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LIGHTWATER CORPORATION v. REPUBLIC OF ARGENTINA

April 14, 2003

LIGHTWATER CORPORATION LIMITED, PLAINTIFF, AGAINST THE REPUBLIC OF ARGENTINA, DEFENDANT. OLD CASTLE HOLDINGS, LTD., PLAINTIFF, AGAINST THE REPUBLIC OF ARGENTINA, DEFENDANT. MACROTECNIC INTERNATIONAL CORPORATION, PLAINTIFF, AGAINST THE REPUBLIC OF ARGENTINA, DEFENDANT.


The opinion of the court was delivered by: Thomas P. Griesa, United States District Judge

ORDER

Plaintiffs in these three cases are owners of bonds issued by The Republic of Argentina. The Republic has defaulted on the bonds. Plaintiffs are suing to recover amounts due them by virtue of these defaults. They have moved for summary judgment, claiming that the Republic's obligations are unconditional and that there are no defenses.

The Republic opposes the motions, asserting various defenses. In addition, the Republic requests that these actions be stayed because the Republic is engaged in efforts to achieve a debt restructuring.

The motions of the three plaintiffs for summary judgment on their bond obligations are granted. The motion of the Republic for a stay of the proceedings is denied, except that the court stays execution of plaintiffs' judgments for a period of one month, until May 14, 2003.

Facts

Copies of the bonds themselves have not been submitted to the court. However, both sides rely on the prospectuses for the bonds as accurately stating their terms and conditions.

The Lightwater and Old Castle Bonds

The Bond Issue

The Lightwater and Old Castle bonds are part of $1,000,000,000 in 11.375% bonds, issued March 13, 2000 and due for principal payment on March 15, 2010, with interest to be paid on March 15 and September 15 of each year.

The Prospectus provides (p. 9) that failure to make any payment of principal or interest for 30 days after the applicable payment date constitutes an event of default. The Republic's declaration of a moratorium on the payment of principal or interest on its Public External Indebtedness is an event of default as well. Upon an event of default, a holder of the bonds may give notice declaring the principal amount immediately due and payable. The Prospectus further states (p. 11) that Argentina waives sovereign immunity and consents to jurisdiction in any state or federal court in the borough of Manhattan in the City of New York.

The Prospectus Supplement states (p. S-8) that the bonds are "direct, unconditional, unsecured and unsubordinated obligations of the Republic, backed by the full faith and credit of the Republic."

Lightwater bought $4,000,000 face value of the bonds on November 5, 2001 and $3,000,000 face value of the bonds on November 6, 2001. Old Castle bought $700,000 face value of the bonds on November 6, 2001.

Lightwater and Old Castle have not specified purchase prices or provided records of purchases. However, the Republic has provided trading prices — 40.81 on November 5, 2001 and 41.88 on November 6, 2001.

Macrotecnic

Macrotecnic made purchases of two types of bonds, which will be referred to as the "2020 bonds" and the "2027 bonds."

2020 Bonds

$1,250,000,000 at 12.00% interest.

Issue date: February ...


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