Attorneys for Defendant-Appellee The Republic of Argentina CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page2 Page of 75 3 of 76

AURELIUS CAPITAL MASTER,LTD., ACP MASTER,LTD., BLUE ANGEL CAPITAL I LLC, BANCA ARNER S.A., BRANTFORD,HOLDING S.A., AURELIUS OPPORTUNITIES FUND II, LLC, FFI FUND,LTD., FYI LTD., NML CAPITAL,LTD., OLIFANT FUND, LIMITED,RICARDO PONS,OFELIA NELIDA GARCIA,NW GLOBAL STRATEGY, VIRGILIO LUIS FOGLIA,MARIA CRISTINA ARGENT BARNA,RICARDO AURELIO TRIAY,ADELA NOEMI JURI,TORTUS CAPITAL MASTER FUND, LP, HECTOR PEREZ, MARLAND INTERNATIONAL S.A., LIS CARINA MEDINA,M.ALEJANDRA TERRA RISSO,WITKRON S.A., GOLSUN S.A., JUAN ALBERTO JOSE,JOSE LUIS QUATRINI, MARIO ALBERTO RUIZ,FARIGOLD TRADE S.A., CLAUDIO MARTINEZ,FRANCISCO DE GAMBOA,SILVIA ALCIRA MURILLO DE GEBERT,ENRIQUE ANTONIO JULIO GEBERT, LAYNEL CORPORATION,LIVIO MAZZOLA,BRADFORD PROMOTIONS S.A., HAMBURG CONSULTING INC., PIERINO GARRAFA,CARLOS JESUS SENDIN,EDUARDO GIBSON, FRANCISCO BASSO,FRANCA ANTONIONE,FLORENCIO PEREZ,JUAN CARLOS GRECO, RAMON ZUBIELQUI,EDUARDO ANDRES FRANCHESCHI,GELLXON CORP., ENRIQUE COHEN,MARIA ISABEL BERRAONDO,GRACIELA ZUBASTI,ADOLFO SANCHEZ BLANCO,RAFAEL ANTONIO SALAMANCA,KINBURG TRUST S.A., MAZZINI,JORGE MARCELO,GRACIELA ALEJANDRA,COMPANIA CALITECNO S.A., ZUM FELDE, HEINRICH PETER BARAVALLE,ANA VALERIA,ALEJANDRO PABLO BARAVALLE, EZEQUIEL HERNAN BACLINI,PATRICIA RUTH CARONNA,JOSE ALBERTO LANDI, SALVADOR SADDEMI,MARIA TERESA LEPONE,HERNAN TABOADA,SUSANA FRASCA DE LAURIA,NORBERTO PABLO GIUDICE,SUSANA LAURIA,GUILLERMO DOTTO, JORGE MANUEL TABOADA,MARIA DEL CARMEN ESCUDERO,ROSAS DE COHEN, ESTRELLA BETY,CORBINS TRADE S.A., LUIGI GIACOMAZZI,LUCIANA PEDROLLI, PATRIZIA GIACOMAZZI,MICHELE STAGNITTO,CLAUDIO MIGUEL MATHEOU,HUGO MASINI,VIVIANA NOEMI TUORON,GUILLERMO JORGE DOMATO,IMPERIAL BYLIDOL S.A., DARIO ALBERTO PARDAL,PAULA MASTRONARDI,HORACIO ALBERTO VAZQUEZ,LILIANA CEBROWSKI,DIEGO PEDRO PELUFFO,JUAN OMAR GIOVACHINI, LILIA ANGELICA PARISI,TRALOVE COMPANY S.A., MAURA MALETTI,GRACIELA ADRIANA GAMITO,ADRIAN CALEFFA,GUILLERMO ALMANZA,FELICITAS C. VON GROMANN,ROBERTO VIRGILIO SAURO,RITA LESO,RODOLFO ALBERTO GIL, VICENCIO,VIVIAN ORIANA VICENCIO SAAVEDRA,FELICITAS FLORENCIA FOX ANASAGASTI,FRANCISCO EDUARDO DE LA MERCED,ISABEL EVANGELINA BAVASSI, MAKAPYAN S.R.L., FRANCISCO JOSE MECHURA,GRACIELA DONNANTUONI, BERNARDO G. FERMAN,FRANCAISE COMPAGNIE,D’INVESTISSEMENTS S.A., MARIA SUSANA PAGANO,CARLOS ALBERTO LAGOS,JULIO HECTOR KRASUK,MAZORAL S.A., MIGUEL LIMOLI,LUCIO RAMON MUR,JESUS JORGE OTANI,ALEJANDRO ENRIQUE FERNANDEZ,GUIDO DEBIASI,ATTILIO DE ROSA,MANUEL G. GUILLEN, BEATRIZ M. CASTANO,MONICA HAYDEE GRACIOTTI,LISANDRO ROBERTO ARTURO MORA,ABEL VICENTE SANTANA,MARIA CLAUDIA MANGIALAVORI,HORACIO ALBERTO M. SANC CABALLERO,RICARDO SANCHEZ CABALLERO,ELISA SANCHEZ CABALLERO,FIRST CITY S.A., JORGE JORACIO ROSINI,ALICIA ESTER SALVADOR, CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page3 Page of 75 4 of 76

DOLLY ESTHER CUBASSO,SANTA SORRENTINO,RODOLFO BURUL,LYDIA HAYDEE GIGAGLIA,ANSGAR NEUENHOFER,DORA RAQUEL MALEC,CLAUDIO OSCAR MAZZA,ADRIANA BEATRIZ POVEDA,ALBERTO SILVIO BURSZTYN,ANDREA FABIANA FUCITO,CARLOS ALBERTO LAGOS,MARIA DEL LAS MERCEDE LAGOS, MAURIZIO GIOVE,GUILLERMO CARLOS F. CENTENO,CARLOS ALBERTO MURACA, PATRIZIA VALERI,ANDREA RONZON,SILVA FALOMO,VITTORIO GIANNATTASIO, MONICA GIANNATTASIO,MARCELO EDUARDO PRIMA,RICARDO SANCHEZ CABALLERO,ELISA SANCHEZ CABALLERO,SUSANA MOLINA GOWLAND,THEA PINA GORGONE,ALESSANDRA PADOAN,GLORIA PADOAN,PIERLUIGI PADOAN,THEA PINA GORGONE,LUIGI PADOAN,MASSIMILIANO MAZZANTI,MANUELA MAZZANTI, GIUSEPPINA FUSCHINI,MARTA GUERRINI,CORRADO GUERRINI,STEFANIA SIMONCINI,LUIGI PACIELLO,LERINERCO S.A., AURELIO PESENTI,ARNOLDO DOLECETTI,TELLADE NAVA,TOMMASINO VITIELLO,LUIGI VITIELLO,GABRIELLE DOLCETTI,GUISEPPE DOLCETTI,PABLO HUGO KALBERMANN,EVA SONDERMANN GELLER,PEDRO KALBERMANN,INTER PALMISANO S.A., DORA RAQUEL MALEC, ANDREA SUSANA BURSZTYN,ALBERTO SILVIO BURSZTYN,ALFREDO PACHECO, FRANCES BROWN,ADOLFO MIGUEL MUSCHIETTI,JOSE ANTONIO MUSCHIETTI, MARIA CRISTINA BUENANO,ADOLFO MIGUEL MUSCHIETTI,MARIA CRISTINA BUENANO,RODRIGO FELIPE MUSCHIETTO,MARIA CRISTINA MUSCHIETTI, ALEJANDRO FEDERICO MUSCHIETTI,NELSON DANTE LUCIANO,DANTE LUCIANO, MERCEDES FELIU,DAVID ADRIAN LUCIANO,OSCAR PAUL CLAVIJO,ANA MARIA AURORA OTERO,CARLOS ALBERTO BRUZZONE,PEDRO KALBERMANN,EVA SONDERMANN,COLOMBO MASI,MARIA ELENA PELAYO,LUIS PEDRO BIVORT, VALENTINA ETCHART,MARIA FAUSTA CILLI,FIORENZO FACCIONI,LEONARDO HILARIO SIMONE,CARLOS ARTURO JOSE ULLA,PATRICIA STORARI,DECIO CARLOS FRANCISC ULLA,OSCAR SECCO,MERCEDES CALVO,DELFIN A. RABINOVICH,DIEGO PEDRO PELUFFO,ELVIRA DAGMAR BUZCAT,LEONIDAS RAUL BORDIGONI, ALEJANDRO FERNANDEZ BARBEITO,RAMON BARBEITO,LIDIA FERNANDEZ DE BARBEITO,MANUEL CALVO,MERCEDES CALVO,ALCIRA NOEMI ARDITI,CLAUDIO GABRIEL ARDITI,FERNANDO BARBEITO FERNANDEZ,SANDRO CONCETTINI,MARIA ASUNCION INMACU CASTELLI,JOSEFA AMBROSELLI,ROBERTO CARLOS PARADA, ROSA SARA POMPEYA LA DE PARADA,GUILLERMO PEDRO PARADA,MARIANO ROBERTO PARADA,ALICIA G. DE SONDERMANN,EVA SONDERMANN,SUSANA SONDERMANN,RICARDO SONDERMANN,PAULA ARMANDA AZCARATE,EDITH ELVIRA NICOLAS,FISEICO,-FINANCIAL SERVICES INTERNATIONAL CORPORATION, ENSENADA UNITED CORPORATION,LORENZO BIANCHI,GIORDANO ALLIEVI, GABRIELLA TOSCANO,AMBROGIO STUCCHI,GIUSEPPE STUCCHI,MARIA LUISA STUCCHI,MORENO LEGNARO,MARIO DAL TOE,DAVIDE CIALLELLA,BRAMANTE DAL TOE,LUCIA VETTORETTI,ALDO NAJ OLEARI,MARIA IDA MODENA,ADA DAL TROZZO,LUIS GARCIA TOBIO,ANTONIA MIRIAN MACIEL,KAZIMIERZ KORNAS, LUIGI GIACOMAZZI,LUCIANA PEDROLLI,AGOSTINO SCOCCHERA,MARCELO CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page4 Page of 75 5 of 76

SPILLER,ROMINA MARIA BUSCAGLIA,NORA RAQUEL LOPEZ,GABRIEL MIGUEL, RAMON MIGUEL,MARCOS VANNI,ANA ANTONIA CABRERA,TERENCIANO DE JESUS CABRERA,CARLOS ALBERTO MARTINEZ,MONICA CRISTINA BARBERO,SIDNEY SUTTER,EDUARDO ARGENTIERI,CARLOS ADOLFO ESCATI,ARMANDO EDUARDO VALERIO,MIRTA ANTONIA PORTELA,ROQUE PEREZ VILLALBIA,GABRIEL FEDRICO LEIMGRUBER,FEDERICO HECTOR LEIMGRUBER,LAURA VICTORIA DEMIDOVICH, ALEJANDRO DEMIDOVICH,DIEGO WALTER CASTRILLI,DANIEL HORACIO ROLFO, ALICIA EVELIA GALIANI,SILVIA MABEL SACCONE,MARCELO RUBEN RIGUEIRO, ALFREDO ENRIQUE ZUCCHINI,NESTOR DE NICOLA,GRACIELA MARTA BERRETTI, PAULA DE NICOLA,SANTIAGO ROCCA,ANA MARIA SALDANA,ENRIQUE JORGE ROCCA,JOSEF SCHWALD,DENISE MARIE LAURETTE COLELLA,MICHELLE COLELLA, SUSANA LEONOR GATTI,MARTA BEATRIZ GATTI,LUIS ANGEL GATTI,GRISELDA TERESA DULEVICH,MARIA AGUSTINA SAUCO,MARIA GRISELDA SAUCO,MARIA FLORENCIA SAUCO,OSVALDO LORENZO SAUCO,ANGELA BUSI,RAMON EDUARDO NEBHEN,ANA CECILIA ALBORNOZ,BRUNO ITALIA,RUBEN UBALDO DI MARCO, MARIA LUCRECIA QUIROGA,JORGE ALBERTO ATILIO NEGRI,NICOLAS CARLOS AMADOR FARINOLA,JORGE CORADO FARINOLA,RENATE ARNOLD,IRMA HAYDEE REDONDO DE NEGRI,MASSIMO BALDARI,LILLINA ROSSO,ALBERTO ANICETO GONZALEZ,DELIA ISABEL GONZALEZ,MARIANA GONZALEZ,ROBERTO FEDECOSTANTE,DINA DI TOMMASO,BRIGIDA ELVIRA DENIS,VILMA BURGIO, NAIBY ELIANA SORIA,MARIA MARTA DE LUCA,ALEXANDER STERN,NELIDA AMELIA GIUSTI DE BEHAR,INGEBORG STERN,SERGIO RODOLFO BERRI,STELLA MARIS BOFFELLI,MALCOLM GERALD BERRI,NELIDA ROSA PAOLINI,FRANCO MARIA CONTE,LINA LO VULLO,FRANCESCO MASSOLETTI,DIANA KLEIN,FERISMAR CORP. S.A., CARLOS A. RIAL COTO,MARIA C. UNGARO TORRADO,COUNTY BAY INVESTMENTS LTD., GHIBLI INVESTMENTS LTD., SILVIO EDUARDO SAUCO,MIGUEL KAUFMANN,EDGARDO A. RAMOS,RIVKA SCHMUSKOVITS DE SCHUSTER,NICOLAS SCHUSTER,FLAVIA MARINA SCHUSTER,BEATRIZ LEONOR DE RAMOS,JORG ZAHN, ELENA PASQUALI,PORTICO CAPITAL INC., HARTMUT PETERS,SABINE ZAHN, WOLFGANG BOLLAND,BLIWAY INTERNATIONAL S.A., RICARDO KAUFMANN, MIGUEL ANGEL BITTO,MARIA SILVIA CINQUEMANI,EUGENIO QUARTRINI,OLGA ALBA MARINI,SEBASTIAN QUATRINI,PEDRO MARCELO SEXE,SAMUEL OLDAK, ANNA OLDAK,DAVID OLDAK,URI OLDAK,TELINCOR S.A., SOCRATE PASQUALI, ANNA MARIA CARDUCCI,NORFOLK INVESTMENT TRADE CO.LTD., GAMETOWN CORPORATION,NORBERTO ANGEL GARCIA MADEO,ANA MARIA SAENZ,GRACIELA CANDIDA CORLEIS SAENZ,WEGE ZU MOZART VERANSTALTUNGSGESEKKSCHAFT M.B.H,BOIM S.A., STEFANO SPANICCIATI,NESTOR ALBERTO RUBIN,ANDREAS WILFRED SCHWALD,ANTONIO JUAN PAULETICH,FABIAN E. PAULETICH,FRANCO PERUZ,NORBERTO DARIO CASTELLA,STREET INVESTMENTS LIMITED,GUIDO SCANAVINO,LYDIA SCANAVINO,GIANCARLO GRASSI,HENDRIK BEYER,EDGARDO GERARDO A. SCLAFANI,LUCIA RAFAELA TASSO,ALEXIA BRANDES,FERNANDO CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page5 Page of 75 6 of 76

EXPOSITO,MARA CAVANA,MAURIZIO DALLA,RENATO PALLADINI,ANDREA VIGNALI,FINCOMPANY S.A., GLORIA GAGGIOLO,VALERIO CHIRIATTI,SIMONETTA BUCCIOLI,ATTILIO GAUDENZI,LORIS ZAVOLI,ELENA MARCACCINI,ILDEBRANDO MOTTI,TULLIA TURCHI,CARLO CIGOLINI,JUAN EDUARDO COLUMBO,ESTELA ISABEL DELGADO,CARLA NANNI,MAURIZIO PETRONI,ROBERTO AKMAN,LILIANA EDITH GENNI,ARNOLDO DOLCETTI,MARCELLA DOLCETTI,LUCA MULAZZANI, ROBERTO BAUTISTA FRANCO BACCANELLI,ALFREDO CARLOS ALZAGA,MIGUEL ALBERTO BALESTRINI,BIBIANA DELLA FLORA,MARIA ISABEL BALESTRINI, MARIANA NOEMI TAUSS,ALEJANDRO R. LUPPI,ATILIO LUIS POCOSGNICH,ALICIA BEATRIZ GRACIAN,CAROLINA POCOSGNICH,BEATRIZ MARTI RETA,HORACIO TOMAS LIENDO,LUCIANA CEREDI,LUCIANO MILANESI,ALESIA MILANESI,PENG ZEYING,WOON CHEUNG LEUNG,RAUL ALEJANDRO GONZA MARTIN,GUSTAVO CARLOS FERREIRA,JOSE EMILIO CARTANA,RAUL HORACIO MENDEZ,MARIA MERCEDES MENDEZ FERRO,ROBERTO CLAUDIO PITRONA ELLE,ALBERTO GUILLERMO HILLCOAT,ELENA GRACIELA MARTINEZ,ENRIQUE SEBASTIAN PALAC MINETTI,SEBASTIAN JORGE PALACIO,MARIA ESTHER FERRER,AJU S.A., CASIMIRO KORNAS,MICHAEL HEEB,LIDIA FLORINDA PIOLI,ANA LIDIA LEIVAS,JUAN DOMINGO BALESTRELLI,GUNTHER BRAUN,HWB RENTEN PORTFOLIO PLUS,HWB ALEXANDRA STRATEGIES PORTFOLIO,NW GLOBAL STRATEGY,VICTORIA STRATEGIES PORTFOLIO LTD., HWB VICTORIA STRATEGIES PORTFOLIO,HWB PORTFOLIO PLUS,CESARE DE JULIIS,MIRTA BEATRIZ MANDOLINO,EDUARDO HECTOR SORROCHE,SUSANA ALICIA COSTA,DIEGO MARCOS SORROCHE,VERONICA SORROCHE,CHRISTA ERB,RUDOLF ERB,SILVIA BEATRIZ OVEJERO,DAVID DE LAFUENTE,JOSE L. PELUSO,HWB ALEXANDRIA STRATEGIES PORTFOLIO, ZYLBERBERG FEIN LLC, U.V.A.VADUZ,KLAUS BOHRER,AMBER REED CORP., CONSULTORA KILSER S.A., MICHAEL SCHMIDT,MARIE LAURETTE DUSSAULT, BURGHARD PILTZ,OSCAR REINALDO CARABAJAL,DORA LUISA SASAL,UTE KANTNER,SUSANA ALICIA MONKES,ALBERTO HABER,ALEJANDRO ALBERTO ETCHETO,CRISTA IRENE BRANDES,FRANCISCO MIGUEL MOLINARI,HELMUT HAGEMANN,HWB DACHFONDS-VENIVIDIVICI,HWB GOLD &SILBER PLUS,ROSA DELFINA CASTRO,GAMETOWN CORPORATION S.A., CRISTOPH HAGEMANN, DRAWRAH LIMITED,MICHELE COLELLA,DENISE DUSSAULT,ANYE SALINOVICH, DEBORA REINA COHEN,FEYSOL S.A., VANINA ANDREA EXPOSITO,BEATE NEUENHOFER,LERINERCO S.A., ANDREA DE NICOLA,INES DELIA EIDELMAN,DIEGO FABIAN TOPF,MODERN GROUP S.A., LUCABRAS S.A., CESAR CIVETTA,ALDO CIVETTA,AMANDA WIELIWIS,PABLO ALBERTO VARELA,LILA INES BURGUENO, MIRTA SUSANA DIEGUEZ,MARIA EVANGELINA CARBALLO,LEANDRO DANIEL POMILIO,SUSANA AQUERRETA,MARIA ELENA CORRAL,TERESA MUNOZ DE CORRAL,NORMA ELSA LAVORATO,CARMEN IRMA LAVORATO,CESAR RUBEN VAZQUEZ,NORMA HAYDEE GINES,MARTA AZUCENA VAZQUEZ,MAXIMO DORRA, OLGA DE DORRA DORRA,ANGEL EMILIO MOLINOS,RAUL RENNELLA AND SANDRA CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page6 Page of 75 7 of 76

ELIZABETH SCHULER,ANA ZEMBORAIN ZEMBORAIN,MIGUEL ANGEL BELOQUI, HORACIO GUIBELALDE,MARTA MABEL FOLGADO,ARAG-A LIMITED,ARAG-O LIMITED,ARAG-V LIMITED,ARAG-T LIMITED,GRAZIANO ADAMI,GIANFRANCO AGOSTINI,MILENA AMPALLA,ALLAN APPLESTEIN TTEE FBO DCA GRANTOR TRUST, AUGUSTO ARCANGELI DE FELICIS,ANTONELLA BACCHIOCCHI,ALBERTO BACIUCCO, OTELLO BACIUCCO,FILIPPO BAGOLIN,SARA BARTOLOZZI,ANNELIESE GUNDA BECKER,SERENELLA BELLEGGIA,GIORGIO BENNATI,ROBERTO BERARDOCCO, GRAZIELLA BERCHI,ORSOLINA BERRA,ADRIANO BETTINELLI,MASSIMO BETTONI, STEFANO BISTAGNINO,GIORGIO BISTAGNINO,GRAZIELLA BONADIMAN,ANDREA BONAZZI,STEFANIA BONPENSIERE,RACHELE BONTEMPI,MARCO BORGRA,SERGIO BORGRA,RENATA BOSCARIOL,EMANUELE BOTTI,CARLO BRETTI,SUSANNA BRETTI,ANTONIETTA GUISEPPINA BRIOSCHI,MARCELLO CALANCA,BRUNO CALMASINI,ITALIA CAMATO,GIUSEPPINA CAPEZZERA,LAURA ANNA CAPURRO, VINCENZO CARBONE,CARIFIN S.A., GIOVANNI CARLOTTA,ELETTRA CASALINI, DIEGO CASTAGNA,MARCO CAVALLI,CARMELINA CENSI,GIAN FRANCESCO CERCATO,ALBERTO COMPARE,GIOVANNA CONNENA,AGOSTINO CONSOLINI, CESARINO CONSOLINI,MARIA LUIGIA CONTI,SILVANA CORATO,GIANCARLO BARTOLOMEI CORSI,FRANCESCO CORSO,GIUSEPPINA CORSO,LAURA COSCI, ANGELO COTTONI,MONICA CROZZOLETTO,GRAZIELLA DACROCE,TARCISIA DALBOSCO,ALDO DAVID,ANTONIO DE FRANCESCO,ANTONELLA DE ROSA KUNDERFRANCO,MANUELA DE ROSA KUNDERFRANCO,EUFROSINA DE STEFANO, ADRIANA DELL’ERA,CARLO FARIOLI,ANNA FERRI,GIOVANNA FERRO,FRANCESCO FOGGIATO,DONATELLA ZANOTTI FRAGONARA,RINALDO FRISINGHELLI,ANGIOLINO FUSATO,GABRIELE FUSATO,FELICINA GAIOLI,MADDALENA GAIOLI,GIAN CARLO GANAPINI,FRANCESCO MAURO GHEZZI,MARIO GIACOMETTI,GIOVANNI GIARDINA, CELESTINO GOGLIA,GIULIA GREGGIO,VERNA GUALANDI,LUISELLA GUARDINCERRI,GIANFRANCO GUARINI,RAIMONDO IALLONARDO,INNOVAMEDICA S.P.A., FKA MATIVA S.R.I., MARITZA LENTI,ANGELO LEONI,PAOLO LISI,UGO LORENZI,SERGIO LOVATI,FERNANDA ANGELA LOVERO,CARMELO MAIO,CLAUDIO MANGANO,ELIDE MARGNELLI,CARLA MARINI DE FELICIS ARCANGLI,ROMANO MARTON,MIRCO MASINA,GUGLIELMINA MASSARA,BRUNA MATTIOLI,SALVATORE MELCHIONDA,MASINA MIRCO MIRCO,SIMONETTA MONTANARI,GIAMPAOLO MONTINO,CARLA MORATA,ALESSANDRO MORATA,MARIA RITA MORETTO, AMATO MORI,BRUNO PAPPACODA,SABRINA PARODI,ALFREDO PELLI,FRANCO PEZZE,VALERIO PIACENZA,PERI LUIGI LUCIBELLO PIANI,EUGENIA RE, ALEESSANDRA REGOLI,BARBARA RICCHI,MARIA ROBBIATI,PAOLA ROSA, ADRIANO ROSATO,GIUSEPPE SILVIO ROSSINI,LAURA ROSSINI,RAFFAELE ROSSINI, RUGGERO ROSSINI,INES ROTA,HILDA RUPPRECHT,VINCENZA SABATELLI, ANGELINA SALMISTRARO,TIZIANO SASSELLI,MARINELLA SCALVI,MAURIZIO SERGI,SIMONA STACCIOLI,LICIA STAMPFLI-ROSA,SANTE STEFANI,ANNA STORCHI, STUDIO LEGALE BENNATI,RENATE TIELMAN,MANUELITO TOSO,VALERIA TOSO, CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page7 Page of 75 8 of 76

