BREAKINGVIEWS-Slim's YPF stake hardly shows belief in Argentina
(The authors are Reuters Breakingviews columnists. The opinions expressed are their own.)
By Raul Gallegos and Fiona Maharg Bravo
NEW YORK/MADRID, June 15 (Reuters Breakingviews) - It’s a bit rich, and disingenuous, for Argentina to hail Mexican billionaire Carlos Slim’s new 8.4 percent stake in YPF (YPFD.BA) as a sign of support. Sure, President Cristina Fernandez’s administration desperately needs some international backing. Snatching the energy group for the nation’s coffers in May might have made for good domestic politicking, but it angered Spanish majority owner Repsol (REP.MC) and sent a worrying message to other foreign companies doing business in Argentina. Yet Slim is hardly making a bet on YPF. He got stuck with the stock as a result of a defaulted loan. Still, with patience he could make a buck.
Slim made the loan when YPF appeared to have a far brighter future. His financial group, Inbursa, helped finance Argentina’s Petersen Group when it acquired an initial 15 percent of the energy company. The shares were offered as collateral and Petersen used its YPF dividend proceeds to make repayments.
But YPF scrapped its dividend earlier this year after pressure from Fernandez. That left Petersen, which by now owned a quarter of the firm, in trouble and it defaulted on the loan in May just after the government nationalized YPF. That left other lenders holding stock they don’t want, too – including Citigroup (C.N), Goldman Sachs (GS.N), Credit Suisse (CSGN.VX), Banco Itau (ITUB4.SA) and BNP Paribas (BNPP.PA), which now own 9 percent between them. Poor Repsol’s remaining stake has doubled to 12 percent.
With YPF’s stock down a whopping 72 percent since Petersen first bought shares in February 2008, it could be that all the various parties are out of pocket. But some may actually be in the black already. Slim’s enforced stake, for example, is currently worth $366 million – whereas the original loan from all the financiers was only $1 billion. That implies the billionaire and the banks were clever enough to demand a lot more collateral than the amount they lent.
In any event, there’s no reason for Slim to sell out now. He knows better than many that governments come and go. For all of Fernandez’s meddling, she won’t be in power for ever. And YPF still sits on the world’s second-largest supply of shale oil reserves. The government-run company does have a point in saying that Slim’s stake is a “long-term investment.” But only, perhaps, because it has given him no choice.
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- Mexican tycoon Carlos Slim and his family now hold an 8.4 percent stake in Argentina's recently renationalized energy company YPF (YPFD.BA). The shares were pledged as security for a loan the billionaire made that defaulted.
- YPF said in a statement that the Slims had acquired 8.4 percent of the company's shares, in what it called a "long-term investment." A filing with the U.S. Securities and Exchange Commission had specified that the Slims own the 8.4 percent stake through ownership of the company’s Class D shares.
- Argentina’s President Cristina Fernandez nationalized Repsol’s stake in the company, but several players are left with important stakes in the Argentine oil concern. Repsol still holds a 6 percent stake. And a number of banks including Credit Suisse, Itau, Goldman Sachs, Citigroup and BNP Paribas are also shareholders.
Mexico’s Slim family takes stake in Argentina YPF [ID:nL1E8HF03H]
Argentina’s Petersen Group in default [ID:nL1E8GID1C]
Sleep with the enemy [ID:nL2E8FK7AN]
- For previous columns, Reuters customers can click on [GALLEGOS/] and [BRAVO/]
(Additional reporting by Kevin Allison. Editing by Rob Cox and Martin Langfield)
((email@example.com)(fiona.bravo@thomsonreuters. om)) Keywords: BREAKINGVIEWS SLIM/YPF
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