Repsol shareholders approve $5bn Argentine deal for YPF takeover

28 March 2014 16:33 Source:ICIS News

LONDON (ICIS)--Repsol’s annual general meeting (AGM) of shareholders ratified on Friday the $5bn compensation deal from the Argentinian government following the expropriation of the company’s YPF subsidiary in 2012, said the Spanish oil major.

Repsol’s shareholders ratification brings closer the solution to a dispute that started in 2012, when Argentina decided to expropriate Repsol’s majority stake (51%) at its subsidiary in the country, Yacimientos Petroliferos Fiscales (YPF).

The compensation agreement, which still has to be ratified by the National Argentinian Congress by 1 May, was passed by the other country’s chamber, the Senate, on 27 March after the package had been signed by the country’s president, Cristina Fernandez, on 27 February.

The payment to Repsol will total $5bn and will be made through dollar-denominated public bonds. The bonds’ face value of $5bn is far from the $10.5bn Repsol had been seeking. Nevertheless, the company agreed to drop legal proceedings against the Argentine government and YPF.

“We have worked very hard to obtain a just compensation. Our efforts have been rewarded with a guaranteed agreement that creates value for our shareholders and strengthens the company’s financial position,” said Repsol’s CEO, Antonio Brufau.

Although the compensation is lower than what Repsol had been demanding, the $5bn package was well received among investors. Investment bank UBS said the final agreement was “unexpectedly good” as it would facilitate the company to significantly reduce its debt. 

The outcome for Argentina may be less rosy. Other investors and academics have noted the unilateral decision to take over YPF makes the country look risky on the back of legal uncertainties.   

By Jonathan Lopez