Repsol considers Argentina exit after YPF settlement

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Repsol considers Argentina exit after YPF settlement

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Spain’s Repsol has confirmed it is considering selling its remaining 12 percent stake in Argentine energy group YPF.

That comes after Repsol reached a $5 billion (3.6 billion euro) settlement with the government of Argentina over the seizure of the company’s operations in the country.

It is half of what Repsol initially demanded, but ends a dispute that has dragged on for two years. Under the terms of the settlement, Repsol will drop all lawsuits against Argentina and waive any future legal claims.

Chairman Antonio Brufau said proceeds from the YPF settlement, the sale of liquid natural gas assets and the possible sale of its YPF stake would allow the company “to continue a sustainable path of growth in the upstream business.”

Speaking about the settlement YPF President Miguel Galuccio, praised it as a crucial step for Argentina’s economy. “YPF is a fundamental tool for the country’s energy future and I believe the expropriation has given that tool back to Argentines.”

Under the agreement, Repsol will receive a package of three dollar-denominated Argentine sovereign bonds with a nominal value of $5 billion. It will also receive 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.

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.

The deal still requires approval from Repsol’s shareholders and the Argentine Congress.