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Argentine lawmakers approve $5-bn YPF payment to Repsol

PABLO GONZALEZ and DANIEL CANCEL

BUENOS AIRES, Argentina (Bloomberg) -- Argentina’s lower house gave final approval to the government’s plan to pay Repsol SA $5 bn compensation for its expropriation of control of the Spanish company’s YPF SA unit in 2012.

Argentina will issue as much as $6 bn in bonds to ensure that Madrid-based Repsol receives at least $5 bn for 51% of the South American country’s biggest oil and gas producer, according to the bill that was passed by the Senate March 26. Lawmakers approved the proposal after about 16 hours of debate at 4 a.m. today with 135 votes in favor, 59 against and 42 abstentions, according to Infobae.

President Cristina Fernandez de Kirchner took control of YPF in April 2012, saying Repsol hadn’t invested enough in boosting output since acquiring the company in 1998. Ending the dispute will help attract investors to the country to develop the Vaca Muerta shale deposit, the world’s second-largest shale gas field and fourth-largest shale oil field, Cabinet Chief Jorge Capitanich said yesterday.

“It’s a very important step to have capital market access and multiply our efforts to explore for and develop oil and gas to achieve self-sufficiency,” Capitanich told a room full of business leaders during an hour-long speech at the Alvear hotel in Buenos Aires. “We think the energy issue is the key for sustainable growth in Argentina.”

The compensation, which has been agreed to by Repsol, is less than half the $10.5 bn the company sought initially. Repsol still owns 12% of YPF. The bill will now become law once published in the Official Gazette.

Argentina will pay Repsol in bonds that have a nominal value of as much as $6 bn to guarantee a minimum market value of $4.67 bn. If Repsol sells the securities and makes more than $5 bn, it will return the surplus to Argentina. Argentina will issue at least $3.25 bn of bonds due 2024 with an interest rate of 8.75%, and pay the rest with securities maturing in 2017 and 2033.

As part of the accord, Repsol will drop lawsuits filed against the government and YPF stemming from the investment dispute.

04/24/2014

 

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