FRANCO TRENTIN,STEFANIA TRENTIN,MARTINO VERNA,MARIO VICINI,LUCA VITALI,VITO ZANCANER,GIOVANNI ZANICHELLI,MATTEO ZANICHELLI,TRINITY INVESTMENTS LIMITED,EGAR RAMON LAMBERTINI,ANA DORATELLI,SCOGGIN CAPITAL MANAGEMENT II LLC, JUANA BONAIUTI,SCOGGIN INTERNATIONAL FUND LTD., SCOGGIN WORLDWIDE FUND LTD., TITO SIENA,MCHA HOLDINGS, LLC, ATTESTOR MASTER VALUE FUND LP, ARMANDO RUBEN FAZZOLARI,JULIO ROBERTO PEREZ,WHITE HAWTHORNE, LLC, JOSE PEDRO ANGULO,PEDRO TIMOTEO ANGULO,FERNANDO CROSTELLI,JUAN CARLOS CROSTELLI,MARTINA CROSTELLI, VIVIANA CROSTELLI,PATRICIO HANSEN,CLAREN CORPORATION,BYBROOK CAPITAL MASTER FUND LP, BYBROOK CAPITAL HAZELTON MASTER,FUND LP, ANDRAREX,LTD., CLARIDAE LTD,MARIA DEL PILAR DE WE FERRER,STONEHILL INSTITUTIONAL PARTNERS, LP, STONEHILL MASTER FUND LTD., Plaintiffs-Appellants,

GIOVANNI BOTTI,CLAUDIO MORI,SILVIA REGOLI, Plaintiffs,

BANK OF AMERICA, N.A., Respondent,

BANCO BILBAO VIZCAYA ARGENTARIA,S.A., BBVA COMPASS BANCSHARES,INC., BBVA SECURITIES INC., Third-Party Defendants,

ADMINISTRACION NACIONAL DE SEGURIDAD SOCIAL,UNION DE ADMINISTRADORAS DE FONDOS DE JUBILACIONS YPENSIONES,CONSOLIDAR AFJP S.A., ARAUCA BIT AFJP S.A., FUTURA AFJP S.A., MAXIMA AFJP S.A., MET AFJP S.A., ORIGENES AFJP S.A., PROFESION+AUGE AFJP S.A., UNIDOS S.A. AFJP, Defendants. CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page8 Page of 75 9 of 76

TABLE OF CONTENTS Page

TABLE OF AUTHORITIES ...... iv

PRELIMINARY STATEMENT ...... 1

COUNTERSTATEMENT OF ISSUE PRESENTED ...... 4

COUNTERSTATEMENT OF THE CASE ...... 4

A. Argentina’s Economic Crisis and Restructuring ...... 4

B. The “Holdout” Bondholder Litigation ...... 5

1. The 2012 pari passu injunctions ...... 5

2. The appeals of the pari passu injunctions ...... 7

3. Appointment of the Special Master ...... 9

4. The 2015 “me too” injunctions ...... 10

C. The Election of President Macri and the New Government’s Change of Course ...... 10

D. The Republic’s Motion to Vacate the Injunctions ...... 13

E. The District Court’s Indicative Ruling ...... 14

F. Settlement with “Lead Plaintiffs” ...... 17

G. The District Court’s Order Granting the Republic’s Motion ...... 19

H. Events Following the District Court’s Order ...... 20

SUMMARY OF ARGUMENT ...... 22

ARGUMENT ...... 26

i Case Case1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page9 Page of 7510 of 76

I. THE DISTRICT COURT ACTED WELL WITHIN ITS BROAD DISCRETION IN ORDERING CONDITIONAL VACATUR OF THE INJUNCTIONS BASED ON CHANGED CIRCUMSTANCES THAT HAD SHIFTED THE BALANCE OF EQUITIES...... 26

A. The Decision to Vacate the Injunctions, Like the Decision to Enter Them, Is Committed to the District Court’s Sound Discretion...... 27

B. The District Court’s Factual Finding of Changed Circumstances Was Firmly Supported by the Record and Not Clearly Erroneous...... 32

1. The district court correctly found that Argentina has shown a good-faith willingness to negotiate with holdouts...... 33

2. The district court correctly found that the Republic had taken meaningful steps toward repealing legislative obstacles to settlement...... 35

3. The district court correctly found that the Republic has entered into settlement agreements in principle with the vast majority of plaintiffs...... 36

C. The District Court Did Not Abuse Its Broad Discretion in Concluding That the Balance of Equities (Including the Public Interest) Had Shifted in Favor of Conditionally Vacating the Injunctions...... 38

1. The district court did not abuse its discretion in concluding that changed circumstances had rendered the Injunctions inequitable...... 39

2. The district court did not abuse its discretion in concluding that the public interest favors vacating the Injunctions...... 46

II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN VACATING THE INJUNCTIONS UPON THE OCCURRENCE OF CONDITIONS PRECEDENT...... 47

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III. THE PARI PASSU CLAUSE DOES NOT REQUIRE THE CONTINUED IMPOSITION OF EXTRAORDINARY EQUITABLE RELIEF IN THE FACE OF CHANGED CIRCUMSTANCES...... 53

A. Equitable Relief Is Not an Entitlement of Parties Aggrieved by Breach of Contract...... 53

B. The Pari Passu Clause Does Not Require That All Bondholders Be Treated the Same in All Circumstances...... 54

IV. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY DECLINING TO ENTERTAIN THE DISINGENUOUS “CLARIFICATION” PROPOSED BY “LEAD PLAINTIFFS.” ...... 56

CONCLUSION ...... 61

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TABLE OF AUTHORITIES

Page(s) Cases Abbo-Bradley v. City of Niagara Falls, 293 F.R.D. 401 (W.D.N.Y. 2013) ...... 49

Advance Pharm., Inc. v. United States, 391 F.3d 377 (2d Cir. 2004) ...... 51

Aevoe Corp. v. AE Tech Co., Ltd., 727 F.3d 1375 (Fed. Cir. 2013) ...... 58

Aurelius Capital Master v. Argentina, No. 14-2689, Doc. 167 (2d Cir. Sept. 19, 2014) ...... 58

EM Ltd. v. Banco Cent. de la República Argentina, 800 F.3d 78 (2d Cir. 2015) ...... 42

Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110 (2d Cir. 2009) ...... 53

Grace v. Rosenstock, 228 F.3d 40 (2d Cir. 2000) ...... 28

Great-West Life & Annuity Ins. v. Knudson, 534 U.S. 204 (2002) ...... 27

Gwozdzinsky v. Magten Asset Mgmt., 106 F.3d 469 (2d Cir. 1997) ...... 48

HMI Mech. Sys. v. McGowan, No. 99-CV-376 (FJS), 2000 U.S. Dist. LEXIS 21231 (N.D.N.Y. Mar. 8, 2000) ...... 50

Horne v. Flores, 557 U.S. 433 (2009) ...... 15, 27, 31, 32

In re Terrorist Attacks on Sept. 11, 2001, 741 F.3d 353 (2d Cir. 2013) ...... 32

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King-Seeley Thermos Co. v. Aladdin Indus., 418 F.2d 31 (2d Cir. 1969) ...... 30

Lewis v. Rahman, 147 F. Supp. 2d 225 (S.D.N.Y. 2001) ...... 50

McPherson v. Homeward Residential, No. C12-5920 (BHS), 2013 WL 4498695 (W.D. Wash. Aug. 21, 2013) ...... 50

N.Y. State Ass’n for Retarded Children v. Carey, 706 F.2d 956 (2d Cir. 1983) ...... 31

NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246 (2d Cir. 2012) ...... passim

NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013) ...... passim

NML Capital, Ltd. v. Republic of Argentina, No. 08 Civ. 06978 (TPG), 2012 WL 5895786 (S.D.N.Y. Nov. 21, 2012) ...... 53

Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806 (1945) ...... 58

Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367 (1992) ...... 31

Salazar v. Buono, 559 U.S. 700 (2010) ...... 32

Semmes Motors v. Ford, 429 F.2d 1197 (2d Cir. 1970) ...... 49

Sierra Club v. U.S. Army Corps of Eng’rs, 732 F.2d 253 (2d Cir. 1984) ...... 29, 30, 31

Sys. Fed’n No. 91, Ry. Emp. Dep’t, AFL-CIO v. Wright, 364 U.S. 642 (1961) ...... 28, 31

Texas v. United States, 523 U.S. 296 (1998) ...... 59

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United States v. Affectionate Heart in Home Care, No. 14-cv-2106 (ELH), 2014 WL 4953748 (D. Md. Sept. 8, 2014) ...... 50

United States v. Diapulse Corporation of America, 457 F.2d 25 (2d Cir. 1972) ...... 49

United States v. Eastman Kodak Co., 63 F.3d 95 (2d Cir. 1995) ...... 31

United States v. LoRusso, 695 F.2d 45 (2d Cir. 1982) ...... 28

United States v. McGinn, 787 F.3d 116 (2d Cir. 2015) ...... 59

United States v. Philip Morris USA Inc., 686 F.3d 839 (D.C. Cir. 2012) ...... 58

Winter v. NRDC, 555 U.S. 7 (2008) ...... 27, 53

Statutes & Rules Fed. R. Civ. P. 54 ...... 28, 29

Fed. R. Civ. P. 60(b)(5) ...... 29

Fed. R. Civ. P. 60(b)(6) ...... 29

Fed. R. Civ. P. 62.1 ...... 13

Other Authorities 11A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2942 (3d ed. 2015) ...... 27, 28

Ross P. Buckley, The Bankruptcy of Nations: An Idea Whose Time Has Come, 43 Int’l Law. 1189 (2009) ...... 5

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PRELIMINARY STATEMENT After more than a decade of intractable litigation between Argentina

and the holders of its defaulted bonds—to the point that this Court branded the

Republic a “uniquely recalcitrant debtor”—an “historic breakthrough” has placed

this case on the path to settlement. As the district court found in exercising its

broad discretion, the Republic’s new administration has committed to resolving

this dispute once and for all, as an essential part of a far-reaching package of

reforms. Argentina’s dramatic change of course has resulted in settlements with the vast majority of bondholders and good-faith settlement proposals to the remaining claimants. What had proven impossible for years is now within reach— an amicable resolution to the hostile dispute that followed Argentina’s 2001 default.

A critical precondition to that resolution, however, is this Court’s expeditious affirmance of the district court’s order providing for the vacatur—upon the occurrence of certain conditions precedent—of the extraordinary injunctions it entered against the Republic in November 2012 and October 2015. Those injunctions were never intended to be a final resolution of the plaintiffs’ claims.

Instead, they were designed to address what the plaintiffs and the district court viewed as the Republic’s intransigence and “unprecedented, systematic scheme” to pay other debts without paying the plaintiffs here. CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page15 Page of 1675 of 76

The injunctions worked. In the order under review, the district court—which has presided over dozens of suits against the Republic for more than a decade and has unparalleled expertise regarding the facts and circumstances of this case—concluded that “circumstances have changed so significantly as to render the injunctions inequitable and detrimental to the public interest.” The court accordingly granted the Republic’s motion to vacate all the injunctions subject to two readily ascertained conditions: (1) the removal of all legislative obstacles to settlement by the Argentine Congress and (2) the Republic’s actual payment of settlements agreed to by February 29, the day before Congress reconvened to take up the proposal.

The district court’s thoroughly reasoned decision falls comfortably within its equitable discretion. As the court found, now that the Republic has returned to the bargaining table to negotiate in good faith with the plaintiffs, the injunctions are not only unnecessary but affirmatively counterproductive and inequitable. The continued force of the injunctions precludes Argentina from accessing the global capital markets to raise funds needed to complete the settlements because global investors will not be able to count on Argentina’s authority to repay. The Argentine legislature also has made authorization of the settlement agreements, and the capital raise to finance them, contingent on affirmance of the district court’s order. And because most settlements are

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conditioned on vacatur of all injunctions, affirming the district court’s order is the only way to prevent the few remaining holdouts from exploiting the injunctions as leverage at the expense of the settling plaintiffs, Argentina’s other creditors, and the 40 million people of the Republic who desperately need to close the book on a troubled chapter in their history.

In the face of these overwhelming equitable considerations and the district court’s indisputable discretion to vacate its own injunctions, the plaintiffs quibble about procedural mechanics and second guess factual findings. None of this comes close to showing an abuse of the district court’s equitable discretion.

There is nothing unusual, let alone improper, about an injunctive remedy that is lifted upon the satisfaction of conditions precedent. And the district court’s factual findings are more than amply supported by the record, which shows that the

Republic’s newly elected administration has promised concrete action to facilitate the resolution of this litigation, and has followed through on that promise.

* * *

Whatever considerations might have supported extraordinary injunctive relief against the Republic in the past, the equities have decisively shifted in favor of resolving this long-running and bitter dispute. And as the district court recognized, time is of the essence, because some settlements might fall through if payment is not made by a certain date. What the district court once

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had the power to decree in order to alter behavior and incentivize good-faith settlement negotiations, it manifestly has the power to relieve now that the behavior has changed and settlement is within reach. The district court’s prudent exercise of its broad discretion should be affirmed expeditiously in all respects.

COUNTERSTATEMENT OF ISSUE PRESENTED Did the district court abuse its broad equitable discretion in conditionally vacating the interim injunctions it had entered against the Republic based on its findings that “circumstances have changed so significantly as to render the injunctions inequitable and detrimental to the public interest”?

COUNTERSTATEMENT OF THE CASE

A. Argentina’s Economic Crisis and Restructuring

In 2001, Argentina suffered the worst economic crisis in its modern history, causing poverty and unemployment to reach unprecedented levels. Unable to pay its debt and provide basic services, the Republic declared a payment moratorium on more than $80 billion of external debt, including bonds it had issued in 1994 pursuant to a Fiscal Agency Agreement (“FAA Bonds”). In the wake of this default, the cumulative fall in economic output was almost twice that experienced by the United States during the Great Depression. “The living standards of over one-half of the Argentine people fell below the poverty line, and

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over a third could not afford basic food.” (Ross P. Buckley, The Bankruptcy of

Nations: An Idea Whose Time Has Come, 43 Int’l Law. 1189, 1196 (2009).)

There is no bankruptcy regime for sovereign nations; instead, a sovereign in crisis must engage in voluntary restructuring of its debt. (Id. at 1189-

91.) As part of its restructuring, Argentina in 2005 and 2010 offered holders of defaulted FAA Bonds new “Exchange Bonds,” which had a face value of about

30% of the face value of FAA Bonds. (SPA-22.) In connection with the exchange, the Argentine Congress enacted the so-called “Lock Law,” which prohibited the Republic from making any payment or settlement with respect to unexchanged debt. (Id.) Approximately 93% of FAA Bonds were exchanged for

Exchange Bonds. After issuing the Exchange Bonds, the Republic began making

payments on the Exchange Bonds, but did not resume payment on the FAA Bonds.

(Id.)

B. The “Holdout” Bondholder Litigation

1. The 2012 pari passu injunctions

Plaintiffs-appellants are FAA Bondholders who declined both

exchange offers and instead sued Argentina for payment. They brought claims for

breach of contract, initially seeking damages for unpaid principal and interest on

the defaulted bonds.

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In October 2010, plaintiffs in 13 actions (the “pari passu actions”) also moved for injunctive relief, invoking the “equal treatment” provision of the

“pari passu” clause of the FAA, which provides: “The payment obligations of the

Republic under the Securities shall at all times rank at least equally with all its other present and future unsecured and unsubordinated External Indebtedness.”

(A-482.)

The plaintiffs in the pari passu actions made clear that the injunctive relief they requested was not intended to operate as a final resolution of the dispute or a permanent encumbrance on the Republic. Instead, they contended that the proposed injunctions could enable bondholders “to pursue a global resolution of

Argentina’s debts arising from the FAA” and that, with the injunctions in place,

“Argentina may at long last conclude that it must put an end to its standoff with all of its aggrieved bondholders.” (No. 08 Civ. 6978, Doc. 361 at 4.) Plaintiffs noted that, in a different sovereign debt case, “after the District Court entered an order that was the functional equivalent of the Proposed Order here, the Republic of the

Congo chose to settle with the plaintiff.” (Id. at 18 n.8.)

On February 23, 2012, the district court exercised its equitable discretion to craft injunctions “to address the Republic’s steadfast refusal to pay plaintiffs anything.” (SPA-49-50.) As plaintiffs had suggested, the injunctions did not purport to constitute a final resolution of this case; the district court expressly

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reserved jurisdiction “to modify and amend” the injunctions “as justice requires to

achieve [their] equitable purposes and to account for changing circumstances.”

(A-538.) Nor did the injunctions order the Republic to pay the plaintiffs the full

amount due on their bonds. Instead, the injunctions provided that whenever the

Republic made a payment on the Exchange Bonds, it also had to make a “ratable

payment” to plaintiffs. (A-535-36.)

In issuing its February 23, 2012 order, the district court made certain findings that are particularly relevant to this appeal. First, the district court found that there was “no adequate remedy at law . . . because the Republic has made clear—indeed, it has codified in [the ‘Lock Law’]—its intention to defy any money judgment issued by this Court.” (A-534.) Second, in analyzing the “balance of the equities,” the district court found that “equitable relief is particularly appropriate here, given that the Republic has engaged in an unprecedented, systematic scheme of making payments on other external indebtedness, after repudiating its payment

obligations [under the FAA].” (Id.)

2. The appeals of the pari passu injunctions

The Republic appealed the pari passu injunctions, contending that the

district court erred in entering such extraordinary relief in a contract action against

a foreign sovereign. Before this Court, plaintiffs defended the district court’s

decision on the basis that “[i]t is difficult to conceive of any case in which

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deference to the discretion of the district court is more appropriate than it is here,” where “[t]he same district judge [had] presided over dozens of similar lawsuits against Argentina for more than [a] decade[]” and had “in-depth familiarity with the parties, counsel, and facts, and . . . [with] virtually every development in the evolving disputes arising from Argentina’s 2001 default.” (Case No.

12-105-cv(L), Doc. 308 at 70.)

This Court agreed, finding that there was “no such abuse of discretion in the injunctive relief fashioned by the district court.” NML Capital, Ltd. v.

Republic of Arg., 699 F.3d 246, 250 (2d Cir. 2012) (“NML I”). This Court explained that “[t]he performance required by a decree need not . . . be identical with that promised in the contract.” Id. at 261. Accordingly, “[o]nce the district court determined that Argentina had breached the FAA and that injunctive relief was warranted, the court had considerable latitude in fashioning the relief” and could impose an equitable remedy that it believed “achieve[d] a fair result under the totality of the circumstances.” Id.

In response to a limited remand, the district court issued an order revising the injunctions in the pari passu actions to clarify how the “ratable payment” requirement was to operate. (SPA-1-8.) This Court affirmed, again finding that the district court had not abused its discretion. NML Capital v.

Argentina, 727 F.3d 230, 238 (2d Cir. 2013) (“NML II”). In particular, the Court

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held that it was not an abuse of discretion to require a “ratable” payment because

“a court empowered to afford equitable relief may also direct the timing of that

relief.” Id. at 241. The Supreme Court denied certiorari.

3. Appointment of the Special Master

To underscore its belief that the injunctions were an interim measure

and that ultimate resolution could come only through settlement, the district court

in June 2014 appointed Daniel A. Pollack, Esq. “as Special Master to conduct and

preside over settlement negotiations between and among the parties to this

litigation.” (A-593.) The district court instructed the parties “to give full

cooperation to the Special Master in all respects in the negotiations and to provide

the Special Master promptly with any and all information he may appropriately

request and any and all logistical assistance which he may request.” (A-594.)

For the next year and a half, Argentina refused to participate in

settlement discussions under the auspices of the Special Master. Instead, the prior

government urged that the Special Master be removed because of his alleged

“overt bias in favor of the vulture funds.”1 On multiple occasions, the district court

expressed its frustration with the Republic’s refusal to seek a negotiated resolution.

1 See Press Release, Ministry of Economy and Public Finance, available at http://www.embassyofargentina.us/en/for-the-benefit-of-vulture-funds-judge- griesa-continues-without-resolving-anything.html.

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(See, e.g., No. 08 Civ. 6978, Doc. 762 at 14 (“The court urges the Republic, once

again, to avail itself of the Special Master’s services.”); No. 08 Civ. 6978, Doc.

778 at 16:4-5 (“I hope the Republic at long last will be willing to negotiate.”).)

The court also repeatedly expressed its view that this dispute could be resolved

only through settlement. (See, e.g., A-578 (“it is through settlement that

obligations which need to be honored can be honored; therefore, it is highly

important that settlement negotiations go forward and bear fruition”); A-602

(“[T]he settlement is what has got to come somehow, some day.”).)

4. The 2015 “me too” injunctions

On October 30, 2015, the district court entered similar injunctions in

49 actions brought by the so-called “me too” plaintiffs (collectively with the pari

passu injunctions, the “Injunctions”). (SPA-9-34.) In issuing the 2015 injunctions,

the district court found that the balance of equities favored plaintiffs for largely the

same reasons the court had found in issuing the initial injunctions in 2012. (SPA-

28-31.) The court also cited “[t]he Republic’s reluctance to entertain meaningful

settlement discussions before the Special Master” and echoed this Court’s

statements that Argentina had been a “uniquely recalcitrant debtor.” (SPA-30.)

C. The Election of President Macri and the New Government’s Change of Course

On November 22, 2015, Argentina elected Mauricio Macri as its

President. President Macri campaigned on an agenda of economic reform, and a

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central part of his reform package is to resolve this dispute with the Republic’s creditors and restore the Republic’s access to global capital markets, which will directly benefit its people. (A-666-67.)

President Macri acted swiftly to implement his agenda. He called for the Argentine Congress to repeal the Lock Law and other legislative impediments to settlement when it reconvened on March 1. And he immediately dispatched senior officials to New York to engage in settlement discussions with plaintiffs under the supervision of the Special Master. (A-642; A-666-67.) On February 3,

2016, after weeks of intense negotiations, the Republic reached settlements in principle with two of the largest bondholders, providing for payment of over

$1 billion and the resolution of five of the Injunction cases. (See A-717-21.)

Two days later, the Republic published a proposal to settle with the holders of all defaulted debt (the “Proposal”). (A-645-49.) The Proposal, if accepted by all plaintiffs with Injunctions, would result in cash payments of approximately $6.5 billion. (A-668-69.) The Proposal contemplates two frameworks for settlement. The “Standard Offer,” which is open to all FAA bondholders, whether or not they have Injunctions, provides for payment equal to

100% of the principal amount of the bond plus up to 50% of that original principal as interest. (A-668.) The “Pari Passu Offer,” which is extended as an option to plaintiffs holding Injunctions, provides for payment equal to the full amount of a

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money judgment or an accrued claim value less a discount of 30%.2 (Id.) The

terms set forth in the Proposal remain open today and do not have an expiration

date.

The Special Master publicly described the Proposal as “an historic

breakthrough.” (A-642.) He recognized the “courage and flexibility” of President

Macri and Minister of the Economy Alfonso Prat-Gay “in stepping up to and

dealing with this long-festering problem which was not of their making,” noting

that the Republic’s “team worked around the clock to facilitate the negotiations.”

(Id.) U.S. Treasury Secretary Jacob Lew similarly expressed support for the

Proposal, commending “Argentina’s good faith efforts to resolve this long-

standing dispute” and echoing the Special Master’s “strong hope that all creditors

will be able to resolve their differences and reach Agreements in Principle with

Argentina.” (A-651.)

Following the issuance of the Proposal, the Republic continued to

negotiate with large and small bondholders, reaching additional settlements that

2 For those who reached settlements by February 19, 2016, this discount was reduced to 27.5%. (A-668.)

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ranged from less than $1 million to more than $100 million. (See A-1670, A-1957-

2015).3

D. The Republic’s Motion to Vacate the Injunctions

On February 11, 2016, the Republic moved in the district court to vacate the Injunctions. (A-450-59.) Because the me too injunctions were then on appeal, the Republic also moved in those cases for an indicative ruling pursuant to

Federal Rule of Civil Procedure 62.1. (A-6331-76.)

