Wednesday, May 7, 2014

Repsol's $1.26 Billion YPF Sale Ends Argentina Entanglement

May 7, 2014 11:08 am

Repsol’s $1.26bn YPF stake sale ends Argentine entanglement

Repsol has drawn a final line under the Spanish energy group’s ill-fated entanglement in Argentina, with the sale of its remaining 12 per cent stake in YPF for $1.26bn.
The move comes two years after the Argentine government nationalised Repsol’s majority stake in YPF, setting off a protracted legal and political battle that only ended in February this year. The settlement involved a $5bn compensation package for Repsol, which in turn agreed to drop its legal challenge in front of an international arbitration panel.




Repsol executives said at the time that the settlement would also allow the group to finally divest its remaining minority stake in YPF, which it had kept throughout the dispute in order to maximise its leverage.
The compensation deal and YPF sale, coupled with other possible divestments, give Repsol the ability to spend as much as $10bn on acquisitions. It is looking in particular to expand in North America, and has recently looked at assets and companies in Canada, though so far without making a deal.
The group said in a regulatory filing on Wednesday that it had sold almost its entire shareholding to Morgan Stanley, in a transaction that will realise a pre-tax gain of $622m. Repsol still has a small holding of YPF shares, less than 0.5 per cent of the total, which it is planning to sell at a later date.
The Spanish group reports first-quarter results on Thursday. It expects to receive the Argentine dollar-denominated bonds that underpin the $5bn compensation package the same day.