NEW YORK, Aug 28 (IFR) - A unit of billionaire Paul Singer’s Elliott Management, which is Argentina’s main holdout creditor, is extending its legal fight with the South American nation to China.
NML Capital served subpoenas this week to Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC) in an effort to obtain information on US$6.8bn in financing for deals signed by the two countries in July.
“We want to understand the mechanics of these credit facilities to establish whether assets to which Argentina has a legal title could surface in jurisdictions where we would be able to attach them,” a lawyer advising Elliott told IFR on Thursday.
The subpoenas are aimed at a US$4.7bn facility provided by China Development Bank, ICBC and BOC to finance the construction of two hydroelectric dams in Patagonia and a US$2.1bn loan from China Development Bank and ICBC to finance the Belgrano Cargas railway project.
Both deals were signed by Argentine President Cristina Fernandez and her Chinese counterpart, Xi Jinping, during an official visit of a Chinese delegation to Buenos Aires.
Elliott hopes to be able to track the payment mechanisms and time legal actions in any relevant jurisdiction accordingly.
The hedge fund is also hoping to bring to light disclosures that Argentina may have made to its Chinese creditors with respect to its dispute with the holdouts, which in July pushed Argentina into its second default in 13 years.
“We think that Argentina may have provided some assurances to the lenders that they have plans to evade the pari passu injunction,” said the lawyer, referring to an injunction issued in 2012 by US district court Judge Thomas Griesa that prevents Argentina from paying holders of its restructured bonds unless it also makes holdouts whole.
The Chinese banks have about a month to provide the documents and have been asked to testify at the New York offices of law firms Dechert and Miller & Wrubel on October 8, according to subpoena documents seen by IFR.
While the banks can oppose the request, Elliott is confident that the US courts would ultimately allow its request to go through.
The subpoenas apply to any form of financing and currency swaps the banks may have arranged for Argentina or hundreds of Argentine government-related entities over the last four years.
Elliott - via its NML Capital unit - is one of the lead creditors who sued Argentina for full repayment after the sovereign’s 2001 default.
The hedge fund has won a number of legal battles against the country, including obtaining a green light from the US Supreme Court to seek information about Argentina’s non-US assets.
In separate proceedings, Elliott plans to subpoena international banks including Citigroup, HSBC and Standard Chartered to seize what it suspects are embezzled Argentine funds, a source at the hedge fund told IFR last week.
Bank of China declined to comment, while Industrial and Commercial Bank of China was not immediately available for comment. (Reporting by Davide Scigliuzzo; editing by Shankar Ramakrishnan and Paul Kilby)