The Republic did not ask the district court to vacate the Injunctions immediately. Rather, the Republic requested that the Injunctions be vacated upon the occurrence of two important and clearly defined conditions precedent: (i) that the Republic repeal the Lock Law and related legislation that now prevents the

Republic from making settlement payments to plaintiffs; and (ii) that the Republic make payment in full to any parties who reached settlements by February 29, 2016,

3 After entering into agreements in principle with VR Global Partners, L.P. and Procella Holdings, L.P., the Republic determined that those agreements provide for payments with respect to certain claims that are time-barred. The Republic asked those parties, in the interest of fairness, to amend the agreements to remove payments related to time-barred claims, but they refused. On February 29, 2016, the Republic mistakenly included in the list of settlements provided to the district court that it had reached an agreement in principle with Red Pines LLC. In fact, while Red Pines signed a form of agreement, which it submitted to the Republic on February 28, 2016 (see A-2017-25), the Republic subsequently determined that the submitted agreement provided for payment with respect to claims that are time- barred. The Republic therefore did not countersign the agreement.

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the day before the March 1 submission of the matter to the Argentine Congress.

(A-452; A-6344.)

The Republic’s motion was supported by several plaintiffs, as well as a large group of Exchange Bondholders who had not been able to receive payment for nearly two years as a result of the Injunctions. Plaintiffs EM Limited and

Montreux, which between them had settled for over $1.1 billion, explained that their settlement was contingent on lifting the Injunctions and that vacatur was therefore essential to the Injunctions’ underlying purpose: promoting a global resolution to the dispute between the Republic and the holdout bondholders.

(A-675-76, 679-80, 689-90, 697.) The Exchange Bondholders explained that their previous “substantial financial sacrifices”—exchanging their FAA bonds for a fraction of face value—are “the very reason why the Republic’s considerably more lucrative settlement offer to the [holdout FAA bondholders] is even possible” and asked that their undisputed right to be paid not be further delayed by plaintiffs’

“disproportionate negotiating leverage.” (A-1712-14.)

E. The District Court’s Indicative Ruling

On February 19, 2016, the district court issued an Indicative Ruling in

the me too actions providing that, if this Court were to remand those cases, the

district court would grant the Republic’s motion to vacate. (SPA-35-69.) The

district court explained that “[t]he injunctions, once appropriate to address the

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Republic’s recalcitrance, can no longer be justified” and that “[s]ignificantly changed circumstances have rendered the injunctions inequitable and detrimental to the public interest.” (SPA-59.)

The district court’s conclusion that changed circumstances had shifted the equities was based upon three key factual findings. First, and “[m]ost importantly,” the district court found that “the Republic has shown a good-faith willingness to negotiate with the holdouts,” as evidenced by senior officials’ engagement in extensive and productive talks before the court-appointed Special

Master. (SPA-59-62.) That engagement, the district court found, marked a dramatic shift from the Republic’s earlier refusal to hold talks with its bondholders and its show of “open contempt for this court’s rulings.” (Id.) “Put simply,” the district court emphasized, “President Macri’s election changed everything.” (Id.)

Second, the district court found that “[t]he Republic’s self-imposed conditions—repealing legislative obstacles and paying settlements in full— represent a ‘dramatic shift in policy’ that justifies vacating the injunctions.”

(SPA-61-62 (alteration omitted) (quoting Horne v. Flores, 557 U.S. 433, 461

(2009).) The court explained that “[j]ust as the Republic’s conduct in 2012 and

2015 influenced the court’s decision to issue the [Injunctions], so too must the court consider the Republic’s present behavior.” (Id. at 62.) The result of these changes, the court concluded, was that “[t]he balance of equities has shifted.” (Id.)

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Third, the district court found the fact that “a number of plaintiffs have now agreed in principle to settle” to be “another changed circumstance [that] significantly alters the equities.” (SPA-63.) The court expressed concern that “[i]f the court refused to vacate the injunctions, it would unfairly deny those [settling] plaintiffs the opportunity to resolve their disputes amicably with the Republic.”

(Id.) In other words, the “court cannot countenance an equitable remedy that would allow plaintiffs to hold other plaintiffs hostage.” (SPA-68-69.)4

The district court also concluded that vacating the Injunctions “would serve the public interest by ceasing the collateral effects they have on third parties,” including the Exchange Bondholders and settling plaintiffs. (SPA-64-65.)

Because many plaintiffs had settled subject to the condition that all Injunctions be

vacated, leaving some injunctions in place would allow non-settling plaintiffs to

“scupper” the deals reached by settling plaintiffs. (SPA-65.)5 The court made

clear that it “never intended this result.” (Id.) In addition, the district court found that vacating the Injunctions and “[a]llowing the Republic to reenter the capital

4 Notably, the district court made that finding before the NML plaintiff group, who hold roughly 65% of the bonds at issue, reached their $4.6 billion settlement with the Republic.

5 Indeed, because the Injunctions, while issued across numerous nonconsolidated cases, all impose the same restrictions on the Republic that are not specific to any individual action, it only makes sense that the Injunctions be vacated across all cases.

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markets will undoubtedly help stimulate its economy and thus benefit its people.”

(SPA-66.) Finally, the court concluded that “vacating the injunctions serves the public interest by encouraging settlement to resolve disputes generally— particularly such protracted ones—as well as the concern for finality in this particular litigation.” (Id.)

F. Settlement with “Lead Plaintiffs”

Following the district court’s issuance of the Indicative Ruling, the

Republic continued to negotiate settlement agreements with bondholders, including large hedge funds, smaller funds, and individual bondholders. (A-652-70.)

On February 29, 2016, under the supervision of the Special Master,

the Republic reached an agreement in principle with the largest bondholders and

primary proponents of this longstanding litigation, including NML, Aurelius,

Olifant and Blue Angel, to resolve their claims for approximately $4.653 billion

(the “NML Agreement”). (No. 08 Civ. 6978 (TPG), Doc. 913.) Among other

provisions, the settlement gives the self-styled “lead plaintiffs” the option to

terminate the agreement if the Republic does not make payment by April 14.

(A-2371.) The NML Agreement represents “about 65% of the claims at issue in

this litigation.” (Aurelius Br. at 1.) That agreement followed weeks of intense

negotiations, including extensive communication between the Special Master and

the Chairman of NML, Paul Singer. (A-1920-21.) In a public statement, the

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Special Master described the settlement as a “giant step forward in this long running litigation” and noted that “fortunately, both sides to this epic dispute finally saw the need to compromise, and have done so.” (Id.) The Special Master described the Republic’s “course correction” as “nothing short of heroic.”

(A-1921.)

The next day, March 1, 2016, President Macri addressed the

Argentine Congress on the first day of its new session. He asked it to repeal the legislative obstacles to settlement, and announced that “now it depends on this

Congress to end the 15-year conflict . . . I’m confident that responsibility will win over rhetoric.”6

By the time of President Macri’s address, the Republic had reached settlements with plaintiffs representing the vast majority of claims in these cases for consideration of approximately $6.2 billion. (A-1939.) Those settlements

“resolv[e] over 85% of the claims of those with ‘pari passu’ and ‘me-too’

Injunctions.” (A-1921; see also A-2327.)

6 See Recap: The Key Points of President Macri’s Speech to Congress, The Argentina Independent, Mar. 2, 2016, http://www.argentinaindependent.com/currentaffairs/analysis/the-key-points-of- president-macris-speech-to-congress.

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G. The District Court’s Order Granting the Republic’s Motion

After the district court issued the Indicative Ruling, the Republic moved this Court to remand jurisdiction over the me too actions to the district court. The Republic also moved to voluntarily dismiss all pending appeals related to the Injunctions. Counsel for the Republic explained that the new government was “abandoning the substantive arguments against the imposition of the original injunctions” (A-1816), an extraordinary step given that the Republic had previously fought the Injunctions all the way to the Supreme Court.

This Court remanded to the district court, which held a hearing at which 15 attorneys presented argument. On March 2, 2016, the district court entered an order granting the Republic’s motion to vacate the Injunctions subject to the conditions precedent. (SPA-70-84.) In the order, the district court incorporated its findings from the Indicative Ruling, and noted three subsequent developments that further supported vacatur. First, the Republic had reached settlement agreements “with plaintiffs representing the vast majority of claims in these actions . . . . at least $6.2 billion, potentially resolving over 85% of claims held by plaintiffs with injunctions.” (SPA-83.) Second, the Republic had

“abandoned all former challenges to the injunctions by voluntarily dismissing with prejudice the two appeals pursued by the Republic’s prior administration, thus showing a completely changed attitude.” (Id.) Third, President Macri had

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addressed Congress on its first day in session “to urge approval of settlements in this litigation—an important step toward fulfilling a condition of this order.”

(SPA-83-84.)

The court noted that “vacating the injunctions in no way impedes the settlement negotiations now taking place” and that it “expects the Republic to continue to negotiate with the remaining non-settling plaintiffs.” (SPA-82.) But the court reiterated that “injunctive relief cannot be allowed to be used as a tool for leverage in negotiations,” and stressed that “[t]here is a pressing need for certainty and finality” given the ongoing debate in the Argentine legislature and the April 14 payment date in the NML Agreement. (SPA-82-83.)

H. Events Following the District Court’s Order

Following President Macri’s address to Congress, the administration introduced a bill to remove the legislative obstacles to settlement and authorize the government to resolve this dispute. The bill repeals the Lock Law and other legislation that would interfere with payment of the settlements. In addition, subject to this Court affirming the district court’s conditional vacatur of the

Injunctions, the bill (a) ratifies the agreements in principle executed to date;

(b) authorizes the government to continue to negotiate settlements with any remaining bondholders without prior approval of Congress; and (c) authorizes a

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capital raise of up to $12.5 billion.7 On March 15, 2016, the bill passed the House

by a vote of 165 to 86.8 The bill is expected to reach the Senate floor on March 30.

On March 16, Minister Prat-Gay appeared in the Senate, where he testified for over

five hours in support of the bill.9

Meanwhile, the Republic has continued to negotiate with plaintiffs

whose claims remain unresolved. On March 4, ten additional bondholders reached

settlements worth approximately $6.7 million.10 On March 9, seven individual and

institutional bondholders reached settlements worth over $190 million.11 On

March 18, 115 individual bondholders, holding $155 million of defaulted bonds,

7 The bill also reinstates Bank of New York Mellon as the Republic’s fiduciary agent.

8 Laura Serra, Con aporte opositor, el Gobierno tuvo un contundente éxito en Diputados, La Nación (Mar. 17, 2016), http://www.lanacion.com.ar/1880461-con- aporte-opositor-el-gobierno-tuvo-un-contundente-exito-en-diputados.

9 Gustavo Ybarra, El Gobierno se acerca a la mayoría en el Senado por los holdouts, La Nación (Mar. 17, 2016), http://www.lanacion.com.ar/1880457-el- gobierno-se-acerca-a-la-mayoria-en-el-senado-por-los-holdouts.

10 Statement of Special Master, March 4, 2016, http://www.prnewswire.com/news-releases/statement-of-daniel-a-pollack-court- appointed-special-master-march-4-2016-300231251.html.

11 Statement of Special Master, March 9, 2016, http://www.prnewswire.com/news-releases/statement-of-daniel-a-pollack-court- appointed-special-master-march-9-2016-300233604.html.

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reached settlements.12 A number of those bondholders then moved to withdraw their appeals.13

SUMMARY OF ARGUMENT I. By any measure, the district court’s entry of interim injunctive

relief against a foreign sovereign in a contract matter was extraordinary. But this

Court affirmed that relief based on the district court’s broad discretion to balance the equities, including the public interest, in crafting a remedy for what the courts perceived to be the Republic’s unprecedented intransigence as embodied in a refusal to negotiate and passage of the Lock Law. Now, however, in light of dramatic and demonstrable changes in the Republic’s approach to this dispute, the same district court has reexamined the equities and concluded that they tip decisively in favor of lifting the Injunctions.

The order below, conditionally vacating the district court’s own

Injunctions, falls well within the district court’s broad discretion and should be affirmed. Simply put, the Injunctions are no longer needed and, indeed, have become affirmatively counterproductive. The Republic has replaced its longstanding recalcitrance with active efforts to resolve this dispute. Those efforts

12 See Statement of Special Master, March 18, 2016, http://www.prnewswire.com/news-releases/argentina-settles-with-115-individual- bondholders-holding-155-million-in-defaulted-bonds-300238220.html.

13 See Case Nos. 16-662-cv, Doc. 75; 16-670-cv, Doc. 77; 16-675-cv, Doc. 91.

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have produced tangible results, as the Republic has taken steps toward repealing the legislation that prompted the Injunctions and also has reached agreements in principle with the holders of more than 85% of the outstanding bonds. Under these circumstances, leaving the Injunctions in place would pose a serious obstacle to

settlement, both because the final holdouts could exploit the Injunctions as

leverage against the Republic at the expense of the settling plaintiffs, and because

the Injunctions prevent the Republic from raising in the global markets the capital

needed to fund those settlements. Moreover, the district court correctly concluded

that lifting the Injunctions would advance the public interest by allowing the

Republic to resume payments to the Exchange Bondholders, strengthening the

Argentine economy, and promoting the resolution of sovereign debt disputes more

broadly.

Appellants do not seriously dispute the district court’s factual

findings, but instead contend that only “exceptional circumstances” could justify

vacatur of the Injunctions. That argument is particularly unpersuasive coming

from litigants who have extolled the district court’s broad equitable discretion for

years. It is also an inaccurate statement of the governing law. Because the

Injunctions were never intended to operate as a final resolution of the parties’

dispute, the district court has the same discretion to vacate the Injunctions as it did

to enter them in the first place. The court correctly found both that modifying the

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Injunctions was equitable and that leaving them in place would be inequitable.

That was not remotely an abuse of discretion.

II. Certain plaintiffs also contend—for the first time on appeal and without any support in this Court’s case law—that the district court’s decision to lift the Injunctions subject to conditions precedent constituted procedural error.

That argument is both forfeited and wrong on the merits. Indeed, “lead plaintiffs’” position is puzzling given that the conditions precedent—repeal of the Lock Law and full payment of settlement agreements entered on or before February 29—are designed to protect settling parties like them. The sensible conditions adopted by the district court here are comfortably within its ample discretion to craft equitable relief. Nor is there anything uncommon or improper about tying the vacatur of an injunction to satisfaction of conditions precedent, even if the injunction is dissolved automatically once those conditions are met. That is especially true here, where nothing will prevent any plaintiff from returning to the district court to seek the re-imposition of equitable relief in the unlikely event that future circumstances warrant it.

III. Some appellants who have not yet reached agreements with the

Republic contend that the pari passu clause itself requires maintenance of the

Injunctions. That position is based on a misinterpretation of both the clause and the Injunctions. As this Court has explained, the Injunctions provide a remedy for

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the Republic’s longstanding refusal to engage with bondholders, but they do not purport to enforce the pari passu clause directly. And nothing in the clause creates an affirmative entitlement to injunctive relief (indeed, equitable relief in any contract case is the exception, not the rule). Now that the Republic’s approach has changed starkly, it was well within the district court’s discretion to conclude that the Injunctions have effectively achieved their purposes and may be dissolved upon satisfaction of the conditions precedent.

IV. Finally, “lead plaintiffs” devote a considerable portion of their brief to asking this Court to address a hypothetical question about the operation of the district court’s order in response to potential future developments. The district court prudently exercised its discretion in declining to issue that proposed

“clarification,” and the question is not properly before this Court. Beyond that, however, the “clarification” they seek makes little sense. What they contend, in essence, is that if they back out of their settlement by exercising a unilateral contractual termination right, Argentina would still have to pay them $4.6 billion to satisfy the payment condition in the district court’s order, because the terminated and void settlement had, once upon a time, been entered into by the February 29 deadline. That argument is meritless and, if considered at all, should be rejected.

* * *

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This bitter dispute has gone on long enough, and the appropriate time for relief is now. Affirmance by this Court is necessary to the legislative reforms required from the Argentine Congress and to the capital markets financing required to fund these settlements. Without affirmance, there can be no settlements, and the great progress of the past few months will be wasted. In short, the district court’s orders lie well within its discretion and should be expeditiously affirmed.

ARGUMENT

I. THE DISTRICT COURT ACTED WELL WITHIN ITS BROAD DISCRETION IN ORDERING CONDITIONAL VACATUR OF THE INJUNCTIONS BASED ON CHANGED CIRCUMSTANCES THAT HAD SHIFTED THE BALANCE OF EQUITIES.

The legal question in this appeal is straightforward: whether the district court abused its broad discretion in conditionally vacating the Injunctions that it had previously entered as a remedy for what it perceived as Argentina’s extraordinary intransigence. The answer is clearly that the district court acted well within its broad discretion; its decision to vacate its own Injunctions was based on factual findings of changed circumstances that are not subject to serious dispute and a balancing of equities that the court was uniquely well-suited to undertake.

Tellingly, plaintiffs’ arguments do not center on whether the

Injunctions should be vacated, but rather when, and under what circumstances.

Some plaintiffs contend that the district court should have waited until more plaintiffs had settled, or that it should have deferred ruling for 30 days, or that the

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Republic first should have settled with them (on terms other than those deemed acceptable to many other bondholders large and small). But it was up to the district court to weigh the equities of each of those suggestions, and it was well within the district court’s discretion to conclude that the equitable approach was to set up a carefully structured path toward final resolution of this dispute. The plaintiffs do not come close to showing that the court’s reasoned exercise of its equitable discretion should be disturbed.

A. The Decision to Vacate the Injunctions, Like the Decision to Enter Them, Is Committed to the District Court’s Sound Discretion.

Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v.

NRDC, 555 U.S. 7, 22 (2008). That is particularly true when the party to be enjoined is a public official or sovereign government. See Horne, 557 U.S. at 448-50; 11A Charles Alan Wright & Arthur R. Miller, Federal Practice and

Procedure § 2942 (3d ed. 2015). Moreover, equitable relief is traditionally unavailable in a contract action “to compel the payment of money past due under a contract, or specific performance of a past due monetary obligation.” Great-West

Life & Annuity Ins. v. Knudson, 534 U.S. 204, 210-11 (2002).

Nevertheless, interim injunctive relief may be ordered in a contract action against a foreign sovereign “where no adequate monetary remedy is available and that relief is favored by the balance of equities, which may include 27 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page41 Page of 4275 of 76

the public interest.” NML I, 699 F.3d at 261. Once a district court has concluded

that injunctive relief is warranted, the court has “considerable latitude in fashioning

the relief.” Id. Among other things, the court may “direct the timing of that relief.” NML II, 727 F.3d at 241.

Consistent with its broad discretion over equitable remedies, a district court that enters an injunction “possesses inherent power” to modify or vacate that injunction. United States v. LoRusso, 695 F.2d 45, 53 (2d Cir. 1982). The district

court’s authority to modify an injunction “is a necessary concomitant of the

prospective operation of equitable relief and has its roots in the historic power of

chancery to modify or vacate its decrees as events may shape the need.” Wright &

Miller §2961; see Sys. Fed’n No. 91, Ry. Emp. Dep’t, AFL-CIO v. Wright, 364

U.S. 642, 647 (1961). “[A] district court always retains the power to adjust the

terms of an injunction as unforeseen problems or complexities . . . present

themselves.” NML II, 727 F.3d at 246.

District court authority to modify injunctions is embodied in several

provisions of the Federal Rules of Civil Procedure. Rule 54(b) provides that “any

order . . . however designated, that adjudicates fewer than all the claims or the

rights and liabilities of fewer than all the parties . . . may be revised at any time

before the entry of a judgment adjudicating all the claims and all the parties’ rights

and liabilities.” Fed. R. Civ. P. 54(b); see Grace v. Rosenstock, 228 F.3d 40, 51

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(2d Cir. 2000). And Rules 60(b)(5) and 60(b)(6) provide that a court may grant relief from a final order, including an injunction, if “applying it prospectively is no longer equitable” or for “any other reason that justifies relief.” Fed. R. Civ.

P. 60(b)(5), (b)(6); see Sierra Club v. U.S. Army Corps of Eng’rs, 732 F.2d 253,

256 (2d Cir. 1984).

The Injunctions at issue here are interim injunctions subject to revision under Rule 54(b) because they “adjudicate[] fewer than all the claims or the rights and liabilities of fewer than all the parties.” In particular, they are orders

that grant carefully targeted relief for the Republic’s alleged breach of the pari

passu clause and prior extraordinary conduct, but they do not purport to resolve

plaintiffs’ claims for damages for the Republic’s failure to make payments on their

bonds. Nor were the Injunctions ever intended to provide a full and final

resolution of the parties’ entire legal dispute. (See SPA-117-18 (“For years, the

court has repeatedly recognized that the only viable way to end this litigation is

through settlement—surely for less than the full claim, as the notion of ‘settlement’

implies.”).)

Plaintiffs themselves recognized at the time the Injunctions were

issued that they were never intended to provide final relief. See, e.g., Case No.

08 Civ. 6978, Doc. 369 at 11 n.4 (“NML is not seeking an injunction aimed at

collecting a judgment, but is requesting specific performance of the equal

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treatment promise that Argentina made”). Indeed, plaintiffs previously argued that this Court had jurisdiction to review the Injunctions as interlocutory orders, rather than final decisions, noting that “claims for principal and interest on the FAA bonds remain outstanding.” Case No. 12-105-cv(L), Doc. 308 at 6. Moreover, the

Injunctions themselves explicitly provide that the court may “modify and amend

[them] as justice requires to achieve [their] equitable purposes and to account for

changing circumstances.” (SPA-7; see also SPA-59.) Thus, to justify modifying

the Injunctions, the district court “need only have applied the same discretion as it

had originally.” Sierra Club, 732 F.2d at 257.

Even if the Injunctions were considered final, the standard for

modification is not nearly as rigid as plaintiffs suggest. See NML Br. at 32

(contending that the Republic must demonstrate “exceptional circumstances”). No

less an authority than Judge Friendly has decried an approach to reviewing

modification of injunctions characterized by excessive “rigidity” and requiring

“drastic changes in conditions.” King-Seeley Thermos Co. v. Aladdin Indus., 418

F.2d 31, 34 (2d Cir. 1969). And plaintiffs’ lead authority, Sierra Club, clearly

states that “in the case of a final or permanent injunction, the inquiry on appeal is

whether there has been such a change in the circumstances as to make

modification of the decree equitable.” 732 F.3d at 257 (emphasis added).

Moreover, this Court has made clear that “modification of the decree” can be

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considered “equitable” (id.) even if the “purpose of the decree” is not fully achieved, United States v. Eastman Kodak Co., 63 F.3d 95, 102 (2d Cir. 1995).

Accordingly, little turns on whether this Court considers the

Injunctions interlocutory measures subject to revision under Rule 54 or final orders subject to modification under Rule 60 because “applying [them] prospectively is no longer equitable.” A district court has “wide discretion” to modify a permanent injunction under Rule 60. Sys. Fed.’n No. 91, 364 U.S. at 647-48; see N.Y. State

Ass’n for Retarded Children v. Carey, 706 F.2d 956, 967 (2d Cir. 1983) (Friendly,

J.) (“[t]he power of a court of equity to modify a decree of injunctive relief [under

Rule 60(b)(5)] is long-established, broad, and flexible”). In exercising that discretion, a district court may vacate or modify an injunction when there has been

“a significant change either in factual conditions or in law.” Rufo v. Inmates of

Suffolk Cnty. Jail, 502 U.S. 367, 384 (1992); see also Sierra Club, 732 F.2d at 256.

Vacatur or modification of an injunction may also be warranted “when enforcement of the decree without modification would be detrimental to the public interest.” Rufo, 502 U.S. at 384.

