November 20, 2014
Repsol board approves $5 billion YPF settlement
Spanish oil major Repsol said its board of directors had approved a definitive $5 billion settlement from Argentina over assets seized in 2012, drawing a line under a 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.
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.
As part of the deal, which follows nearly three months of negotiations in Buenos Aires and still needs approval from Repsol's shareholders and the Argentine Congress, Repsol will drop all legal arbitrage against Argentina and waive future claims.
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.
It has said it could sell its 30 percent stake in Spanish power firm Gas Natural Fenosa to help fund a purchase in North America.
Repsol's shares, which have suffered during the turmoil with Argentina, closed up 0.88 percent at 18.37 euros today before the deal was announced.
Analysts have said a $5 billion settlement from Argentina could add up to 3 euros to Repsol's share price.