BUENOS AIRES – Mexican multi-billionaire Carlos Slim has gotten stuck with a nearly 8.4 percent stake in recently nationalized Argentine oil company YPF as part of a loan settlement.
Two Slim companies – Grupo Financiero Inbursa and Inmobiliaria Carso – acquired 6.59% and 1.78% stakes, respectively, in the country’s largest oil and gas producer, YPF said in a filing Thursday with the Buenos Aires stock exchange. Slim and his companies had been part of a loan made to the Eskenazi family, who defaulted. The YPF shares were collateral. In a regulatory filing confirming the transaction, YPF says that Banco Inbursa got 25,911,050 shares and Inmobiliaria Carso got 6,997,456 shares.
The Argentine government, seeking more financing for the oil company, sought to put a different spin on it. YPF said in a press release that with this transaction Slim has begun “a long-term investment in one of the most important companies in Latin America’s hydrocarbons sector.”
In a conversation Thursday afternoon with new YPF CEO Miguel Galuccio, Slim’s representatives said they see the Argentine firm as a solid company with good growth potential, the release said.
Galuccio, meanwhile, was quoted as saying the investment by the Mexican billionaire, ranked by Forbes magazine as the world’s wealthiest individual, sends a “clear signal” to global financial markets.
According to the filing, Inbursa and Inmobiliaria Carso received the shares as collateral after Argentina’s Grupo Petersen – which earlier this year had a 25.46% interest in YPF – defaulted on loans used to purchase its stake.
According to YPF’s release, Inbursa paid $288.1 million for its 6.59% stake, or $11.12 per share.
The Argentine government seized control of YPF in May when Congress approved a bill to expropriate a 51% stake in the energy firm from Spanish oil major Repsol.
President Cristina Fernandez’s administration has since accused the Spanish company of using YPF as a cash cow to fund its international expansion.
Repsol has said the recent discovery of massive unconventional shale gas and oil reserves in west-central Argentina was behind the move to seize control of the firm and has denied Buenos Aires’ accusations that YPF’s dividend policy sapped it of the resources it needed to invest and meet the country’s energy needs.
Petersen, owned by the Eskenazi family, was unable to meet its debt obligations after the government cut off shareholders’ dividend revenue following the takeover. The Eskenzai family had used the YPF dividends to meet obligations until defaulting in May on a $1 billion loan that used the YPF stake for collateral. Before the defaults, the Eskenazis had owned 25% of YPF. Petersen failed to meet a $400 million payment to the banks in May.
Credit Suisse, Goldman Sachs, BNP Paribas, Banco Itau, Standard Bank, and Citigroup were the lending banks and took 19% of YPF after the Eskenazi default. Repsol took the remaining 6%.
In the lead-up to the nationalization announcement, six Argentine provinces – Santa Cruz, Mendoza, Chubut, Neuquen, Salta and Rio Negro – had revoked YPF’s licenses to operate in more than 15 areas, while Tierra del Fuego and Formosa provinces threatened to cancel YPF’s production permits unless the company boosted investment.
Those moves were made amid a political climate in which Fernandez’s government blamed Repsol’s management of YPF for a whopping fuel-import bill last year.
Repsol, whose interest had been reduced to around 6 percent in the wake of the government takeover, saw its ownership rise again to12% after Petersen defaulted on a separate loan to the Spanish firm.
The Argentine federal government is keeping just over half of the controlling 51% stake in YPF, with the remainder to be divided among the country’s oil-producing provinces.
Another 17% of YPF is traded on the Buenos Aires and New York stock exchanges.
Repsol sent a letter to Fernandez last month formally proclaiming a dispute over Buenos Aires’ nationalization of the company’s YPF unit, the first step toward invoking international arbitration.
The Spanish firm, which retains one seat on the new 17-member board, is demanding more than $10 billion in compensation for the stake seizure, but the Argentine government has indicated it won’t pay that sum and that it will be up to a valuation panel to set the amount.
YPF posted net income of 5.3 billion pesos ($1.18 billion) in 2011, 8.5% less than in 2010.
Under its new Argentine government management, on June 5, YPF announced plans to invest $7 billion annually between 2013 and 2017 to boost reserves and fuel production.
YPF's American ADR, which trades on the New York Stock Exchange (NYSE), traded as high as $54.58 last year. It tumbled in the wake of Argentina's expropriation and closed Friday, 15 June, at $11.17.
Slim is widely thought to be the world's richest man, with estimates putting his net worth at $66.5 billion.