A “flexible approach” to modifying injunctive relief is especially appropriate when an injunction encumbers public officials of a sovereign government. Horne, 557 U.S. at 450. Courts must ensure that “responsibility for discharging the State’s obligations is returned promptly to the State and its

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officials” and must avoid “improperly depriv[ing] future officials of their designated legislative and executive powers.” Id. Indeed, modifying an equitable remedy in response to changed circumstances is not merely optional; “a court abuses its discretion when it refuses to modify an injunction or consent decree in light of such changes.” Id. at 447; accord Salazar v. Buono, 559 U.S. 700, 714-15

(2010) (plurality opinion) (courts “must never ignore significant changes in the law or circumstances underlying an injunction lest the decree be turned into an instrument of wrong”).

B. The District Court’s Factual Finding of Changed Circumstances Was Firmly Supported by the Record and Not Clearly Erroneous.

This Court reviews a district court’s decision to enter, modify or

vacate an injunction for abuse of discretion, and reviews any factual findings for

clear error. See In re Terrorist Attacks on Sept. 11, 2001, 741 F.3d 353, 357 (2d

Cir. 2013); accord NML Br. at 25. The ultimate showing of an abuse of discretion

can be made only when “(1) [the district court’s] decision rests on an error of law

or a clearly erroneous factual finding; or (2) cannot be found within the range of

permissible decisions.” Id.

The district court’s conclusion that changed circumstances had shifted

the equities that once supported the Injunctions—and that the Injunctions were no

longer equitable and should be conditionally vacated—was based on several

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factual findings that were firmly supported by the record. None of those findings even comes close to constituting clear error.

1. The district court correctly found that Argentina has shown a good-faith willingness to negotiate with holdouts.

The district court’s first and “[m]ost importan[t]” factual finding of changed circumstances was that “the Republic has shown a good-faith willingness to negotiate with the holdouts.” (SPA-59.) There is no serious dispute that this finding was correct. All parties agree that, at the time the Injunctions were issued, the Republic’s official policy was that it would not take any steps to resolve its dispute with plaintiffs. See, e.g., NML Br. at 10.

But “President Macri’s election changed everything.” (SPA-59.)

Shortly after taking office, President Macri dispatched senior finance officials to

New York, who engaged in around-the-clock efforts to reach settlements with the

Republic’s bondholders. See NML Br. at 11 (“To his credit, days after his

election, President Macri announced his intention to negotiate a resolution to these

long-pending actions.”). And, in addition to its many one-on-one negotiations

with bondholders—no small feat given their dispersion around the world—the

Republic published a global settlement proposal that can be accepted by anyone

with a valid claim. Indeed, a number of plaintiffs have resolved their actions in

this way. (See A-1957-2025.)

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A few plaintiffs complain that Argentine officials have not met with them individually. See, e.g., Andrarex Br. at 22. But it was hardly necessary for the Republic to meet with every single plaintiff one-on-one to support a finding of significant changed circumstances. In all events, the district court found as a factual matter (with the benefit of reports by the Special Master, as well as his public statements) that “claims made by certain plaintiffs that they have had ‘no opportunity’ to negotiate are exaggerated.” (SPA-82.) As explained by the

Undersecretary of Finance in sworn declarations, the Republic disputes assertions made by some individual bondholders that they lacked an opportunity to negotiate—senior Argentine government officials tried to initiate conversations with counsel for those parties multiple times without receiving a response.

(A-1940.)14

14 Undersecretary of Finance Santiago Bausili further stated, “on January 13, 2016, Luis Caputo, Argentina’s Secretary of Finance, and Eugenio Bruno, counsel to the Argentine Ministry of Treasury and Public Finance, met at the office of the Special Master with Michael Spencer of Milberg LLP . . . [who is] counsel to numerous plaintiffs . . . . On February 4, 2016, Mr. Spencer again met with Secretary Caputo at the office of the Special Master. That meeting was also attended by Mario Quintana, Vice Chief of the Argentine Cabinet, the Special Master, and principals for certain other plaintiffs. I personally exchanged emails with Mr. Spencer on February 28, 2016, and we are scheduled to speak today, February 29, 2016.” (A-1940.) In addition, on March 18, 2016, Mr. Spencer withdrew two appeals (Nos. 16-675-cv and 16-662-cv), because, seemingly unbeknownst to him, his clients had reached agreements in principle to settle. See No. 16-628-cv(L), Docs. 385, 388. Those plaintiffs clearly were not denied a meaningful opportunity to engage with the Republic regarding settlement.

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The public settlement proposal issued by the Republic also applies to all plaintiffs, and the district court expressly found that this proposal “remains open.” (SPA-82.) By any fair measure, the district court’s most important factual finding—of Argentina’s good-faith willingness to negotiate—was correct.

2. The district court correctly found that the Republic had taken meaningful steps toward repealing legislative obstacles to settlement.

The district court’s second finding of changed circumstances was that the Republic had taken meaningful steps toward repealing legislative obstacles to

settlement. Again, the change is both dramatic and undeniable. As this Court

previously observed in affirming the Injunctions, “Argentina’s executive

declarations and legislative enactments” prevented even the possibility of

settlement with plaintiffs. NML I, 699 F.3d at 260. But the Republic’s new

administration not only committed to seeking repeal of the legislative obstacles to

settlement, but also affirmatively asked the district court to make repeal a condition

precedent of vacating the Injunctions. (See SPA-61-62 (“The Republic’s self-

imposed conditions—repealing legislative obstacles and paying settlements in

full—represent a ‘dramatic shift in policy’ that justifies vacating the injunctions.”)

(alterations omitted).) And President Macri has delivered on his promise to seek

legislative change, personally urging the Argentine Congress on its first day in

session after his election to repeal the Lock Law and related measures. In response

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to that message, the Congress acted in swift and dramatic fashion by passing the required bill in the lower house on March 15. The bill is now scheduled to be taken to the Senate next week.

Some plaintiffs question whether the Argentine Congress will actually enact the proposed legislation. See Arag-A Br. at 45. Of course, there is no way to

answer that question with certainty. But President Macri’s strong advocacy of the

repeal bill, combined with its passage by one house of the Argentine legislature,

surely suffice to support the district court’s finding of changed circumstances. In

all events, as the district court explained, the conditions precedent in the vacatur

order ensure that the Injunctions will not be lifted unless and until the Argentine

legislature completes the repeal, so any objections based on uncertainty about the

repeal bill’s fate are beside the point.

3. The district court correctly found that the Republic has entered into settlement agreements in principle with the vast majority of plaintiffs.

The district court’s third factual finding of changed circumstances was

that the Republic has entered into settlement agreements in principle with the vast

majority of plaintiffs. (SPA-83-84.) Like the district court’s other findings, this

change in circumstances is both beyond dispute and highly significant. At the time

the Injunctions were issued, the Republic refused to discuss settlement or pay

anything to holders of defaulted FAA bonds. But it is now undisputed that the

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Republic has reached voluntary resolutions of more than 85% of outstanding claims, which will result in more than $6.2 billion in payments. That progress continues to this date, as just last week 115 individual bondholders, holding

$155 million of defaulted bonds, reached settlements with the Republic and withdrew their appeals.15

Despite those dramatic developments, some plaintiffs dispute the district court’s finding because they have not yet been able to reach a settlement with the Republic. See, e.g., Individual Bondholder Br. at 25-27. But that

assertion falls well short of suggesting clear error. The district court did not base

its Injunctions on the Republic’s failure to settle with all of the plaintiffs; it based

its Injunctions on the Republic’s refusal to engage in meaningful settlement

discussions with any of the plaintiffs. (See SPA-50.) And it would make no sense

as a matter of law or logic to establish a 100% settlement rate as the threshold for

finding changed circumstances. To do so would not only be practically

unworkable but would also turn the Injunctions into “a tool for leverage in

negotiations” that obstructs rather than promotes settlement. (SPA-83.)

15 See Statement of Special Master, March 18, 2016, available at http://www.prnewswire.com/news-releases/argentina-settles-with-115-individual- bondholders-holding-155-million-in-defaulted-bonds-300238220.html.

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Some of the remaining bondholders have tried to seek settlement with respect to bonds that are outside the statute of limitations period and thus not the basis for valid claims. But Argentina need not ignore what it believes are legal bars to certain claims in order to show significantly changed circumstances. In all events, there is no need for this Court to wade into disputes about the merits of the discrete claims of individual bondholders, particularly disputes that have not been brought before the district court and are not before this Court on appeal. Whatever disagreements might exist with respect to the increasingly small fraction of bonds not yet subject to settlement, the fact remains that the Republic has reached settlements in principle to resolve the vast majority of the outstanding claims.

C. The District Court Did Not Abuse Its Broad Discretion in Concluding That the Balance of Equities (Including the Public Interest) Had Shifted in Favor of Conditionally Vacating the Injunctions.

Based on its findings of changed circumstances, the district court concluded that the balance of equities, including the public interest, had shifted in favor of conditionally lifting the Injunctions. Although the Injunctions had been entered to promote a resolution of this long-running dispute and advance the public interest, the court found that leaving the Injunctions in place at this point would preclude resolution and harm the public interest. That conclusion was correct and does not come close to constituting an abuse of discretion.

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1. The district court did not abuse its discretion in concluding that changed circumstances had rendered the Injunctions inequitable.

The changes in circumstances found by the district court—the Macri

Administration’s diligent efforts to resolve this litigation, the Republic’s meaningful steps toward repealing legislative obstacles to settlement, and the settlement of more than 85% of the claims through agreements in principle— thoroughly undermine the equitable premises that once supported the Injunctions.

The Injunctions were entered at a time when the Republic was steadfastly refusing to resolve this dispute, was making payments on other indebtedness, and was making clear that it would refuse to pay these plaintiffs anything. Under those circumstances, the Injunctions operated to apply pressure to the Republic—which this Court dubbed a “uniquely recalcitrant debtor.” NML II, 727 F.3d at 247; see also NML Br. at 18, Case No. 08 Civ. 6978, Doc. 361 (Jan. 6, 2012) (“Hemmed in, in this way . . . the Court might persuade Argentina that it must deal fairly with all its creditors . . . pav[ing] the way to a global resolution of this protracted dispute.”).

That is no longer today’s world. The Republic has now promised to take (and has taken) meaningful action to resolve its dispute with the plaintiffs in good faith. The Injunctions are thus no longer needed to bring Argentina to the bargaining table. Instead, they operate as an impediment to the resolution of this

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dispute by allowing non-settling parties to obstruct settling parties and preventing the Republic from raising needed funds. The equities, in short, have flipped. To leave the Injunctions in place under these circumstances would convert them from a permissible equitable remedy into an impermissible and inequitable “instrument of wrong,” (SPA-63), in at least two critical ways.

First, leaving the Injunctions in place would impede resolution of this dispute by preserving a legal obstacle to most of the settlement agreements that that Republic has reached. Plaintiffs concede this. (See, e.g., A-1645 (“NML appreciates that any such resolution must include the dissolution of the pari passu injunctions entered in NML’s actions.”).) Indeed, as noted above, most of the agreements recently entered by the Republic and FAA bondholders expressly require as a precondition to settlement that the Injunctions will be vacated. For example, the district court pointed to the Republic’s nearly $1 billion settlement with EM Limited, finding that “[i]f another plaintiff, armed with an injunction in a different action, could scupper that deal, EM—as a third party to that action— would suffer.” (SPA-65.) The court explained that it “never intended this result,” and that the Injunctions should thus be lifted “in all cases.” (Id.)

If the district court acted within its discretion in determining that the

Injunctions were necessary to promote resolution of this dispute—as this Court twice affirmed—surely the same district court was within its discretion to conclude

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that vacating the Injunctions was necessary to avoid undermining its own intended result. As plaintiffs themselves explained to this Court in 2012, “[i]t is difficult to conceive of any case in which deference to the discretion of the district court is more appropriate than it is here,” where “[t]he same district judge, with nearly three decades of experience on the federal bench, presided over dozens of similar lawsuits against Argentina for more than one of those decades.” Case No.

12-105-cv(L), Doc. 308 at 69-71. In considering the equitable solution under the

present circumstances, the district court brought to bear its “indepth familiarity

with the parties, counsel, and facts,” having “borne witness to virtually every

development in the evolving disputes arising from Argentina’s 2001 default” and

having “extensively examined the arguments and written more than 100 opinions

and orders [in this dispute],” many of which favored plaintiffs. Id. at 71. In short,

the same considerations plaintiffs urged on this Court in 2012 in support of

deference to the district court’s discretion apply with equal force here.

Second, the district court correctly found that leaving the Injunctions in place would hinder resolution of this dispute by preventing the Republic from accessing global capital markets to raise the money necessary to fund the settlements. The district court concluded that “[a]llowing the Republic to reenter the capital markets,” as part of a framework for resolution, would provide a direct and immediate benefit to the Argentine economy and the Argentine people, and

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that restoring that access weighed in favor of vacating. (SPA-66.) Similarly, the court found that the Republic’s “need for time to raise the capital required to pay plaintiffs with whom it has reached agreement” was a factor giving rise to “a pressing need for certainty and finality.” (SPA-82-83.) It was comfortably within the district court’s discretion to determine that the Republic’s need to access international capital markets shifted the balance in favor of vacatur.

It is no answer to say, as some plaintiffs do, that the Republic could

pay settlements with foreign reserves held by the Argentine Central Bank. See

NML Br. at 41-44. The Central Bank’s international monetary reserves are used

for a variety of purposes, most importantly to support the exchange rate of the

Argentine peso. Moreover, this Court has previously held that the Central Bank is

legally separate and not liable for the debts of the Republic. See EM Ltd. v. Banco

Cent. de la República Argentina, 800 F.3d 78, 96 (2d Cir. 2015) (cert. pending)

(ordering dismissal with prejudice of plaintiffs’ alter ego complaint against the

Central Bank). And the Republic’s success in raising relatively small amounts of money in its domestic capital markets is hardly proof that it could tap those markets again to raise the funds needed to finance its significant payments to the settling parties.

Plaintiffs’ suggestion that they know more about Argentina’s fiscal needs than Argentina does is contradicted not only by common sense but by the

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agreed-upon terms of their settlement agreement. Section 7 of the NML

Agreement provides: “The parties contemplate that to fund the payments to the

Plaintiffs . . . the Republic of Argentina . . . will undertake one or more capital- raises, likely in the form of a bond offering.” (A-2368 (emphasis added).) Indeed,

the agreement then sets forth detailed provisions concerning that expected capital

raise, including that “the first moneys raised . . . through capital-raises” will be

paid to lead plaintiffs, and that lead plaintiffs “shall not attach, or attempt to attach,

or enjoin . . . a capital-raise that is made by the Republic.” (A-2368-69.)

It also ignores the political realities in the Republic. Settlement of this

litigation, which requires the support of a Congress in which President Macri’s

party does not hold a majority, is key to a broader package of economic reforms

that depend upon Argentina’s ability to restore its credit in the global economy.

That political reality is embodied in the bill that has passed the lower house of

Congress, which conditions Congressional approval of the agreements in principle,

continuing negotiations, and a $12.5 billion capital raise on the district court’s

order being affirmed in this appeal. Based on its extensive experience and

understanding of the case, the district court crafted an order to navigate those

complexities. This is the antithesis of an abuse of discretion.

Plaintiffs’ primary response is that the Injunctions should not be lifted

until the Republic actually consummates the settlements in principle and thus

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conclusively resolves the claims. See NML Br. at 34 (“None of [the circumstances] has changed, and none of it will change until Argentina fulfills its

obligations under the AIP and the agreements that others have entered into by

making the agreed-to settlement payments.”). NML argues that “[d]issolution of

all plaintiffs’ Injunctions,” including those that have not settled, “could not

possibly be appropriate in the absence of Argentina actually resolving the vast

majority of claims pending before the district court, adhering to its commitments,

and demonstrating a good-faith effort to resolve the remaining claims, including

through robust negotiations.” NML Br. at 47.

That is not the required showing, but even if it were (and any

conclusion to the contrary were an abuse of discretion), the Republic has reached

agreements to “resolv[e] the vast majority of claims pending before the district

court,” it has “demonstrat[ed] a good-faith effort to resolve the remaining claims,”

and it has imposed on itself the requirement that it “adher[e] to its commitments”

by making actual payment to plaintiffs of more than $6.2 billion before the

Injunctions can be vacated.

Moreover, plaintiffs’ argument ignores the critical fact that the

settlement agreements cannot be “consummated” without certainty that the

Injunctions will be vacated upon payment. NML Br. at 24, 29. Otherwise, as

explained above, the Republic will be unable to access the international capital

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markets to fund the required settlement payments. There was certainly no abuse of discretion in declining to adopt such a circular and self-defeating approach.16

Plaintiffs’ proposal also is unworkable given the practical realities of the other condition precedent to vacatur—namely, certain legislative actions by the

Argentine Congress. As noted above (at 20-21), the bill that was passed by the lower house on March 15, 2016, (a) repeals the Lock Law and the Sovereign

Payment Law; and (b) conditions the lifting of other impediments to settlement upon the affirmance of the district court’s order to vacate the Injunctions. In other words, absent certainty that the payment of settlements will also relieve Argentina from the crippling effects of the Injunctions, the Congress—where President

Macri’s party does not hold a majority in either house—is not willing to authorize those payments.

In exercising its discretion, the district court showed a deft hand in navigating the situation such that all of these interrelated requirements—

Congressional action, raising of capital, payment of settlements and lifting of the

Injunctions—fit together to achieve a global resolution. Plaintiffs’ proposed alternative recognizes none of these practical realities.

16 Assertions that the Republic has not yet purged the district court’s contempt orders (NML Br. at 9) are similarly without merit because, for the Injunctions to be lifted, the Republic also must repeal the Sovereign Payment Law, which would resolve the contempt order.

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2. The district court did not abuse its discretion in concluding that the public interest favors vacating the Injunctions.

The public interest is a critical component of the balance of equities that a district court may consider in exercising its equitable discretion. NML I, 699

F.3d at 261. Here, the district court concluded that conditional vacatur of the

Injunctions would serve the public interest for several reasons, none of which was an abuse of discretion or even seriously contested.

First, the court held that “[v]acating the injunctions would serve the public interest by ceasing the collateral effects they have on third parties,” most notably including the Exchange Bondholders, but also including certain FAA bondholders and the Argentine people. (SPA-64.) The court found that, after

“nearly two years” without payment to Exchange Bondholders, “it is in the public interest for the Republic to resume paying its restructured debt.” (SPA-65.)

Second, the court found that vacating the Injunctions and “[a]llowing the Republic to reenter the capital markets will undoubtedly help stimulate its economy and thus benefit its people.” (SPA-66.) In considering the public interest, the court correctly recognized that it had “discretion to consider ‘the health of the nation’ when considering appropriate remedies.” (Id.)

Third, citing the “strong judicial policy in favor of settlements,” the court held that “vacating the injunctions serves the public interest by encouraging

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settlement to resolve disputes generally—particularly such protracted ones—as well as the concern for finality in this particular litigation.” (Id.)

Plaintiffs argue that “none of the harms identified . . . warrants vacatur of the Injunctions” because “many of the ‘harms’ identified by the district court were considered by this Court and rejected as a basis for denying equitable relief.”

NML Br. at 41. But the fact that the district court found the public interest to be served by injunctive relief in 2012 and 2015 does not preclude it from finding that, due to the changed circumstances, the public interest is best served today by conditional vacatur of the Injunctions.

II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN VACATING THE INJUNCTIONS UPON THE OCCURRENCE OF CONDITIONS PRECEDENT.

The district court vacated the Injunctions subject to two clearly articulated conditions precedent: (i) the Republic repeal the Lock Law and related legislation that now prevents the Republic from making settlement payments to plaintiffs; and (ii) the Republic make payment in full to any parties who reached settlements by February 29, 2016, the day before the March 1 submission of the matter to the Argentine Congress. (SPA-84.) The NML plaintiffs—and, notably, only the NML plaintiffs—contend that the district court’s decision to vacate the

Injunctions is procedurally improper because it will take effect automatically upon

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the occurrence of two conditions precedent.17 That argument is both forfeited and

wrong.

As an initial matter, NML did not raise this objection before the

district court and therefore has forfeited it for purposes of this appeal. See

Gwozdzinsky v. Magten Asset Mgmt., 106 F.3d 469, 472 (2d Cir. 1997) (“[W]e will

not decide an issue on appeal not first presented to the district court.”). In its

district court briefing, NML did not even mention the existence of the conditions

until page 15, and nowhere did it contend that conditional vacatur was procedurally

improper. See generally No. 08 Civ. 6978, Doc. 874. Nor did NML raise this issue at the hearing held in the district court on March 1. Indeed, at that hearing, counsel for NML announced that he had “only one point to make,” which was that the district court should “allow just 30 additional days . . . before it takes any action to vacate the injunction.” (A-2271, 2273.)

17 The non-party Foreign-law Bondholders do not appear to challenge the district court’s authority to issue such an injunction, but they argue that doing so under these particular circumstances is inappropriate given their purported anticipated dispute as to whether the conditions will have been satisfied. See Foreign-Law Bondholder Br. at 15-16. While those bondholders submitted offers to settle by February 29, the Republic has not accepted those offers because they include claims that the Republic believes are time-barred. As discussed above (see supra Section I.B.1), this Court need not wade into the merits of that issue, which is not on appeal and has no bearing on whether the district court abused its discretion in ordering the Injunctions conditionally vacated.

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More fundamentally, NML’s argument is wrong as a matter of law.

NML does not cite a single authority to support its purported rule against

“springing” vacatur of an injunction. That is unsurprising, because this Court has explained in this very case that a district court “empowered to afford equitable relief may also direct the timing of that relief.” NML II, 727 F.3d at 241. The form and timing of the district court’s Injunctions are well within its broad equitable discretion.

This Court has held that district courts may issue injunctions that expire or lose effect upon the satisfaction of specified conditions. In United

States v. Diapulse Corporation of America, for example, this Court affirmed an order prohibiting the appellant from shipping a particular machine in interstate commerce “until the labeling meets the standards of the Food, Drug, and Cosmetic

Act,” which was a self-executing “condition for the lifting of the injunction.”

457 F.2d 25, 26, 29 (2d Cir. 1972); see also Semmes Motors v. Ford, 429 F.2d

1197, 1207-08 (2d Cir. 1970) (affirming injunction prohibiting defendant from making contacts with plaintiff’s customers until termination of related litigation).

District courts within this Circuit also have issued injunctions that are dissolved upon the satisfaction of specific, court-ordered conditions, without the need for further judicial review. See Abbo-Bradley v. City of Niagara Falls,

293 F.R.D. 401, 409-10 (W.D.N.Y. 2013) (enjoining environmental sampling

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unless plaintiffs provide defendants four days’ advance notice, “contemporaneous access to samples,” and “an opportunity to take split samples”); Lewis v. Rahman,

147 F. Supp. 2d 225, 238 (S.D.N.Y. 2001) (“Defendant Hasim Rahman is hereby enjoined from engaging in any heavyweight bout for the next 18 months unless and until he complies with his contractual obligation to fight a rematch with Lennox

Lewis . . . .”); HMI Mech. Sys. v. McGowan, No. 99-CV-376 (FJS), 2000 U.S.

Dist. LEXIS 21231, at *13 (N.D.N.Y. Mar. 8, 2000) (“[T]he preliminary injunction

. . . is lifted, conditional on the [Department of Labor] sending the aforementioned cover sheet and extending the deadline for the grace period.”).

The two unpublished decisions cited by NML actually support the

Republic’s position. In United States v. Affectionate Heart in Home Care,

No. 14-cv-2106 (ELH), 2014 WL 4953748 (D. Md. Sept. 8, 2014), the court issued an injunction requiring the defendant to pay certain taxes and held that the injunction “shall automatically dissolve in five (5) years from the date of the entry of this Order if Defendants remain in compliance with the terms of the injunction.”

Id. at *2. Similarly, in McPherson v. Homeward Residential, No. C12-5920

(BHS), 2013 WL 4498695, at *2 (W.D. Wash. Aug. 21, 2013), the court entered an injunction requiring plaintiffs to make specified monthly payments, and providing that the “injunction shall dissolve (1) automatically if [plaintiffs] fail to make monthly deposits or (2) [upon] further order of the Court.” Like the order at issue

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here, the courts in both actions entered injunctions that dissolved automatically and without further judicial action once certain events had taken place.

