ARGENTINA: Argentina says it has reached a settlement and agreed to pay Repsol $5 billion dollar for expropriated YPF assets

Record ID: 447746

  • Title: ARGENTINA: Argentina says it has reached a settlement and agreed to pay Repsol $5 billion dollar for expropriated YPF assets
  • Date: 25th February 2014
  • Summary: BUENOS AIRES, ARGENTINA (FILE) (REUTERS) VARIOUS OF A REPSOL REFINERY VARIOUS OF YPF GAS INSTALLATIONS
  • Embargoed: 12th March 2014 12:00
  • Keywords:
  • Location: Argentina
  • Country: Argentina
  • Topics: Business,Politics,Energy
  • Reuters ID: LVACUBV5MT8SHVSKNCRCMU7DBH2A
  • Story Text: Argentina said it had come to a settlement with Spanish oil major Repsol in which the South American country agreed to pay the equivalent of $5 billion U.S. dollars over assets seized in 2012.
    The deal was announced on Tuesday (February 25) andRepsol's two-year battle for compensation.
    Repsol will receive a package of three dollar-denominated Argentine sovereign bonds with a nominal value of $5 billion as well as additional bonds - for a maximum face value of up to $1 billion - to compensate for the market discount on the first group of bonds.
    Argentine sovereign bonds mostly trade at a steep discount since the country defaulted on international debt in 2002.
    The total market value of the combined packages will be at least $4.67 billion, which could be supplemented by $500 million in back interest payments on one of the bonds, known as the Discount 33.
    "The economy ministry, with the support of the secretary general (Cabinet Chief Oscar Parrilli) and several other ministers including the minister of planning, have been working very hard to get an agreement which will be signed in coming days and which Repsol accepts in all respects to receive a payment equivalent to five billion U.S. dollars, but not paid in cash, as dictated by the law of expropriation, but instead, to its (Respsol's) conformity, this will be paid in sovereign bonds as compensation for the expropriation," Economy Minister Axel Kicillof said from the economy ministry.
    Repsol can sell the bonds whenever it wants though the final amount it receives for the bonds cannot exceed $5 billion after expenses and interest.
    Though the compensation is half of what Repsol initially demanded after Argentina expropriated its majority stake in energy firm YPF, the company has been eager to end a rocky chapter in its history and avoid a drawn-out legal fight.
    As part of the deal -- which was approved by Repsol's board, but still needs approval from shareholders and the Argentine Congress -- Repsol will drop all legal arbitrage against Argentina and waive future claims.
    "I also want to say that there were 31 different (judicial) cases in the Repsol case. A notable one was a demand for, I think it was $10.5 billion dollars, for the same stake before a ICSID (International Centre for Settlement of Investment Disputes) judge. I understand from public information that Repsol has withdrawn (the case), but anyway, with the signing of the agreement both parties desist," Kicillof said.
    The company will now be able to focus firmly on a strategic plan to boost its international exploration and production business to compensate for the loss of YPF, which had accounted for over half of its output.
    Analysts have said a $5 billion settlement from Argentina could add up to 3 euros to Repsol's share price.
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