NML’s objection appears limited to a concern that there could be some ambiguity about whether the conditions precedent have been satisfied. Once again, however, NML cites no law for the proposition that potential future ambiguity about the satisfaction of a condition precedent forecloses lifting the injunction. Indeed, such an objection could have been raised in any number of the cases above. In fact, this Court has made clear that the mere “possibility” of a future dispute with respect to an injunction “is not a ground for us to reverse or vacate the injunction for abuse of discretion.” Advance Pharm., Inc. v. United

States, 391 F.3d 377, 400-01 (2d Cir. 2004). “Rather, should the forecast circumstance arise, defendants may seek appropriate relief.” Id.; see also NML II,

727 F.3d at 246, 248 (rejecting “speculative” or “hypothetical” objections to injunctive relief).

Moreover, the conditions are simply not ambiguous. Contrary to

NML’s contention that the legislative condition is “rife with the potential for factual disputes,” and its attempts to conjure up hypotheticals (what if Congress enacted “some other legislation that itself was a ‘legislative obstacle to settlement’?”) (NML Br. at 28), it will be obvious when the “legislative obstacles to settlement” will have been abrogated because the Republic will begin paying

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settlements, including to them (and it will be widely reported in the press).

Similarly, there can be no ambiguity as to whether the Republic has made “full payment” on the settlement agreements reached by February 29. To do that, the

Republic simply needs to look at the amounts specified under “Settlement

Amount” in each agreement it has entered into, pay that amount, and then advise the Court that it has done so. (See, e.g., A-1973 (defining “Settlement Amount” as

“USD $963,437”).)

In all events, the district court expressly stated that it was retaining jurisdiction to “allay any concern that the Republic will return to its old ways.”

(SPA-63.) And this Court has made clear that “a district court always retains the power to adjust the terms of an injunction as unforeseen problems or complexities

. . . present themselves.” NML II, 727 F.3d at 246. The district court’s decision to make the relief effective automatically upon the satisfaction of two clearly defined conditions precedent with an option for subsequent review, as opposed to ordering some alternative sequence, is quintessentially within the court’s “considerable latitude in fashioning the relief.” NML I, 699 F.3d at 261.

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III. THE PARI PASSU CLAUSE DOES NOT REQUIRE THE CONTINUED IMPOSITION OF EXTRAORDINARY EQUITABLE RELIEF IN THE FACE OF CHANGED CIRCUMSTANCES.

A. Equitable Relief Is Not an Entitlement of Parties Aggrieved by Breach of Contract.

An injunction is not available for a breach of contract (or any similar claim for money damages) except under “extraordinary circumstances.” Faiveley

Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) (internal citation omitted); see also Winter, 555 U.S. at 32 (“An injunction is a matter of equitable discretion; it does not follow from success on the merits as a matter of course.”). When considering the Injunctions at issue here, both this Court and the district court found that the equities favored such drastic relief at the time they were imposed because, among other things, Argentina had engaged in an

“unprecedented, systematic scheme of making payments on other external indebtedness, after repudiating its payment obligations to Plaintiffs.” NML I, 699

F.3d at 255-56. As the district court noted when the Injunctions first issued, they were put in place “not literally to carry out the Pari Passu Clause,” NML Capital v.

Argentina, No. 08 Civ. 06978 (TPG), 2012 WL 5895786, at *3 (S.D.N.Y. Nov. 21,

2012), but to address the Republic’s extraordinary conduct.

Indeed, appellants have acknowledged that the Injunctions were

fashioned by the court as a remedy for the Republic’s past behavior, not to require

actions that were already required by the FAA. As this Court previously observed,

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NML’s position has always been that “ratable payments [are] a remedy for

Argentina’s breach of the [pari passu] Provision,” not that the clause “require[s] ratable payments.” NML I, 699 F.3d at 259 n.10. Now that the behavior requiring a remedy has been ceased, however, appellants have reversed course. Because the

Injunctions can no longer be justified on the basis of the Republic’s current conduct, appellants must, and now do, argue that they have a positive right to the

Injunctions. They do not have such a right, and this argument must be rejected.

B. The Pari Passu Clause Does Not Require That All Bondholders Be Treated the Same in All Circumstances.

In its prior decisions, this Court articulated the limits of what the pari

passu clause requires and what it does not. The pari passu clause prohibits

creating and servicing new classes of debt superior to the FAA Bonds. Id. at 259.

In holding that the Republic breached this clause, this Court emphasized that the

Republic stated in SEC filings “that it ha[d] classified unexchanged FAA Bonds as

a category separate from its regular debt” and had “declared in the prospectuses

associated with the exchange offers that it ha[d] no intention of resuming payments

on the FAA Bonds.” Id. at 254, 260. Thus, the Republic “effectively ha[d] ranked

its payment obligations to the plaintiffs below those of the exchange bondholders.”

Id. at 259.

This Court has also been clear about what the pari passu clause does

not require: “we have not held that a sovereign debtor breaches its pari passu 54 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page68 Page of 6975 of 76

clause every time it pays one creditor and not another, or even every time it enacts a law disparately affecting a creditor’s rights.” NML II, 727 F.3d at 247. Rather, this Court “simply affirm[ed] the district court’s conclusion that Argentina’s extraordinary behavior was a violation of the particular pari passu clause found in the FAA.” Id. That extraordinary behavior has ceased.

In contrast to the issuance of the Exchange Bonds, which constituted a new class of debt functionally senior to the FAA Bonds, the Republic currently is not seeking to subordinate the FAA bonds or relegate them to an inferior class.

Rather, the Republic is seeking to settle and make payments with respect to all outstanding claims under the FAA Bonds. It has made a general proposal to all holders of FAA Bonds, which remains open, and has been actively negotiating with individual bondholders to reach agreements and will continue to do so. And while those agreements and related settlements have not been identical, the pari passu clause does not require them to be. Parties are free to negotiate whatever settlement terms they find acceptable and one party’s acceptance of specific terms does not prejudice other FAA bondholders. Every FAA bondholder is free to accept the general proposal or separately negotiate with the Republic, which has

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been authorized by Congress to continue negotiating without the limits imposed by the Lock Law.18

IV. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY DECLINING TO ENTERTAIN THE DISINGENUOUS “CLARIFICATION” PROPOSED BY “LEAD PLAINTIFFS.”

Finally, this court should reject the argument advanced by Aurelius

that the district court abused its discretion by refusing to “clarify” that, if “lead

plaintiffs” elected to terminate their settlement agreement, the Injunctions would

remain in place, unless the Republic nevertheless paid them under the terminated

agreement. (See Aurelius Br. at 39-49.)

Under their agreement in principle, “lead plaintiffs” negotiated the

right to terminate the agreement if the Republic does not make payment in full by

April 14, 2016. Within hours after entering into that $4.6 billion settlement

agreement, however, they unexpectedly renewed their opposition to the Republic’s

18 Similarly, the Court should reject the contention of Arag-A and others (see Arag-A Br. at 33-36) that the settlement payments or the Republic’s Proposal are discriminatory and thus violate the pari passu clause. See NML I at 259 n.10 (rejecting argument that pari passu clause violated by arms’-length repurchases by the Republic of FAA bonds “at a discount or premium”). Payments in settlement of these actions, involving the dismissal of lawsuits, release of claims and, in many instances, foregoing collection of judgments, involve more than mere “payment obligations of the Republic under the Securities” as described in the pari passu clause. Likewise, the Republic’s Proposal is an offer to settle claims and judgments, and not simply a commitment to make payments on the FAA bonds.

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motion, asking—despite the time pressure inherent in the April 14 deadline—that the district court “defer entry of any order” vacating the Injunctions. (Mar. 7

Paskin Decl., Ex. D at 3.) Then, at the hearing before the district court on March 1,

“lead plaintiffs” asked “to postpone any order vacating the injunctions” for “just 30 additional days.” (A-2273.) With the time required for an appeal (which the “lead plaintiffs” went on to file), that delay would have made it practically impossible for the Republic to comply with the April 14 deadline.

Meanwhile, “lead plaintiffs” also asked the district court for what they term a “ministerial clarification” (Aurelius Br. at 43) that, “if Plaintiffs do not receive full payment in accordance with the specific terms of the AIP for any reason, including if Plaintiffs terminate the AIP on or after April 14 . . . the

Injunctions shall remain in place.” (A-2312 (emphasis added).) Had the district court entertained that “clarification,” their position was that “if the AIP is terminated [by plaintiffs], the Order could not take effect, and the Injunctions could not be vacated.” (Aurelius Br. at 42-43.) Indeed, lead plaintiffs contend that the terminated agreement would somehow “remain an ‘agreement[] in principle with the Republic [entered into] on or before February 29, 2016’,” under the terms of the district court’s order, “pursuant to which payment must be made in order for the Injunctions to be vacated.” (Id. at 46.) In other words, under this purported

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“clarification,” the Republic still would have to pay them $4.6 billion under a terminated contract or else the Injunctions would remain in place.

In sum, immediately after entering into their $4.6 billion settlement agreement, “lead plaintiffs” filed a motion that effectively would have prevented their counterparty from complying with its obligations under the contract. Then they tried to turn the Republic’s inability to comply into a weapon that would enable them, at their option, to “scupper” all other plaintiffs’ settlements and return this litigation to an impasse, or (more likely) to continue to use the Injunctions as a tool to extract yet more profits for themselves. The district court properly declined to go along with that inequitable conduct, and this Court should too. See Precision

Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814

(1945) (holding that “the doors of a court of equity [are closed] to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief”).

First, if what “lead plaintiffs” are asking for is truly a “ministerial clarification,” then the district court’s refusal to issue such a clarification is not appealable. See Aurelius Capital Master v. Argentina, No. 14-2689, Doc. 167 at 2

(2d Cir. Sept. 19, 2014) (refusing jurisdiction because “the Order appealed from

[was] a clarification, not a modification” of the previous order); see also Aevoe

Corp. v. AE Tech Co., Ltd., 727 F.3d 1375, 1380 (Fed. Cir. 2013) (an “order interpreting or enforcing an injunction . . . is generally not appealable”); United

58 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page72 Page of 7375 of 76

States v. Philip Morris USA Inc., 686 F.3d 839, 845-46 (D.C. Cir. 2012)

(“clarification” of an injunction is not appealable).19

Second, “lead plaintiffs’” challenge is not ripe for review. Their alleged injury—that Argentina will not comply with its payment obligations—is wholly hypothetical. See Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.”). Argentina intends to comply with its obligations under the NML Agreement, and to make the required payment by April 14, if affirmance by this Court comes in time to permit it to do so. See supra Section I.C.1. Regardless, “lead plaintiffs” have the power to avoid any such future injury by refraining from exercising their option to terminate—i.e.,

by accepting payment of their $4.6 billion in settlement consideration even if, for

some reason, that cannot be accomplished by April 14. Cf. NML II, 727 F.3d

at 246 (rejecting argument based on potential consequences that are “speculative,

hyperbolic, and almost entirely of [one party’s] own making”).

19 United States v. McGinn, 787 F.3d 116 (2d Cir. 2015) is not to the contrary. McGinn did not concern injunctive relief or even civil litigation, but instead remanded a criminal action for the limited purpose of revising the text of a restitution order to confirm the interpretation the district court had already announced. Id. at 131.

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Third, rejecting the proposal advanced by “lead plaintiffs” was entirely within the district court’s discretion. Regardless of what they may call it, substantively, what they were asking for is a dramatically different order from the one the district court found equitable to enter—one that would have made a multibillion dollar payment to “lead plaintiffs” a precondition to vacatur of the

Injunctions even if they terminated their settlement agreement. Of course, contract law and common sense both dictate that if an agreement is terminated the parties no longer have any obligations to each other at all—in this case, the Republic would not be obligated to make payment and “lead plaintiffs” would not be obligated to provide a release or to dismiss their claims. The district court’s refusal to entertain their proposed language is conclusive evidence that the court did not intend its order to be read in such a way as to contravene basic contract principles.

Moreover, the proposed “clarification” is contrary to the text of the district court’s order, which requires that settlements be paid “in accordance with the specific terms of each such agreement.” (SPA-84.) The “specific terms” of the

NML Agreement provide, in bold letters, that “[i]n the event that this Agreement in

Principle is terminated as to any or all Plaintiffs” it shall be “as if there had been no

Agreement in Principle.” (A-2371.) The application of the district court’s order in that event is clear—no settlement payment will be owed, and thus such payment will not be a condition to vacatur of the Injunctions.

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Needless to say, this is unusual behavior for parties that have already reached a settlement, and if their goal is to coerce yet more profits for themselves—or, even worse, to “scupper” the entire global settlement and return this 15-year-old dispute to an intractable impasse—the Republic respectfully submits that the district court acted within its discretion in concluding that the equities did not support such a “clarification.”

CONCLUSION For the foregoing reasons, the Order of the District Court should be affirmed.

March 21, 2016

BANCROFT PLLC, CRAVATH, SWAINE & MOORE LLP,

by by /s/ Paul D. Clement /s/ Michael A. Paskin Paul D. Clement Daniel Slifkin Jeffrey M. Harris Michael A. Paskin Christopher G. Michel Damaris Hernández

500 New Jersey Avenue NW Worldwide Plaza Seventh Floor 825 Eighth Avenue Washington, DC 20001 New York, NY 10019 (202) 234-0090 (212) 474-1000

Attorneys for Defendant-Appellee The Republic of Argentina

61 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 446, 03/23/2016, 37-13 Filed 1734285, 04/07/16 Page75 Page of 7675 of 76

CERTIFICATE OF COMPLIANCE PURSUANT TO FED. R. APP. P. 32(a)(7)(C)

This brief complies with the type-volume limitation of Fed. R. App. P.

32(a)(7)(B) because this brief contains 13,958 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Office 2007 in 14-point Times New Roman.

March 21, 2016

/s/ Michael A. Paskin Michael A. Paskin Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 1 of 61

EXHIBIT 13 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 2 of 61

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EXHIBIT A

Transcript of Oral Argument in Aurelius Opportunities Fund II LLC v. Republic of Argentina, No. 15-1060(L) (2d Cir.), held on February 24, 2016 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 6 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 2 of 54 Page1

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 ------x

4 In the Matter of:

6 AURELIUS OPPORTUNITIES FUND II. LLC., et al,

7 Appellees.

8 v. Docket No. 15-1060-cv

9 THE REPUBLIC OF ARGENTINA,

10 Appellant.

12 ------x

14 U.S. Court of Appeals

15 Thurgood Marshall U.S. Courthouse

16 40 Foley Square

17 New York, New York

19 February 24, 2016

21 BEFORE:

22 HON. PETER W. HALL

23 HON. JOHN M. WALKER, JR.

24 HON. REENA RAGGI

25 U.S. COURT OF APPEALS JUDGES Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 7 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 3 of 54 Page2

1 APPEARANCES:

3 CRAVATH, SWAINE & MOORE LLP

4 Attorneys for The Republic of Appellant

6 BY: MICHAEL A. PASKIN

8 GIBSON DUNN

9 Attorney for Appellees

11 BY: MATTHEW D. MCGILL

25 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 8 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 4 of 54 Page3

1 PROCEEDINGS

2 JUDGE RAGGI: And now we’ll hear from the parties

3 in Aurelius Opportunities v. Argentina. Counsel, let me

4 begin by saying this case is before the Court for argument

5 of an appeal, but there have been motions filed recently,

6 first of all, to dismiss the schedules appeal with

7 prejudice, and then to have this panel entertain motions in

8 a related case, which is colloquially referred to by all

9 parties as involving the me too injunctions.

10 And to remand that case for further action by the

11 District Court. I think we’d like to start by hearing you

12 all on the motions. And if everybody could just identify

13 themselves for us, who’s going to be arguing, it would be

14 helpful.

15 MR. PASKIN: Yes, may it please the Court, Michael

16 Paskin from Cravath, Swaine & Moore for the Republic of

17 Argentina.

18 JUDGE RAGGI: Thank you, Mr. Paskin.

19 MR. MCGILL: May it please the Court, Judge Raggi,

20 Matthew McGill of Gibson, Dunn & Crutcher for the appellees

21 in 1060. And to the extent the Court is addressing 3675,

22 I’m here on behalf of appellees, NML Capital, the Aurelius

23 appellees and FFI and FFY Funds.

24 JUDGE RAGGI: Thank you.

25 JUDGE WALKER: And we also have another. We have Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 9 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 5 of 54 Page4

1 other people who have come in support of Argentina for some

2 of the -- for the remand.

3 MR. PASKIN: That’s correct. There have been

4 other papers filed --

5 JUDGE RAGGI: And only the two of you are going to

6 be arguing?

7 JUDGE WALKER: Only the two of you will be

8 arguing, okay.

9 MR. PASKIN: But only the two of us will be --

10 JUDGE WALKER: That’s fine.

11 JUDGE RAGGI: Well, if I understand it, the motion

12 for dismissal with prejudice is Argentina’s. The motion for

13 this panel to consider the remand motion is Argentina’s, but

14 the motion for this panel to consider it is -- comes from

15 your client, Mr. McGill, is that right?

16 MR. MCGILL: That is correct, Your Honor.

17 JUDGE RAGGI: All right. Well, we’ll start with

18 Argentina. And we have many questions on these motions, so

19 I’m going to start, let Judge Hall start us off here.

20 MR. PASKIN: Of course.

21 JUDGE HALL: I guess let me make first make clear,

22 Mr. Paskin, in the me too cases, is it Argentina’s motion

23 also to refer this case -- sorry -- to remand this case

24 under 12.1?

25 MR. PASKIN: Argentina’s motion, yes, in the me Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 10 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 6 of 54 Page5

1 too cases is to remand under 12.1 based on the Court’s

2 indicative ruling.

3 JUDGE HALL: But and my colleagues will jump in

4 very shortly, but I think the first thing we would like to

5 know is with respect to that motion, why is Argentina not

6 seeking to dismiss that appeal with prejudice as it is doing

7 in this one?

8 MR. PASKIN: Right. Well, frankly, Your Honor, I

9 think dismissal with prejudice of that appeal as a

10 substantive issue would be appropriate and entirely

11 consistent with the overall change in strategy of the

12 Republic here, which is we are not pursuing these old issues

13 and these old appeals, and challenging the entry of these

14 injunctions.

15 Things have obviously been moving, you know,

16 extremely quickly over the last several days, and couple of

17 weeks. And the concern, and it may be a baseless concern,

18 but the concern with just dismissing the 3675 appeal along

19 with 1061 was, does it procedurally interfere with our

20 attempt to get the remand and make sure that we’re on

21 procedurally appropriate grounds with the District Court’s

22 indicative ruling and the ability to have that converted

23 into an actual order?

24 JUDGE RAGGI: I’m not sure I understand. You’re

25 looking for dismissal with prejudice in this case. I would Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 11 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 7 of 54 Page6

1 assume that the same concerns apply.

2 MR. PASKIN: Yes, I --

3 JUDGE RAGGI: And that’s why we’re a little

4 perplexed as to why there are different applications in the

5 two cases.

6 MR. PASKIN: Okay. Well then, apologies for the

7 complexity there, Your Honor, but Argentina’s position is it

8 is not pursuing the substance of either of the pending

9 appeals.

10 JUDGE WALKER: I’d like to ask a few questions, if

11 I could --

12 MR. PASKIN: Of course.

13 JUDGE WALKER: -- about the District Court’s order

14 lifting the -- or opinion lifting the injunction. First of

15 all, it’s not lifting the injunction, it’s because we have

16 jurisdiction, so it’s going to depend upon a remand of

17 somehow getting it back before the District Judge, right?

18 MR. PASKIN: Of course.

19 JUDGE WALKER: And then the second question that I

20 have, though, are what are the terms of the lifting of the

21 injunction? The injunction, as I read it, it looks like

22 Argentina has to take some legislative steps, and then

23 payment has to be made before the injunction can be lifted.

24 MR. PASKIN: That’s correct.

25 JUDGE WALKER: But how do you pay -- make Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 12 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 8 of 54 Page7

1 payments, and then lift the injunction, if you don’t lift

2 the injunction first? That’s one question.

3 JUDGE RAGGI: Because the payments are not in

4 conformity with (indiscernible).

5 JUDGE WALKER: The payments are not in --

6 JUDGE RAGGI: (indiscernible) --

7 JUDGE WALKER: -- conformity of the pari passu.

8 MR. PASKIN: The -- technically, the injunctions

9 themselves apply to payments to the exchange bond holders.

10 JUDGE WALKER: Right.

11 MR. PASKIN: The payments that would be made in

12 conform -- in consistent with Judge Griesa indicative ruling

13 are payments to the holdout bond holders, the litigants in

14 these cases, who settle with Argentina.

15 JUDGE WALKER: Don’t the -- doesn’t the injunction

16 enjoin Argentina from making anything other than pari passu

17 payments?

18 MR. PASKIN: The injunction enjoins Argentina from

19 making anything other than pari passu payments to the

20 exchange bond holders. They can’t make payments to the

21 exchange bond holders, unless they also are making payments

22 from the --

23 JUDGE WALKER: From the injunction.

24 MR. PASKIN: -- to the holdouts.

25 JUDGE WALKER: It doesn’t cover the settlements. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 13 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 9 of 54 Page8

1 MR. PASKIN: That’s correct. The injunction

2 doesn’t --

3 JUDGE WALKER: Even though the contract would?

4 MR. PASKIN: That is, you know, correct, yes. And

5 Judge Griesa, it appears, is prepared to -- proposes in his

6 order that he would --

7 JUDGE WALKER: (indiscernible) -- violate the pari

8 passu clause of a contract in order to effectuate the

9 settlement.

10 MR. PASKIN: That he would authorize those

11 payments in order to bring about the settlement so that

12 everybody can get paid.

13 JUDGE WALKER: So but let me just ask then, what

14 is the realistic -- I mean, you’ve -- there’s a lot of talk

15 about an emergency here, and Monday’s got to be an emergency

16 and everybody’s got to settle by then. And the date -- the

17 reason that’s been fixed, apparently, is because the

18 legislature’s coming into session on the following day,

19 March 1st, correct?

20 MR. PASKIN: Correct.

21 JUDGE WALKER: So what is the indication that the

22 legislature’s going to do anything for -- on March 1st, or

23 for that matter, for the next three months?

24 MR. PASKIN: Right. Well, the legislative process

25 is going to take time. They have two houses of Congress. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 14 of 61

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1 There’s a house and a Senate (indiscernible) --

2 JUDGE WALKER: Right. So why wouldn’t the actual

3 lifting of the lock law be -- and the other impediments to

4 settlement be the triggering event, at least as far as

5 lifting the injunction is concerned, rather than having it

6 be Monday.

7 MR. PASKIN: Well, the triggering event, as far as

8 lifting the injunction is not only the change of the laws,

9 but it’s also getting these payments effectuated.

10 JUDGE WALKER: Well --

11 MR. PASKIN: And just to continue, Your Honor, if

12 the question is why isn’t there a delay prior to remand in

13 order to let the District Court enter his order, because

14 that appears to be appellees’ position is the -- as to what

15 should happen.

16 JUDGE WALKER: Yeah.

17 MR. PASKIN: The issue there becomes, in order to

18 effectuate the payments that are the other prong of the

19 conditions under the order, what really is necessary is for

20 the -- for there to be certainty about the meaning and

21 viability of that order. If it’s unclear whether upon

22 making those payments, that order would then be challenged

23 in this Court, and potentially overturned, then it can’t

24 work.

25 And so, the idea would be if there’s going to be a Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 15 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 11 of 54Page 10

1 challenge, the challenge to the indicative ruling or the

2 challenge to the rationale behind it should happen as

3 quickly as possible. It should be converted to an order.

4 If appellees want to take it up on appeal, which presumably,

5 they do, then it can be challenged.

6 And in parallel, with the process that goes on in

7 the legislature, and the mechanics behind effectuating

8 payments to the settling bond holders, excuse me, we can get

9 the certainty as to whether the order that’s been entered,

10 that’s proposed to be entered by the District Court is an

11 order that actually is going to stand.

12 And because without that, it puts -- it makes the

13 entire situation untenable. And so, while Mr. McGill

14 suggests that we should all wait and let the status quo of

15 the last two years just prevail, that doesn’t really work,

16 first of all, because the status quo has changed. The

17 government has come in and changed its attitude, and based

18 on that, the District Court has changed its interpretation

19 of, you know, what equitably is required to do here.

20 JUDGE WALKER: When would the parties appear

21 before the District Judge, if a remand occurred? Because it

22 seems to me there are lots of questions about why this --

23 why -- I don’t understand quite right now, by the February

24 29th date, is in place, were -- for the others to settle, in

25 order to benefit from, in effect, from the injunction. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 16 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 12 of 54Page 11

1 Because if they don’t settle by the 29th, then they’re --

2 they have no injunction, right?

3 MR. PASKIN: Well, if they don’t settle by the

4 29th, they -- and everything goes forward and the settling

5 parties do get paid and the injunction and the order becomes

6 effective --

7 JUDGE WALKER: Right.

8 MR. PASKIN: -- essentially, that’s correct.

9 Appellees no longer, who don’t settle, no longer have the

10 injunctions.

11 JUDGE WALKER: This is effectively a cram down

12 provision.

13 MR. PASKIN: No, it’s absolutely not, because

14 first of all, the District Court retains jurisdiction over

15 the injunction. And as has been abundantly clear in the

16 past, if it believes that Argentina is no longer, is

17 reverting to its old ways, to put it, you know,

18 colloquially, the District Court obviously can put the --

19 you know, can impose the same restrictions or harsher ones

20 or whatever it is that the District Court is inclined to do.

21 JUDGE RAGGI: That would be a new order, and that

22 would be appealable and that’s what the non-settling parties

23 don’t want to have to go through.

24 MR. PASKIN: If it’s just a question, Your Honor,

25 of the effort of that, Argentina is taking the position, and Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 17 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 13 of 54Page 12

1 again, I’m not expecting them to be taken on their words

2 alone, which is why there are these conditions in the

3 lifting of the injunction. We’re abandoning the substantive

4 arguments against the imposition of the original

5 injunctions.

6 And by abandoning those arguments, I would expect

7 that it’s going to be very hard to reassert them again,

8 having lost them in past years, having lost them on appeal

9 before, and now having completely changed the strategy. So

10 there’s a certain point at which the new government has to

11 be given an opportunity to actually do what it says it’s

12 going to do with these conditions applied, and allow these

13 settlements to happen, because I realized that I’m running

14 out of time, but --

15 JUDGE RAGGI: You’re last on our calendar.

16 MR. PASKIN: But the -- but I think the other

17 issue about the status quo is the status quo that prevailed

18 for the last two years, as Mr. McGill points out in his --

19 in one of his briefs, at least up until the new government

20 took office in December, was a status quo that inflicted

21 tremendous pain on Argentina, that they had brought upon

22 themselves admittedly. But one -- didn’t actually succeed

23 in moving settlement talks forward, that didn’t actually

24 succeed in getting any of these holdout bond holders paid.

25 So now we have a process in place that allows Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 18 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 14 of 54Page 13

1 those things to move forward, that allows settlements to

2 happen. There have been billions of dollars in settlements

3 announced already, pursuant to these new rules and the new

4 approach of Argentina’s government. So it seems that the

5 worst position that the appellees find themselves in is

6 exactly the same position that they have been in, which is

7 winning everything in Court, but not actually getting the

8 satisfaction that they want.

9 And now there’s a way through it, so we would

10 think, respectfully, that they should be in favor of a

11 prompt remand of converting the indicative ruling into an

12 order. And if by that point they haven’t settled or other

13 people haven’t, take it up on appeal. Figure out what the

14 rules are and then play by them.

15 JUDGE HALL: When is the injunction actually

16 lifted? It’s not lifted for several months, is that right,

17 until the payments are (indiscernible) --

18 MR. PASKIN: Until the payments occur.

19 JUDGE HALL: When do they occur? Do we know,

20 roughly?

21 MR. PASKIN: It -- ultimately, it will depend

22 upon, I think the quantity of payments required, and the

23 degree to which access to capital markets will be required

24 in order to finance them.

25 JUDGE HALL: And so, until that time, the Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 19 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 15 of 54Page 14

1 injunction remains in play.

2 MR. PASKIN: Exactly.

3 JUDGE HALL: And the District Judges can modify it

4 or do whatever, hear arguments on that score.

5 MR. PASKIN: Of course.

6 JUDGE HALL: But then, right now, as we stand here

7 now, who has settled? My -- the papers seem to indicate

8 that I think 14 percent have settled, and that’s of the me

9 toos, I assume?

10 MR. PASKIN: Those were me toos. The 14 percent

11 referred to in the papers were the initial settlements that

12 were announced back on February 5th or whatever the date

13 was. Since then, the special master has made statements as

14 additional cases and additional plaintiffs have settled.

15 Those statements have come out on practically a daily basis

16 of additional --

17 JUDGE HALL: What’s the tally in that?

18 JUDGE RAGGI: (indiscernible) --

19 JUDGE HALL: What’s it now?

20 MR. PASKIN: I don’t know what the exact tally is,

21 but I think we’re now approaching $2 billion rather than a

22 little bit over one million.

23 JUDGE HALL: (indiscernible) percentage.

24 JUDGE RAGGI: (indiscernible) percentage, are we

25 talking 25 percent, 40 percent? Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 20 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 16 of 54Page 15

1 MR. PASKIN: I wouldn’t want to be taken exactly

2 on it, but I think about 25 percent is where they are.

3 JUDGE WALKER: And those are the me toos?

4 MR. PASKIN: It’s a -- (indiscernible) question.

5 JUDGE WALKER: (indiscernible) no-me too, any

6 original (indiscernible)?

7 MR. PASKIN: No, good question. I should know the

8 answer to that question, but I don’t, so I’m not going to

9 guess.

10 JUDGE RAGGI: With respect to the motion before us

11 on dismissal with prejudice, you know, this was made just

12 the other day. We -- we’re ready to hear this appeal and

13 resolve it. And I’m wondering why we shouldn’t? You know,

14 you said, well, you basically abandoned the challenges to

15 the original injunction, and so you’re -- you know, there

16 wouldn’t be litigation of that again.

17 But a dismissal with prejudice leaves some

18 ambiguity as to what got resolved, and you know, I’m a

19 little concerned about this, especially if you’re not

20 looking to dismiss with prejudice, the me too case, which

21 would then perhaps leave you free, or your client, I

22 understand, that you’re making a representation to the

23 Court, but your client’s changed its mind before, to

24 resurrect issues that we’re prepared to address right now.

25 MR. PASKIN: Right, understood, Your Honor. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 21 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 17 of 54Page 16

1 JUDGE RAGGI: Why should we dismiss?

2 MR. PASKIN: Well, first, with the question of

3 dismissal of the other case, of the me too case, as I stated

4 earlier, we are prepared to dismiss that.

5 JUDGE RAGGI: With prejudice?

6 MR. PASKIN: With prejudice?

7 JUDGE RAGGI: Okay.

8 JUDGE WALKER: Can you do that today?

9 MR. PASKIN: Yes, I can do that today. We can

10 dismiss that with prejudice. I just wanted to preserve

11 procedurally the District Court’s ruling and the ability to

12 convert that into an order.

13 JUDGE RAGGI: So your adversary expressed some

14 cost to that -- some question about litigating costs and

15 sanctions. What’s Argentina’s position with respect to

16 costs, because I might have thought those were dictated by

17 Rule 39?

18 MR. PASKIN: I think that at this point, first of

19 all, I would expect appellees to be happy with the result,

20 and that the costs associated with the particular appeal

21 here seem to be a drop in the bucket relative to --

22 JUDGE RAGGI: (indiscernible) acknowledging your

23 responsibility for costs, how much is maybe another

24 question, but you’re acknowledging your responsibility for

25 costs (indiscernible) -- Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 22 of 61

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1 MR. PASKIN: I’m acknowledging the client’s, you

2 know, potential responsibility for costs, subject to a

3 motion for costs that they would bring.

4 JUDGE RAGGI: Now my understanding about Rule 38

5 sanctions motions is that those could be sought even after

6 dismissal. Does Argentina take any different view on that?

7 I mean, if we dismiss this case, are you going to dispute

8 their ability to seek sanctions?

9 MR. PASKIN: No.

10 JUDGE RAGGI: I mean, you’d dispute their right.

11 MR. PASKIN: We made -- exactly. We may challenge

12 the substance of it, but we won’t challenge --

13 JUDGE RAGGI: (indiscernible) --

14 MR. PASKIN: -- the procedural time limits,

15 exactly.

16 JUDGE RAGGI: Okay. We may have more questions,

17 but I think we want to hear from your adversaries first.

18 MR. PASKIN: Okay. Thank you, Your Honor.

19 MR. MCGILL: Thank you, Your Honors, and may it

20 please the Court, Matthew McGill for the parties as I

21 described before. The District Court’s indicative ruling of

22 just Friday gave Argentina’s public tender offer the force

23 of a judicial ultimatum.

24 JUDGE RAGGI: Before we get to the merits of what

25 the District Court did, which may not even be in front of Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 23 of 61

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1 us, you’ve just heard Argentina say that it’s prepared to

2 have both appeals dismissed with prejudice. They

3 acknowledged that they will be liable for costs, the amounts

4 to be resolved, and that you can bring a Rule 38 sanctions

5 motion, even after dismissal. In light of that position,

6 why should we not grant dismissal with prejudice, of the two

7 appeals?

8 MR. MCGILL: Rule 42(b) dismissals are within the

9 discretion of the Court, particularly at --

10 JUDGE RAGGI: Right. So now tell us why not?

11 MR. MCGILL: And I will. Let me paint the picture

12 of what the indicative ruling does and permits. On Monday,

13 that’s February 29th, on Monday, Argentina’s public tender

14 offer closes. And on Tuesday, Argentina can fulfill the

15 conditions set forth in the order. The injunctions are

16 automatically lifted. There is no hearing. There has been

17 no hearing on this motion. This was a -- this was presented

18 by an ex parte order to show cause.

19 It was briefed on our side. Initially, we were

20 told, you know, the Court had already closed for the Friday

21 and Monday, and our deadline was Tuesday at noon, at 10:30

22 on Tuesday. The Court extended it to Thursday.

23 JUDGE WALKER: What’s to prevent you from going

24 right -- if we dismiss these appeals, and did it quickly,

25 you’re going right before Judge Griesa this week and making Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 24 of 61

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1 whatever points you want to make.

2 MR. MCGILL: Well, I would --

3 JUDGE WALKER: The injunction’s not going to take

4 effect.

5 MR. MCGILL: We would’ve -- well, no, that’s

6 exactly the point. On Monday, the -- is when the offer

7 closes, this public tender offer.

8 JUDGE RAGGI: (indiscernible) --

9 MR. MCGILL: On Tuesday, they can fulfill the

10 conditions, and that -- and then, it is a springing vacatur

11 of the injunction.

12 JUDGE RAGGI: (indiscernible) to the Court,

13 though.

14 MR. MCGILL: It -- they do not. It --

15 JUDGE RAGGI: That’s what the last line of the

16 Judge’s order says, the indicative ruling. Let me get it in

17 front of me.

18 MR. MCGILL: (indiscernible), and it says, “If the

19 Court of Appeal remands, the injunctions will be lifted

20 automatically upon fulfillment of these two conditions.”

21 JUDGE WALKER: One of which is that the Republic

22 give notice of the payments (indiscernible) --

23 MR. MCGILL: But --

24 JUDGE RAGGI: Right, so the last line of the

25 second (indiscernible) -- Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 25 of 61

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1 MR. MCGILL: But all that can happen on Tuesday.

2 The lock law can be lifted. The payments can be made.

3 We’re talking about -- you asked how many people have

4 settled so far? It’s 20 percent. 20 percent is what

5 settled. The three funds that I mentioned before, NML, the

6 Aurelius funds and FFI and FFY, we’re 65 percent. Right?

7 My plea to the Court is, “Wait to dismiss anything.” We are

8 -- we have had, since Thursday --

9 JUDGE RAGGI: What is that going to mean in terms

10 of the District Court being able to decide what it’s going

11 to do here?

12 MR. MCGILL: I --

13 JUDGE RAGGI: Because the alternative is, we’re

14 ready to hear the appeal and we’re ready to rule on it --

15 MR. MCGILL: Right, and --

16 JUDGE RAGGI: -- probably in a, you know, very

17 brief time.

18 MR. MCGILL: And I’m -- and I can address that.

19 But the point here is, you have discretion on -- to whether

20 or not to dismiss. And I think you should wait to dismiss

21 for the following --

22 JUDGE HALL: (indiscernible), though? Why should

23 we be in the position of having to decide whether the

24 settlement’s effective or fair or anything like that,

25 because that’s the District Court’s normal responsibilities? Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 26 of 61

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1 MR. MCGILL: It is --

2 JUDGE RAGGI: That’s (indiscernible) --

3 JUDGE HALL: The -- this District Judge has been

4 on this case forever, and that’s what you’re asking us to

5 do. You’re asking us to weigh in and see if we can help you

6 get a better settlement.

7 MR. MCGILL: No, no, I’m not. All I’m asking for

8 is for a little time for the settlements that Argentina

9 claims that they want to take place. My point, my core

10 point is that this February 29th deadline is needless and

11 counterproductive.

12 JUDGE RAGGI: Well, why (indiscernible) --

13 MR. MCGILL: And we had had no --

14 JUDGE RAGGI: (indiscernible) for an adjournment

15 then, or an extension, if you need more time? Why should

16 this Court use a delay in either granting a dismissal motion

17 or deciding the appeal? Why should it delay either of

18 those, in order --

19 MR. MCGILL: Because --

20 JUDGE RAGGI: -- in order to give you time on

21 something that’s really a District Court matter?

22 MR. MCGILL: I think there are two reasons, Judge

23 Raggi. One is that we have made repeated requests to the

24 District Court to be heard on this motion, and thus far,

25 have been -- those requests have been declined. The order Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 27 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 23 of 54Page 22

1 was entered, and the --

2 JUDGE HALL: (indiscernible) have jurisdiction,

3 isn’t it?

4 MR. MCGILL: No, it’s not.

5 JUDGE HALL: (indiscernible) of these --

6 MR. MCGILL: He entered the indicative ruling and

7 he could’ve heard us on the ex parte motion to enter an

8 indicative ruling and he chose not to. And he --

9 JUDGE RAGGI: We need to grant dismissal for rule

10 in this case so that the appeal is over. You can make

11 whatever application you have to the District Court.

12 MR. MCGILL: Well --

13 JUDGE RAGGI: If you’re not successful, can’t you

14 appeal the unsuccessful ruling --

15 MR. MCGILL: The --

16 JUDGE RAGGI: -- and seek a stay, if you

17 (indiscernible)?

18 MR. MCGILL: Well, if Argentina would consent now

19 to a stay pending appeal --

20 JUDGE RAGGI: They’re not going to consent.

21 MR. MCGILL: Okay. But --

22 JUDGE RAGGI: And you’ll make the application to

23 the Court.

24 MR. MCGILL: Well, then here’s the problem, and

25 now let me just try to paint it. If Argentina satisfies the Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 28 of 61

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1 conditions on Tuesday and the injunctions are automatically

2 lifted on Tuesday, on that same day, Argentina can change

3 the payment mechanisms that have been in place for years,

4 that the injunction prohibits them from changing, and

5 thereby render the restoration of effective injunctive

6 relief impossible.

7 JUDGE RAGGI: I understand all these concerns you

8 have, I do. But my question is, how do we use delay in

9 ruling on motions for an appeal to effectively grant you a

10 stay of the lifting of the injunction?

11 MR. MCGILL: It is within your discretion to grant

12 or to decline to grant the dismissal.

13 JUDGE RAGGI: But why (indiscernible) exercise it

14 for the purpose you’re urging?

15 MR. MCGILL: I --

16 JUDGE RAGGI: That doesn’t seem to be our task.

17 MR. MCGILL: The -- and I’m -- the reason you

18 should exercise it is that it will facilitate the end of the

19 litigation. What nobody wants is what this order is going

20 to create, which is the cascade of appeals and stay motions

21 and everything else. Let me finish. The -- my clients, the

22 65 percent, we have had a -- an agreement on economic terms

23 with Argentina since Thursday. We’re this close to a deal,

24 this close.

25 We’ve been discussing payment mechanics, ancillary Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 29 of 61

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1 provisions. And I should mention that our deal, our on

2 economic terms is closer to their public tender offer than

3 100 percent. We are this close. Unfortunately, we’ve had

4 some hiccups in negotiating these mechanics. You know, the

5 first payment, the -- a payment mechanic that was suggested

6 by the special master, it was discovered very late that it

7 involved, rather than a wire transfer, it involved the use

8 of paper checks coming through FedEx.

9 That was not going to work. So we’re trying to

10 find a payment mechanics that work. This is a $5 billion

11 transaction, and we’re being told that we have to sign it up

12 on a page and a half agreement by Monday. If we have just a

13 little time, we can finish the deal. The economic terms are

14 agreed.

15 What they’re asking for, and what we’re afraid of,

16 is that by hastening this back to the District Court, we’re

17 all going to be mitigating stay motions, stays pending

18 appeal that will last --

19 JUDGE WALKER: How much time do you feel you need

20 to settle this?

21 MR. MCGILL: What I suggested in my papers, on the

22 remand motion, which I --

23 JUDGE HALL: The balance of next week?

24 MR. MCGILL: I think what would be appropriate is

25 that the Court wait until Argentina lifts its lock law. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 30 of 61

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1 That is the first, but not the second condition that

2 Argentina has set forth that would trigger the indicative

3 ruling. And then, that is when they’ll be ready to pay. We

4 are, you know, we are so close to ending 15 years --

5 JUDGE RAGGI: (indiscernible) know before they

6 lift the laws, how many parties they settled. Isn’t that

7 why there’s the 29th and then the Argentine legislature will

8 meet within a day or two of that? So you’re suggesting that

9 it be put the other way, that Argentina lift the laws before

10 your client settles.

11 MR. MCGILL: The --

12 JUDGE RAGGI: I don’t want to get into which makes

13 sense, but that’s what I understand the (indiscernible)

14 reason.

15 MR. MCGILL: The indicative ruling is in place.

16 The Court, the District Court has signaled its intention --

17 JUDGE RAGGI: Well, the indicative ruling is an

18 indicative ruling. We have to decide something and get the

19 case back to it before it can enter anything.

20 MR. MCGILL: I --

21 JUDGE RAGGI: I mean, I would almost understand

22 you’re saying to us, “Ask the District Court before it makes

23 it a final ruling,” to give you another opportunity to be

24 heard.

25 MR. MCGILL: We would think at a minimum, we would Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 31 of 61

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1 be entitled to that. This is litigation, just on the pari

2 passu -- I mean, the litigation has gone on for 15 years.

3 JUDGE RAGGI: Yeah, but an opportunity to be

4 heard, and he just enters an indicative ruling, you have an

5 automatic appeal, and probably a very successful one. Don’t

6 you think?

7 MR. MCGILL: I --

8 JUDGE RAGGI: I mean, if you haven’t been heard up

9 to this point and he’s not hearing you and then he enters an

10 injunction and you’re not --

11 MR. MCGILL: I, I’m going to --

12 JUDGE RAGGI: This is an injunction and you’re not

13 prepared to --

14 MR. MCGILL: I’ll be back here on Tuesday, you

15 know, saying, “I desperately need a stay pending appeal.”

16 And but the fact is is that we really don’t want that. What

17 we want is to settle these cases that have clogged the

18 dockets of the District Court and this Court for 15 years.

19 JUDGE RAGGI: I understand that, I’m just not sure

20 I understand why a delay by this Court is an appropriate

21 action by us to facilitate something like that. We review

22 District Court decisions, that’s what we do.

23 MR. MCGILL: Right. Well, one, the -- obviously,

24 the me too appeals have yet to be dismissed. And that --

25 they may -- that may happen, and if they do, then we’ll be Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 32 of 61

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1 in a different situation. They blew their briefing deadline

2 of yesterday, so that fairly does indicate an intent to

3 dismiss the appeals.

4 JUDGE RAGGI: (indiscernible) sought an extension.

5 MR. MCGILL: Yeah, so the -- you asked the, I

6 think fine, the -- what is the key question? Why should you

7 exercise your discretion in this way? And I think the

8 answer is that it will facilitate the ends that everybody

9 here is professing to want to achieve. And it is so close,

10 and it would be such a tragedy, if it all vaporized, because

11 of a hasty, indicative ruling that was entered.

12 And I should just say, you know, my clients are

13 the lucky ones, right? My clients have had the opportunity

14 to negotiate. There are dozens of plaintiffs who, for whom

15 it’s the tender offer or nothing. And maybe, you know,

16 maybe they’ll be the ones taking the appeals.

17 JUDGE RAGGI: You know, Judge Walker asked you how

18 long do you want your stay, do you want it, (indiscernible)?

19 JUDGE HALL: What’s the (indiscernible)?

20 JUDGE RAGGI: Well, that’s a curious way for us to

21 act. We’re going to delay a ruling? Not for two weeks, not

22 for two months, but until another sovereign takes certain

23 action. I mean, that seems an extremely curious thing, when

24 the two applications before us are to dismiss with prejudice

25 or to decide an appeal that we are prepared to hear you on. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 33 of 61

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1 MR. MCGILL: We will -- I’m perfectly happy to be

2 heard on the 1060 appeal. I think the Court should decide

3 it. It should rule on the merits. But that’s --

4 JUDGE RAGGI: But that’s going to (indiscernible)

5 on that --

6 JUDGE HALL: And that --

7 JUDGE RAGGI: -- you’ll be in the same position as

8 a dismissal with prejudice.

9 MR. MCGILL: Yes, that’s correct, Judge Raggi.

10 That’s correct. And I’m not -- and what we’re -- what we

11 want to do is what we have argued is that this -- when it

12 was just a motion to remand, we argued that the remand

13 should wait until this -- this isn’t even a real indicative

14 ruling, it’s a conditional indicative ruling, right? It’s

15 an indicative ruling that we -- it will vacate if two

16 conditions are satisfied.

17 Now I think maybe seeing the force of that

18 argument, Argentina has changed tactics again, in yet

19 another abrupt procedural maneuver, has now said, “We’re

20 going to dismiss the appeals outright.” And this is all

21 calculated to avoid a hasty -- this is all calculated to

22 avoid any holdup in this Court and to delay any entry of

23 this order.

24 And I think it is -- I would not be protecting my

25 client’s interests and I would not be serving the interests Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 34 of 61

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1 of the other bond holders involved in this appeal, if we did

2 not have an opportunity to seek appellate review of that

3 order, once it’s entered. And our very real concern, our

4 very real concern is that Argentina will satisfy all the

5 conditions and make it impossible to restore injunctive

6 relief. There -- this is an -- this -- Argentina, I

7 recognize that the government has changed --

8 JUDGE WALKER: (indiscernible) relief of the very

9 form.

10 MR. MCGILL: Right. If you reversed --

11 JUDGE WALKER: (indiscernible) appeal onto the --

12 MR. MCGILL: If you reversed -- yeah, if the

13 indicative ruling were entered as an order to vacate and you

14 reversed, it could be, “Well, too bad that we’ve changed the

15 payment mechanics and Bank of New York is no longer the

16 trustee of the U.S. dollar bonds, it’s now (indiscernible),”

17 which is, I have -- it bears mentioning. Argentina remains

18 in contempt of court. They -- it’s un-purged for their

19 legislation to fire Bank of New York as Trustee, and to

20 replace them with an Argentine institution.

21 Judge Griesa had recognized that this was a

22 blatant attempt to evade the injunction. So the --

23 actually, the legislative mechanism is already in place in

24 Argentina. It’s already in place. So there is no way,

25 under the structure of this order, I’ve never seen anything Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 35 of 61

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1 like it. It is a springing vacatur upon satisfaction of two

2 conditions that are entirely within Argentina’s control.

3 They could make them happen tomorrow. It could

4 pass the law and it can wire the funds. The injunction goes

5 away. We change the payment mechanics and we’re left with

6 nothing, except our judgments, which will keep the

7 litigation going forever.

8 JUDGE RAGGI: Why don’t we hear briefly from

9 Argentina, and you know, if you need to respond further,

10 we’ll hear you then? Thank you.

11 MR. MCGILL: Thank you, Judge Raggi.

12 JUDGE WALKER: You have a way of addressing your

13 adversaries concerns here, if you want to settle this case,

14 by agreeing to a period of time that could be used to

15 effectuate these settlements, so that it’s not what I raised

16 earlier., effectively, you know, my way or the highway until

17 Monday.

18 MR. PASKIN: Well, I think it’s interesting, Your

19 Honor, because Mr. McGill effectively said that this is all

20 about settlement leverage. And if the question is, what’s

21 brought the settlement negotiations as close to fruition as

22 they have been with his clients, and have concluded them

23 with other parties, it’s hard to believe, when he says

24 that’s what brought Argentina to that position is the years

25 of history of having these injunctions in place. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 36 of 61

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1 JUDGE HALL: Right, but --

2 MR. PASKIN: It’s --

3 JUDGE WALKER: I’m asking a more direct question.

4 I’m asking you a question as to whether or not there is a

5 possibility that there could be a meeting of the minds on

6 how this is -- how this could play out, rather than our

7 hearing a competing -- competing considerations and having

8 to wrestle with those.

9 MR. PASKIN: Right.

10 JUDGE WALKER: In other words, you heard what he

11 said, and --

12 MR. PASKIN: Yes.

13 JUDGE WALKER: -- his concerns. Is there a way

14 you can address those?

15 MR. PASKIN: I think the way that I would address

16 it is that his description of the terms is not accurate,

17 because it’s not the my way or the highway deadline.

18 JUDGE WALKER: No, he is saying that the

19 effectively, Argentina, once the injunction is lifted, is

20 free to alter all sorts of things and make it very difficult

21 for his clients to get paid in any event. If you want a

22 settlement here, why wouldn’t you want some period of time

23 in which to effectuate that?

24 MR. PASKIN: The period of time has -- we’ve given

25 a period of time. We’re trying to effectuate settlements Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 37 of 61

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1 with as many parties as possible. I think that the

2 existence of the firm deadline is what in fact has brought

3 the parties as close together as they are.

4 JUDGE RAGGI: It’s unlikely you’ll settle with

5 everybody between now and Monday.

6 MR. PASKIN: It’s --

7 JUDGE RAGGI: And the concern is, if you get the

8 injunction lifted, which would, you know, you’re -- the

9 concern is the legislature changes to the law the next day,

10 and you transfer the money immediately to everyone, what

11 you’ll also do is free of the injunction, change transfer

12 agents, do all of the things that have allowed the Court’s

13 injunction to limit Argentina’s violation of the pari passu

14 clause by, you know, basically taking the actions out of the

15 supervision of the United States Court.

16 And while, you know, your client professes to have

17 a new view of all of this, those of us who’ve been involved

18 in the supervision of the litigation for 14 years know that

19 there’ve been changes of heart over time.

20 MR. PASKIN: Absolutely understood, Your Honor. I

21 think the bottom line here is that the situation that he

22 posits is exactly the same situation that he’s currently in,

23 and that he’s been in for years without an ability to get

24 what his clients want.

25 JUDGE RAGGI: Well, except that at least for the Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 38 of 61

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1 last few years, there’s been the injunction.

2 MR. PASKIN: Right, and the --

3 JUDGE RAGGI: That -- and while that may not be

4 the triggering agent that has made the new administration

5 take a different view, it certainly has to have played a

6 part.

7 MR. PASKIN: Of course it’s played a part. And by

8 the District Court having continuing jurisdiction to oversee

9 those issues, if Argentina steps --

10 JUDGE RAGGI: These are changing your transfer

11 banks and all of this. The District Court may not be able

12 to enter the same kind of injunction that it -- that is

13 presently in place.

14 MR. PASKIN: But it still has the power,

15 regardless of any of those changes, it still has the power

16 to block -- to direct Argentina not to make the other

17 payments, essentially to direct Argentina that it can’t

18 violate pari passu.

19 JUDGE WALKER: You don’t have any -- are you not

20 at all concerned about the fact that Judge Griesa has not

21 accommodated the other side here, in terms of meeting with

22 him to discuss the -- or to go over this indicative ruling?

23 MR. PASKIN: Why Judge Griesa did what he did, I

24 wasn’t before him either. So we don’t know.

25 JUDGE HALL: Well, I understand that, but I mean - Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 39 of 61

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1 -

2 JUDGE RAGGI: Would you have any objection to it?

3 Imean--

4 JUDGE HALL: If we were to --

5 JUDGE RAGGI: If we’re going to send this back, do

6 you have any objection to meeting with the Judge and all

7 these concerns being aired before the final ruling is

8 entered?

9 MR. PASKIN: We have no objection at all to

10 whatever proceedings Judge Griesa wishes to hold before he

11 enters his orders. We want to do whatever --

12 JUDGE HALL: (indiscernible) to order him to do

13 certain things, or at least in broad brush?

14 MR. PASKIN: You probably --

15 JUDGE HALL: That is hold a hearing and hear from

16 those parties that want to be present, prior to entering

17 this order?

18 MR. PASKIN: Your Honor probably knows the answer

19 to that question better than I do, but if you believe that

20 that’s something that you can and should do, well then,

21 we’ll appear at the hearing and defend the positions that

22 we’ve already articulated and that have already been

23 responded to on the papers.

24 JUDGE RAGGI: Let me ask you another question, I

25 was concerned with Mr. McGill that he was asking us to delay Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 40 of 61

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1 rulings as a way of ensuring that they would have the time

2 to appeal any action by the District Court, or at least

3 delay any action until they were heard.

4 If we were to go ahead and rule, as you’re urging

5 us to do, and the District Court lifts the injunction, are

6 you prepared to agree to something like a 24 or a 48 hour

7 period before you take any action, to give them at least a

8 time to come to the Court and seek whatever redress they

9 want? That’s not to say they’ll be successful, but at least

10 to ensure that before anything happens, they’ve had an

11 opportunity to be heard by this Court.

12 MR. PASKIN: As I said before, Your Honor, we have

13 no objection to appropriate appellate review of what the

14 District Court has articulated in its indicative ruling.

15 JUDGE WALKER: Is the offer -- does the offer that

16 expires on the 29th, do you have authority to extend that

17 offer?

18 MR. PASKIN: I do not.

19 JUDGE WALKER: Mm hmm.

20 MR. PASKIN: But as I was saying, first of all, 24

21 or 48 hours functionally wouldn’t matter because to get the

22 laws changed is going to take more than 24 or 48 hours. To

23 set up the mechanics to pay the people who settle by the

24 deadline is going to take more than 24 or 48 hours. And as

25 I explained earlier, as a practical matter, unless Argentina Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 41 of 61

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1 knows that the order that Judge Griesa anticipates entering

2 is a good order that’s going to hold up, then they can’t

3 meet the conditions. They need that certainty.

4 So I would submit that we have just the same

5 interest in having finality associated with that order, as

6 Mr. McGill says he has, and that’s why I don’t understand

7 his suggestion that there be this delay built in. He should

8 be as anxious as anybody to say, “This case should go back

9 to the District Court, reduce it to real orders that are

10 appealable, appeal it as quickly as possible,” and all of

11 that’s going to happen very quickly.

12 JUDGE RAGGI: Anything else? Otherwise, I’m going

13 to let Mr. McGill have the last word here.

14 MR. PASKIN: No, that’s all, Your Honor. Thank

15 you.

16 JUDGE RAGGI: Mr. McGill, you’ve heard what

17 Argentina’s position is on all of this.

18 MR. MCGILL: If Argentina won’t agree to a stay of

19 even 24 hours, then this is a cram down period. There is no

20 other way to describe it. It is take the tender offer or

21 you get nothing.

22 JUDGE RAGGI: All right, well let’s

23 (indiscernible) --

24 MR. MCGILL: That --

25 JUDGE HALL: You’re saying he does have authority Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 42 of 61

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1 to do it, but we’ve got the rest of this week to sort it

2 out. Suppose we say we’ll -- we won’t decide these motions

3 for three days, and then in the meantime, we direct the

4 parties to appear before Judge Griesa?

5 MR. MCGILL: I think this Court has ample

6 authority and discretion under Rule 42(b) to condition its

7 dismissal on proceedings in the District Court. It could

8 condition its dismissal on the Court’s entry of a stay

9 pending appeal of some length of time. It could be brief,

10 to allow a properly briefed and argued stay motion to happen

11 before a motions panel of this Court --

12 JUDGE WALKER: You have no problem with us

13 granting all the motions, but if we included with it a stay

14 of any effectuation of the order until -- to give you an

15 opportunity to appeal, and a directive to appear before

16 Judge Griesa?

17 MR. MCGILL: I think. Judge Walker, you know, I’ve

18 avoided talking about the substance of the indicative

19 ruling. I think the indicative ruling is deeply, deeply

20 flawed. But, I --

21 JUDGE RAGGI: Right, but that’s --

22 MR. MCGILL: -- I, so I --

23 JUDGE RAGGI: -- (indiscernible) whether you have

24 had an opportunity to be heard by the District Court,

25 whether you have the opportunity to be heard (indiscernible) Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 43 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 39 of 54Page 38

1 --

2 MR. MCGILL: If we have an opportunity to be heard

3 by both forums, I think that would solve many of the

4 concerns I have about the picture I painted of the

5 injunction going away very suddenly. I do need to make just

6 one more point. The me too appeals involved 49 different

7 cases. I am, you know, here in -- from in those cases, I’m

8 here for three large hedge funds that have the bulk of the

9 claims. But there are dozens of other parties who have had

10 no opportunity to negotiate. I urge the Court to look at

11 the letters of Mr. Michael Spencer, describing what he has

12 had in terms of an opportunity to negotiate.

13 JUDGE RAGGI: Negotiate settlement.

14 MR. MCGILL: Negotiate a settlement. He’s not

15 nobody. He’s got almost a billion dollars of claims here.

16 And, you know, and he represents individuals from Argentina

17 who bought these bonds at par before default. He represents

18 some small funds, but there’s been no meaningful opportunity

19 for these people to negotiate. And for them, it really is a

20 cram down, and that is -- it is obvious, any sentient being

21 can see what’s going on here. It is settle with the big

22 guys by -- and then tell everyone else on February 29th to

23 take a hike.

24 And I don’t think this Court should be party to

25 it. I urge the Court to condition any dismissal on at least Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 44 of 61

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1 those non-settling parties having ample opportunity to be

2 heard in the District Court and to be heard in this Court

3 before any vacatur of the injunction takes effect.

4 JUDGE RAGGI: Well, I mean, let me ask both

5 parties again to avoid any misunderstanding about this. So

6 what you’re suggesting is that if we grant relief here,

7 namely the dismissal, that the order indicate that we

8 understand this is sought for the purposes of allowing the

9 indicative ruling to be an actual ruling, and that before

10 that’s done, all parties in the two cases should have the

11 opportunity to be heard by the District Court.

12 MR. MCGILL: I would add to that, Judge Raggi,

13 that -- and before any vacatur takes effect, that the Court

14 stay it for a -- whatever period of time this Court views is

15 sufficient, to --

16 JUDGE WALKER: Well, you would stay it until a

17 proper stay motion with more --

18 MR. MCGILL: Right.

19 JUDGE WALKER: -- with better papers and so forth

20 could be made before a motions panel of this Court.

21 MR. MCGILL: Right. And I don’t want to presume

22 what length of time that should be. But we would accept,

23 speaking for the people I represent, we would accept any

24 conditions that the Court wants to impose.

25 JUDGE RAGGI: (indiscernible) all kinds of Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 45 of 61

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1 (indiscernible). I’ve seen District Courts grant stays for

2 only 24 hours on the theory that then a judge of this court

3 can decide whether to enter a longer stay. I’ve seen judges

4 enter a stay for a week. So there are lots of ways that’s

5 done. Counsel, Mr. Paskin, what’s your view on what’s being

6 proposed here?

7 MR. PASKIN: I think, Your Honor, that with

8 respect to the idea that we be directed to appear before

9 Judge Griesa. We have no objection to that whatsoever.

10 JUDGE RAGGI: And all parties, so that all parties

11 are (indiscernible) --

12 MR. PASKIN: That any party who wants to appear --

13 JUDGE WALKER: (indiscernible) pending any appeal.

14 MR. PASKIN: A stay pending any appeal, as Your

15 Honor suggested, I think if you want to grant a stay that

16 gives them enough time to apply for a stay to this Court, we

17 have no --

18 JUDGE WALKER: (indiscernible) on Tuesday.

19 MR. PASKIN: Yes, we have no problem with that,

20 Your Honor.

21 JUDGE WALKER: I think we’re going to discuss it

22 and then come back and tell them what we’re going to do.

23 JUDGE RAGGI: All right. Given the time

24 sensitivity of this, we’d like to conference and ask you to

25 wait. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 46 of 61

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1 MR. PASKIN: Okay. Thank you, Your Honor.

2 MR. MCGILL: Very well, Your Honor.

3 JUDGE RAGGI: Okay, thank you very much.

4 CLERK: The Court’s in recess. Judges of the

5 United States Court of Appeals for the Second Circuit.

6 JUDGE RAGGI: Please be seated. First of all, let

7 me thank all counsel for their arguments and responsiveness

8 to our questions. It is our inclination, subject to hearing

9 from you now, to grant the dismissals with prejudice, but

10 subject to certain agreements that we understand counsel to

11 have indicated a moment ago. So I’m going to try to speak

12 slowly and suggest that this is a draft of an order, but I

13 think substantively, it captures what we want. I may have

14 to clean up our syntax a little bit.

15 We expect to note that motions to dismiss the

16 appeals in, and then list all the docket numbers that

17 pertain, have been sought in order to allow the District

18 Court to enter orders indicated in its indicative ruling of

19 February 19th.

20 The motions are granted pursuant to the party’s

21 agreement. One, that Argentina will give notice to all

22 parties in these actions. If it moves the District Court to

23 formalize the indicative rulings, and Argentina will afford

24 the parties an opportunity to be heard before the District

25 Court. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 47 of 61

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1 Then number two, Argentina agrees to the entry of

2 a stay of any order of the District Court for up to two

3 weeks, so that the parties can file a notice of appeal

4 within two business days of the order, and then, seek a stay

5 from a motions panel of this Court pending appeal.

6 If you gentlemen want to think about this for a

7 moment or talk among yourselves, we’re happy to give you

8 some time. Otherwise, the question is whether we’ve

9 correctly understood what you just agreed to and whether

10 there’s any other concerns we should be mindful of before we

11 proceed in the way I’m just indicating.

12 MR. MCGILL: May I be heard, Judge Raggi?

13 JUDGE RAGGI: Sure.

14 MR. MCGILL: On the -- if I understand correctly

15 the first of the two conditions you set forth, it’s that

16 Argentina will provide notice to all of the affected parties

17 that it is filing a motion to formalize the indicative

18 ruling. My -- this is -- I think the substance of that is

19 fine, except for one unique feature of this indicative

20 ruling, is that I do not read it to contemplate any further

21 action by the District Court.

22 JUDGE HALL: Well, the indicative ruling --

23 MR. MCGILL: Or excuse me, I misspoke.

24 JUDGE HALL: A precondition here is that the

25 indicative ruling can’t take effect otherwise. Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 48 of 61

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1 MR. MCGILL: So that it will take effect only

2 after a motion being made on notice, not ex parte --

3 JUDGE HALL: Right.

4 MR. MCGILL: -- in the District Court, and we --

5 us having an opportunity to brief and be heard on that

6 motion?

7 JUDGE RAGGI: Well, my first sentence, which I

8 know went by quickly, says that the motions to dismiss the

9 appeals in docket numbers whatever are sought in order to

10 allow the District Court to enter orders indicated in its

11 indicative ruling. So we are contemplating that the

12 indicative ruling has no force in effect by itself.

13 This Court has to return jurisdiction to the

14 District Court, whereupon the ruling is indicated it wants

15 to enter once it has jurisdiction could be entered. And

16 pursuant to your agreement, and Argentina has to indicate

17 whether this is correct, Argentina has agreed it’ll give

18 notice to everybody and afford them an opportunity to be

19 heard when it says to Judge Griesa, “You’ve got jurisdiction

20 again, enter your orders.” And it will also agree to a

21 modest stay, so that you can come up and file your notice of

22 appeal and move for a stay and take your chances as to how

23 that will go for you.

24 MR. MCGILL: On the understanding that as the

25 first condition that there will be a motion filed in the Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 49 of 61

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1 District Court --

2 JUDGE HALL: Yes, because the indicative ruling is

3 just -- he’s indicated what his ruling will be. He hasn’t -

4 - it’s not a ruling yet.

5 MR. MCGILL: I understand that part.

6 JUDGE HALL: It won’t be a ruling until he says

7 it’s a ruling.

8 MR. MCGILL: I clearly understand that part. What

9 I am concerned about, and I, I’ll just put it on the table,

10 and I just want to make sure we all have a clear

11 understanding, since this is an agreement among the parties,

12 is that --

13 JUDGE RAGGI: Let me see if I can tweak language,

14 but I’d first like to hear from Argentina, so that I know

15 exactly -- I’d like to know whether we have an agreement on

16 the large points or not?

17 MR. PASKIN: Right. Yes, thank you, Your Honor.

18 JUDGE RAGGI: Mr. Paskin.

19 MR. PASKIN: With respect to the points as Your

20 Honor laid them out, yes, we can agree to those conditions.

21 I believe the point that Mr. McGill was getting at is that

22 it is possible, and without knowing what the District

23 Court’s intent is, that the District Court doesn’t believe a

24 further motion by Argentina is necessary in order to just

25 say, “I’ve received remand, now I’m going to enter the Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 50 of 61

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1 orders.”

2 JUDGE WALKER: Because the orders say, because the

3 indicative orders say that it becomes effective as an order,

4 upon remand, or does it require -- does it say -- is it

5 silent?

6 MR. PASKIN: It’s silent about that. So but the

7 question is, because the motions were put before the

8 District Court on -- seeking the underlying substantive

9 relief, the District Court has those motions. And so, the

10 question I believe for this Court is not necessarily whether

11 Argentina can agree to say, “If we move to formalize the

12 order, we’re going to give notice,” but whether, you know --

13 but what to do in the event that the District Court on its

14 own determines that now that the case has been remanded, I

15 can just enter my orders.

16 JUDGE RAGGI: Well, let me suggest this, though I

17 could be blunter even than this, we would say that the

18 motions are granted pursuant to the parties agreements.

19 One, that before any indicative order is formalized,

20 Argentina will give notice to all parties of its intent to

21 request such an order, and an opportunity to be heard before

22 the District Court. Now that’s one way of doing it.

23 You know, another is to say that motions to

24 dismiss the appeals have been sought in order to allow the

25 District Court upon motions of the parties to enter orders Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 51 of 61

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1 indicated in the indicative ruling. Or, I could do both, as

2 belts and suspenders, you know, whatever. I want to capture

3 what you all have agreed to.

4 MR. PASKIN: Right. I understand, Your Honor, and

5 again, the way Your Honor described it is perfectly

6 acceptable to us. But I think that if you really want to

7 ensure that notice happens, I think that it needs to account

8 for the possibility that there would be no motion required

9 in order to get the District Court to issue its orders.

10 So it could be that the District Court, prior to

11 issuing such orders, must notify or must require Argentina

12 to notify all parties of this remand and the fact that --

13 something along those lines.

14 JUDGE RAGGI: (indiscernible) give you notice of

15 the remand.

16 MR. PASKIN: Exactly.

17 JUDGE RAGGI: The final -- a final sentence could

18 read, “Jurisdiction is returned to the District Court in

19 order to allow motions to be made consistent with the

20 agreements of the parties stated above,” something to that

21 effect.

22 MR. PASKIN: Yes.

23 JUDGE RAGGI: Now we have belts, suspenders.

24 MR. PASKIN: Yes. That would be fine, Your Honor.

25 I would envision a one line motion that says -- Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 52 of 61

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1 JUDGE WALKER: Or we could even say it a little

2 further, not only an order to, it’s conditioned upon the

3 District Court.

4 JUDGE RAGGI: On condition.

5 JUDGE WALKER: On condition that the parties have

6 notice and be able to appear before the District Court

7 before any finalization of the indicative order.

8 JUDGE RAGGI: All right.

9 MR. PASKIN: That’s certainly acceptable to us.

10 JUDGE RAGGI: Now I will need a little time to get

11 this in, you know, cogent English, but do you have another

12 suggestion?

13 JUDGE HALL: Do you have something else?

14 MR. MCGILL: I have one last friendly suggestion.

15 Could -- as a part of the second condition, could you

16 please, in all cases, waive federal rule of Appellate

17 Procedure Eight, which would require us to seek a stay in

18 the District Court first?

19 JUDGE HALL: You’re getting this stay pursuant to

20 the order, I think.

21 JUDGE RAGGI: Why should we do that, if the

22 District Court grants you the stay, you’ve got what you

23 want. Why should we eliminate that? Maybe I’m missing

24 something.

25 MR. MCGILL: Well, I just -- the way I had Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 53 of 61

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1 understood what Your Honors had suggested was that there --

2 that the District Court would impose a stay for two weeks,

3 in order for us to seek a stay pending appeal in this Court.

4 And on my reading of --

5 JUDGE HALL: You want us to waive the requirement

6 when you’re seeking a stay with us that you have sought the

7 stay?

8 MR. MCGILL: Correct.

9 JUDGE RAGGI: Oh.

10 MR. MCGILL: Yes.

11 JUDGE RAGGI: So --

12 MR. MCGILL: It’s a procedural formality, but I

13 want to be observant of the formalities.

14 JUDGE WALKER: (indiscernible) shoelaces with the

15 belt and suspenders.

16 MR. MCGILL: Don’t want to trip and fall.

17 JUDGE WALKER: Absolutely.

18 MR. MCGILL: I think with -- I would also --

19 JUDGE RAGGI: Rule Eight?

20 MR. MCGILL: Yes, of the Appellate Procedure

21 Rules. And I understand the Court to be saying in the

22 beginning, when you said, when you referred to all of the

23 cases. We’re talking about the consolidated appeals 15-

24 1060, and 15-3675.

25 JUDGE RAGGI: I have I think seven numbers just Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 54 of 61

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1 for the appeal today. And then, there are numbers there.

2 Frankly, I would not mind if the parties were able to ensure

3 that we’ve got everybody (indiscernible) -- I’m sorry

4 (indiscernible) go back here --

5 MR. MCGILL: May I suggest something that would

6 make that very easy for Your Honor?

7 JUDGE RAGGI: Yes.

8 MR. MCGILL: And with his (indiscernible) -- this

9 is on the fly, but perhaps, since he is -- since you are

10 dismissing everything, consolidate the two appeals,

11 consolidate 1060 and 3675, then it all goes back down in one

12 neat package.

13 JUDGE WALKER: (indiscernible) good?

14 MR. PASKIN: That seems fine to me, Your Honor.

15 JUDGE WALKER: I didn’t hear what you said. You

16 said it seems fine?

17 MR. PASKIN: I said that seems fine.

18 JUDGE RAGGI: All right, so it’s consolidating the

19 1060 and the 1035, is that the --

20 MR. MCGILL: 3675.

21 JUDGE RAGGI: 3675.

22 MR. MCGILL: And then, what I envision would

23 happen is that when -- unfortunately there’s many, many

24 parties, so what we -- if there is an appeal, there would be

25 many appeals. So we would -- if the Court wishes, we can Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 55 of 61

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1 move to consolidate at that time, or the Court could include

2 it in its order that any appeal from the order will be

3 consolidated in a single docket.

4 JUDGE RAGGI: I’m not inclined to consolidate in

5 advance of knowing what goes on and who’s appealing on what

6 grounds, but I -- you can certainly move to consolidate, if

7 everybody’s bringing common issues or (indiscernible) --

8 MR. MCGILL: We’ve --

9 JUDGE RAGGI: That’s fine.

10 MR. MCGILL: Historically, we’ve always

11 (indiscernible) --

12 JUDGE RAGGI: We would consolidate simply for

13 purposes of the order. There -- I think you may have a

14 colleague who wants to consolidate?

15 MAN: (indiscernible).

16 JUDGE RAGGI: You are, sir?

17 MAN: (indiscernible) representing

18 (indiscernible). I (indiscernible) convenience of the Court

19 and the parties that they might indeed want to allow

20 (indiscernible) to make consolidated (indiscernible), simply

21 to do it as (indiscernible).

22 JUDGE RAGGI: We’ll consider that. I need to

23 think about that, and I’m sure my colleagues do, too.

24 Anything else? All right, we will try to get this in clean

25 prose and out as soon as possible. Thank you all again for Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 56 of 61

Case 1:08-cv-06978-TPG Document 902-1 Filed 02/29/16 Page 52 of 54Page 51

1 your attention to this matter.

2 CLERK: The Court stands adjourned.

25 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 57 of 61

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1 INDEX

3 RULINGS

4 Grant the dismissals with prejudice, but subject to certain

5 agreements, Argentina agrees to entry of stay and

6 consolidation of 1060 and 1035 Page 41 Line(s) 8-11

25 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 58 of 61

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1 CERTIFICATION

3 I, Sonya Ledanski Hyde, certified that the foregoing

4 transcript is a true and accurate record of the proceedings.

8 Sonya Ledanski Hyde

20 Veritext Legal Solutions

21 330 Old Country Road

22 Suite 300

23 Mineola, NY 11501

25 Date: February 25, 2016 Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 59 of 61

Case 1:08-cv-06978-TPG Document 902-2 Filed 02/29/16 Page 1 of 3

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------x NML CAPITAL, LTD., : : 08 Civ. 6978 (TPG) Plaintiff, : 09 Civ. 1707 (TPG) : 09 Civ. 1708 (TPG) v. : 14 Civ. 8601 (TPG) : 14 Civ. 8988 (TPG) THE REPUBLIC OF ARGENTINA, : : Defendant. : ------x : AURELIUS CAPITAL MASTER, LTD. and : ACP MASTER, LTD., : 09 Civ. 8757 (TPG) : 09 Civ. 10620 (TPG) Plaintiffs, : : v. : : THE REPUBLIC OF ARGENTINA, : : Defendant. : : ------x : AURELIUS OPPORTUNITIES FUND II, LLC : and AURELIUS CAPITAL MASTER, LTD., : 10 Civ. 1602 (TPG) : 10 Civ. 3507 (TPG) Plaintiffs, : : v. : : THE REPUBLIC OF ARGENTINA, : : Defendant. : : (captions continued on next page) ------x

[PROPOSED] ORDER

15903544.1.LITIGATION Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 60 of 61

Case 1:08-cv-06978-TPG Document 902-2 Filed 02/29/16 Page 2 of 3

------x AURELIUS CAPITAL MASTER, LTD. and : 10 Civ. 3970 (TPG) AURELIUS OPPORTUNITIES FUND II, LLC, : 10 Civ. 8339 (TPG) : Plaintiffs, : : v. : : THE REPUBLIC OF ARGENTINA, : : Defendant. : ------x BLUE ANGEL CAPITAL I LLC, : : Plaintiff, : 10 Civ. 4101 (TPG) : 10 Civ. 4782 (TPG) v. : 14 Civ. 8947 (TPG) : THE REPUBLIC OF ARGENTINA, : : Defendant. : ------x OLIFANT FUND, LTD., : : Plaintiff, : 10 Civ. 9587 (TPG) : v. : : THE REPUBLIC OF ARGENTINA, : : Defendant. : ------x AURELIUS CAPITAL PARTNERS, LP AND : AURELIUS CAPITAL MASTER, LTD. : : Plaintiffs, : : v. : : 14 Civ. 8946 (TPG) THE REPUBLIC OF ARGENTINA, : : Defendant. : ------x

15903544.1.LITIGATION Case 1:16-cv-02238-TPG Document 37-14 Filed 04/07/16 Page 61 of 61

Case 1:08-cv-06978-TPG Document 902-2 Filed 02/29/16 Page 3 of 3

------x FFI FUND, LTD. AND FYI LTD., : : Plaintiffs, : : v. : : THE REPUBLIC OF ARGENTINA, : 14 Civ. 8630 (TPG) : Defendant. : ------x

It is HEREBY ORDERED that the injunctions entered in the above-captioned actions

(the “Injunctions”) shall be vacated upon the occurrence of two conditions precedent:

(1) The Republic repeals all legislative obstacles to settlement with the FAA bondholders, including the Lock Law and the Sovereign Payment Law;

(2) The Republic must make full payment in accordance with the specific terms of the Agreement in Principle it has entered into with the Plaintiffs in the above-captioned actions, dated February 28, 2016 (the “AIP”). The Republic must also notify the court (with simultaneous copy of notice provided to Plaintiffs) once Plaintiffs have all received full payment. For the avoidance of doubt, if Plaintiffs do not receive full payment in accordance with the specific terms of the AIP for any reason, including if Plaintiffs terminate the AIP on or after April 14, 2016 at 12:00 noon EST in accordance with the terms of the AIP, the Injunctions shall remain in place.

SO ORDERED

Dated: New York, New York ______, 2016 ______Thomas P. Griesa United States District Judge

15903544.1.LITIGATION Case 1:16-cv-02238-TPG Document 37-15 Filed 04/07/16 Page 1 of 4

EXHIBIT 14 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 516, 04/06/2016, 37-15 Filed 1743751, 04/07/16 Page1 Page of 3 2 of 4

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

AURELIUS CAPITAL MASTER, LTD. AND ACP MASTER, LTD., Plaintiffs-Appellants, No. 16-628(L) -against-

THE REPUBLIC OF ARGENTINA,

Defendant-Appellee.

DEFENDANT-APPELLEE THE REPUBLIC OF ARGENTINA’S OPPOSITION TO THE MOTION OF THE AMICI CURIAE FOREIGN-LAW BONDHOLDERS TO PARTICIPATE IN ORAL ARGUMENT

The Republic of Argentina (the “Republic”) respectfully submits that the

Motion of Amici Curiae Foreign-Law Bondholders to Participate in Oral Argument (the

“Motion”) should be denied.

One condition of the Order on appeal is that “[f]or all plaintiffs that entered into agreements in principle with the Republic on or before February 29, 2016, the Republic must make full payment in accordance with the specific terms of each such agreement”. (Doc. 2 at 5.) The Motion asserts that the Foreign-Law Bondholders reached settlement agreements with the Republic on or before February 29, 2016. (See

Doc. 507 at 2.) Consequently, the Foreign-Law Bondholders contend, payment of amounts due under their alleged agreements is a condition precedent to vacatur of the injunctions. (See id.; Doc. 502-1 at 1.) The Republic disagrees because the Republic did not countersign the Agreement Schedules submitted by the Foreign-Law Bondholders, as CaseCase 1:16-cv-02238-TPG 16-628, Document Document 516, 04/06/2016, 37-15 Filed 1743751, 04/07/16 Page2 Page of 3 3 of 4

was expressly required by the agreement documents. (See A-645-49; A-1617-18;

A-1620-29.)

This discrete issue of whether the Foreign Law Bondholders have reached agreement with the Republic is not appropriately addressed to this Court in the first instance. In fact, the Foreign-Law Bondholders (together with other bondholders) filed a

Complaint in the district court on March 25 against the Republic asking for injunctive and declaratory relief on the same issue. (No. 16 Civ. 2238, Doc. 1.) Thus, when they moved this Court to participate in oral argument, there was already an action pending in the district court that would fully resolve the concerns expressed by the Foreign-Law

Bondholders.

The rest of the Motion is no more than rhetoric, and it would not be productive to permit the Foreign-Law Bondholders to repeat it at oral argument. The

Republic has not “reneged” (Doc. 507 at 2) on any agreements. And the Republic did not

“attempt[] after the fact to insert a statute-of-limitations proviso” into its settlement proposal. (Id.) The Republic’s proposal included a provision stating that claims barred by applicable statutes would not be recognized, and the provision was incorporated by reference into the terms of the form settlement agreement published by the Republic.

(See A-645-49; A-1617-18; A-1620-29.) The inclusion of time-barred claims is the reason the Republic did not countersign Agreement Schedule submitted by the Foreign-

Law Bondholders, and so no settlement agreement was completed.

For these reasons, the Motion should be denied.

2 CaseCase 1:16-cv-02238-TPG 16-628, Document Document 516, 04/06/2016, 37-15 Filed 1743751, 04/07/16 Page3 Page of 3 4 of 4

April 6, 2016

Respectfully submitted,

CRAVATH, SWAINE & MOORE LLP,

by /s/ Michael A. Paskin Daniel Slifkin Michael A. Paskin Damaris Hernández Members of the Firm

Worldwide Plaza 825 Eighth Avenue New York, NY 10019 (212) 474-1000 [email protected]

Attorneys for Defendant-Appellee The Republic of Argentina

3 Case 1:16-cv-02238-TPG Document 37-16 Filed 04/07/16 Page 1 of 5 Case 1:16-cv-02238-TPG Document 37-16 Filed 04/07/16 Page 2 of 5 Case 1:16-cv-02238-TPG Document 37-16 Filed 04/07/16 Page 3 of 5 Case 1:16-cv-02238-TPG Document 37-16 Filed 04/07/16 Page 4 of 5 Case 1:16-cv-02238-TPG Document 37-16 Filed 04/07/16 Page 5 of 5 Case 1:16-cv-02238-TPG Document 37-17 Filed 04/07/16 Page 1 of 35

EXHIBIT 16 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 35 of 71 SCHEDULE I

Plaintiff ISIN Governing Debt Instrument Case 1:16-cv-02238-TPGDocument37-17Filed04/07/16Page2of35 ARAG-A

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CH0005458101 November 26, 1996 prospectus (the “CH0005458101 Prospectus”)

1 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 36 of 71

Plaintiff ISIN Governing Debt Instrument

XS0105694789 Trust Deed dated as of July 23, 1993 (the “Trust Deed”) Case 1:16-cv-02238-TPGDocument37-17Filed04/07/16Page3of35

XS0124528703 Trust Deed

DE0005450258 September 7, 2000 offering circular (the “DE0005450258 Offering Circular”)

DE0001300200 November 14, 1995 information memorandum (the “DE0001300200 Information Memorandum”)

DE0004509005 January 26, 2000 offering circular, as amended (the “DE0004509005 Offering Circular”)

DE0001308609 February 6, 1996 information memorandum (the “DE0001308609 Information Memorandum”)

DE0004500558 December 7, 1999 offering circular (the “DE0004500558 Offering Circular”)

DE0001319507 April 10, 2996 prospectus (the “DE0001319507 Prospectus”)

DE0001325017 October 1996 prospectus (the “DE0001325017 Prospectus”)

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DE0001904308 March 18, 1997 offering circular (the “DE0001904308 Offering Circular”)

XS0098314874 Trust Deed

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DE0001974608 February 26, 1998 offering circular (the “DE0001974608 Offering Circular”)

2 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 37 of 71

Plaintiff ISIN Governing Debt Instrument

DE0001354751 December 31, 1996 offering circular (the “DE0001354751 Offering Circular”) Case 1:16-cv-02238-TPGDocument37-17Filed04/07/16Page4of35

DE0003089850 June 30, 1999 offering circular (the “DE0003089850 Offering Circular”)

XS0089277825 Trust Deed

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DE0001954907 October 30, 1997 offering circular (the “DE0001954907 Offering Circular”)

XS0084071421 Trust Deed

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DE0003045357 June 4, 1999 offering circular (the “DE0003045357 Offering Circular”)

DE0002466208 June 20, 2000 offering circular (the “DE0002466208 Offering Circular”)

DE0001340909 October 1996 prospectus (the “DE0001340909 Prospectus”)

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XS0113833510 Trust Deed

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DE0001767101 November 17, 1998 subscription agreement (the “DE0001767101 Subscription Agreement”)

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3 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 38 of 71

Plaintiff ISIN Governing Debt Instrument

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ARARGE031633 May 22, 2001 prospectus (the “ARARGE031633 Prospectus”) ARAG-O

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Plaintiff ISIN Governing Debt Instrument

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5 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 40 of 71

Plaintiff ISIN Governing Debt Instrument

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XS0089277825 Trust Deed

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ARARGE031633 ARARGE031633 Prospectus

6 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 41 of 71

Plaintiff ISIN Governing Debt Instrument

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CH0005458101 CH0005458101 Prospectus

7 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 42 of 71

Plaintiff ISIN Governing Debt Instrument

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XS0124528703 Trust Deed

DE0005450258 DE0005450258 Offering Circular

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8 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 43 of 71

Plaintiff ISIN Governing Debt Instrument

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XS0084071421 Trust Deed

DE0002998952 DE0002998952 Offering Circular

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9 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 44 of 71

Plaintiff ISIN Governing Debt Instrument

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10 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 45 of 71

Plaintiff ISIN Governing Debt Instrument

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11 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 46 of 71

Plaintiff ISIN Governing Debt Instrument

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DE0002929452 DE0002929452 Offering Circular

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12 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 47 of 71

Plaintiff ISIN Governing Debt Instrument

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13 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 48 of 71

Plaintiff ISIN Governing Debt Instrument

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14 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 49 of 71

Plaintiff ISIN Governing Debt Instrument

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15 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 50 of 71

Plaintiff ISIN Governing Debt Instrument

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16 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 51 of 71

Plaintiff ISIN Governing Debt Instrument

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17 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 52 of 71

Plaintiff ISIN Governing Debt Instrument

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18 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 53 of 71

Plaintiff ISIN Governing Debt Instrument

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Plaintiff ISIN Governing Debt Instrument

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Plaintiff ISIN Governing Debt Instrument

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21 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 56 of 71

Plaintiff ISIN Governing Debt Instrument

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Plaintiff ISIN Governing Debt Instrument

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24 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 59 of 71

Plaintiff ISIN Governing Debt Instrument

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Plaintiff ISIN Governing Debt Instrument

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26 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 61 of 71

Plaintiff ISIN Governing Debt Instrument

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27 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 62 of 71

Plaintiff ISIN Governing Debt Instrument

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28 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 63 of 71

Plaintiff ISIN Governing Debt Instrument

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29 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 64 of 71

Plaintiff ISIN Governing Debt Instrument

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30 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 65 of 71

Plaintiff ISIN Governing Debt Instrument

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31 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 66 of 71

Plaintiff ISIN Governing Debt Instrument

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32 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 67 of 71

Plaintiff ISIN Governing Debt Instrument

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33 Case 1:16-cv-02238 Document 1 Filed 03/25/16 Page 68 of 71

Plaintiff ISIN Governing Debt Instrument

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CH0005458101 CH0005458101 Prospectus

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34 Case 1:16-cv-02238-TPG Document 37-18 Filed 04/07/16 Page 1 of 26

EXHIBIT 17 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893 FiledFiled 02/26/1604/07/16 PagePage 12 ofof 526 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893 FiledFiled 02/26/1604/07/16 PagePage 23 ofof 526 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893 FiledFiled 02/26/1604/07/16 PagePage 34 ofof 526 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893 FiledFiled 02/26/1604/07/16 PagePage 45 ofof 526 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893 FiledFiled 02/26/1604/07/16 PagePage 56 ofof 526 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG DocumentDocument 37-18893-1 FiledFiled 04/07/1602/26/16 PagePage 71 ofof 261

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CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG DocumentDocument 37-18893-2 FiledFiled 04/07/1602/26/16 PagePage 81 ofof 262

Carter, Christopher Louis

From: Max Lee Sent: Tuesday, February 16, 2016 6:48 PM To: Santiago Bausili Cc: Thomas Curran; Santiago Bausili Subject: RE: Argentina Holdout Issue Attachments: Fore German & English Untendered Bonds Holdings ISIN (2.16.2016).xlsx

Dear Santiago,

As discussed, please see attached a spreadsheet showing the ISIN of the English and German untendered bonds Fore owns.

Please confirm that Argentina is offering 150% of principal/face value for all the bonds in the attached spreadsheet.

Once we have the confirmation, we can discuss the next step/paperwork.

We believe we will be able to assist Argentina in achieving a quick resolution with the other group members as well.

Thanks.

Max Lee Fore Research & Management, LP 510 Madison Avenue, 11th Floor New York, NY, 10022

From: Santiago Bausili Sent: Tuesday, February 16, 2016 5:24 PM To: Max Lee Cc: Thomas Curran; Javier Fraga ; Santiago Bausili Subject: Re: Argentina Holdout Issue

Hello Max, thank you for reaching out. If you are going to be in the office for a little bit longer I can give you a call there.

Best,

1 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG DocumentDocument 37-18893-2 FiledFiled 04/07/1602/26/16 PagePage 92 ofof 262

German Law 1 DE0001300200 2 DE0001308609 3 DE0001319507 4 DE0001325017 5 DE0001340909 6 DE0001340917 7 DE0001348100 8 DE0001354751 9 DE0001767101 10 DE0001904308 11 DE0001954907 12 DE0001974608 13 DE0002466208 14 DE0002483203 15 DE0002488509 16 DE0002923851 17 DE0002929452 18 DE0002966900 19 DE0002998952 20 DE0003045357 21 DE0003089850 22 DE0003527966 23 DE0003538914 24 DE0004500558 25 DE0004509005 26 DE0005450258

English Law 1USP8055KFQ33 2 XS0070531420 3 XS0071898349 4 XS0076397248 5 XS0077243730 6 XS0078502399 7 XS0080809253 8 XS0081057589 9 XS0084071421 10 XS0084832483 11 XS0088590863 12 XS0089277825 13 XS0096960751 14 XS0098314874 15 XS0105224470 16 XS0105694789 17 XS0109203298 18 XS0103457585 19 XS0124528703 20 XS0113833510 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893-3 Filed Filed 04/07/16 02/26/16 Page Page 10 1 of 126

Carter, Christopher Louis

From: Santiago Bausili Sent: Wednesday, February 17, 2016 1:22 PM To: Max Lee Cc: Osvaldo A. Colazo; Santiago Bausili; Thomas Curran Subject: Re: Argentina Holdout Issue

Max, we were working on providing the following link and agreement for you to execute. https://urldefense.proofpoint.com/v2/url?u=http-3A__www.economia.gob.ar_instrucciones-2Dpara-2Dla-2Dparticipacion- 2Den-2Dla-2Dpropuesta-2Dpreliminar-2Dargentina_&d=CwIF- g&c=wbMekZ1iboz3wtx3lILI8YgCUSSh7g3G58syakvKORs&r=VoJJj7SRnEki6ziFFQEDd2xi1BYukmungELX8taXpk45CF TG-8ApkVVLWKDk_-7W&m=oiU9Q_Hx9PGcgT9ZSWKiXz- nHCYdJ5fChhj4IuTvAJU&s=PCR3PjYX0FGJUa7UzHWhyEIXtrjdmzA3Cz6YibFawLk&e=

Let us know if you have any question.

We did not find any issues in the list of ISINs that you sent us.

Best,

On Feb 17, 2016, at 3:04 PM, Max Lee wrote:

Dear Santiago/Osvaldo,

We are operating under the assumption that Argentina will be getting back to us today to confirm the ISINs. If we do not hear back by 4pm EST today (via phone or email), we will assume that this discussion is put on hold.

We remain committed in trying to find a resolution with Argentina on the holdout issue; and we look forward to your response.

Thanks.

Max

Max Lee Fore Research & Management, LP 510 Madison Avenue, 11th Floor New York, NY, 10022

From: Max Lee Sent: Wednesday, February 17, 2016 10:52 AM To: 'Osvaldo A. Colazo'; Santiago Bausili Cc: Santiago Bausili; Thomas Curran Subject: RE: Argentina Holdout Issue

Dear Osvaldo,

1 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893-4 Filed Filed 04/07/16 02/26/16 Page Page 11 1 of 126

Carter, Christopher Louis

From: Santiago Bausili Sent: Wednesday, February 17, 2016 7:28 PM To: Max Lee; Santiago Bausili Cc: Osvaldo A. Colazo; Thomas Curran Subject: RE: Argentina Holdout Issue Attachments: image001.png

Sorry, I meant that you send us the schedule. These things about prescription become irrelevant i guess if we agree on an amount of money for the isins and principal submitted. We will not be entertaining comments from everyone. The agreement is quite simple.

Santiago Bausili Subsecretario de Financiamiento Ministerio de Hacienda y Finanzas Públicas República Argentina

------Original message ------From: Max Lee Date: 2/17/2016 5:29 PM (GMT-05:00) To: Santiago Bausili , Santiago Bausili Cc: "Osvaldo A. Colazo" , Thomas Curran Subject: RE: Argentina Holdout Issue

Dear Santiago,

Great, I assume we have an agreement in principle here.

We will get our lawyers to prepare the draft and send it over soon. If you have a word doc version of the Master Settlement Agreement handy, please send it over, so we can show the blackline version of the agreement easily.

In addition, we have spoken to another group member, Daniel Ehrmann, at King Street, and they have expressed interest in reaching a deal as well.

Thanks.

Max

Max Lee Fore Research & Management, LP

1 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG DocumentDocument 37-18893-5 FiledFiled 04/07/1602/26/16 PagePage 121 of of 12 26

Carter, Christopher Louis

From: Max Lee Sent: Thursday, February 18, 2016 4:12 PM To: Santiago Bausili; Santiago Bausili Cc: Osvaldo A. Colazo; Thomas Curran Subject: Argentina Settlement - PLEASE ACKNOWLEDGE RECEIPT Attachments: Fore Settlement Agreement Schedule (2.18.2016).pdf

Importance: High

Dear Santiago,

Thank you for your assistance during this negotiation process. We are encouraged by the Republic's efforts to put this long-standing issue behind it. Attached is our completed Agreement Schedule as well as a proposed Rider of text we propose to add as a final paragraph to the Schedule. We look forward to Argentina's final confirmation that all holdings/ISINs included on the attached Schedule, with its Rider, will be settled for 150% of principal/face value and the attached Rider is acceptable to the Republic. If acceptable, please arrange for signature and return it to us.

Although we don't represent anyone other than Honero, we understand that a significant portion of the Morgan Lewis bondholder group (perhaps as great as 73% of the group US$483million holding) are prepared to promptly send in their ISINs with the identical rider if these terms are acceptable to you.

If we reach an agreement, it would be helpful (although not absolutely necessary) for Argentina to makes a public disclosure of it. Please let us know if this is acceptable. Again, thank you for your efforts to advance this process; we look forward to your signed agreement finalizing the proposed settlement.

Very truly yours,

Fore Research & Management, LP on behalf of Honero Fund I, LLC

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Carter, Christopher Louis

From: Max Lee Sent: Friday, February 19, 2016 9:21 AM To: Santiago Bausili; S Bausili Cc: Osvaldo A. Colazo; Thomas Curran Subject: RE: Argentina Settlement - PLEASE ACKNOWLEDGE RECEIPT

Dear Santiago,

We believe more than 90% of the Morgan Lewis group will sign up to the deal now.

Please give us a call at as soon as you are available.

Thanks.

Max Lee

Fore Research & Management, LP

510 Madison Avenue, 11th Floor

New York, NY, 10022

1 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893-7 Filed Filed 04/07/16 02/26/16 Page Page 25 1 of 226

Carter, Christopher Louis

From: Santiago Bausili Sent: Friday, February 19, 2016 10:12 AM To: Max Lee; S Bausili Cc: Osvaldo A. Colazo; Thomas Curran Subject: RE: Argentina Settlement - PLEASE ACKNOWLEDGE RECEIPT

Max. Just landed. We will be ok with the rider. We will need to however reconcile isins into cases as mentioned before. We will continue working on that throughout the day but prioritizing the injunction adhesions that suffer a reduction at 5 pm. Will keep u updated on progress.

Santiago Bausili

Subsecretario de Financiamiento

Ministerio de Hacienda y Finanzas Públicas

República Argentina

------Original message ------

From: Max Lee

Date: 2/19/2016 11:21 AM (GMT-03:00)

To: Santiago Bausili >, S Bausili

Cc: "Osvaldo A. Colazo" , Thomas Curran

Subject: RE: Argentina Settlement - PLEASE ACKNOWLEDGE RECEIPT

Dear Santiago,

1 CaseCase 1:16-cv-02238-TPG 1:08-cv-06978-TPG Document Document 37-18 893-7 Filed Filed 04/07/16 02/26/16 Page Page 26 2 of 226

We believe more than 90% of the Morgan Lewis group will sign up to the deal now.

Please give us a call at as soon as you are available.

Thanks.

Max Lee

Fore Research & Management, LP

510 Madison Avenue, 11th Floor

New York, NY, 10022

From: Santiago Bausili

Sent: Thursday, February 18, 2016 10:32 PM

To: Max Lee; S Bausili

Cc: Osvaldo A. Colazo; Thomas Curran

Subject: RE: Argentina Settlement - PLEASE ACKNOWLEDGE RECEIPT

2 Arag-A Limited et al v. The Republic of Argentina, Docket No. 1:16-cv-02238 (S.D.N.Y. Mar 25, 2016), Court Docket

General Information

Court United States District Court for the Southern District of New York; United States District Court for the Southern District of New York

Federal Nature of Suit Contract - Other[190]

Docket Number 1:16-cv-02238