UPDATE: Repsol Shareholders Hit By YPF Seizure As Impact Widens
April 19 2012 - 9:28AM
Dow Jones News
Collateral damage from Argentina's seizure of oil firm YPF
spread Thursday in Spain to key Repsol shareholders, as CaixaBank
SA (CABK.MC)--one of the country's largest banks and Repsol YPF
SA's (REP.MC)'s largest shareholder--said it doesn't yet plan to
write down its controlling stake on the Spanish oil company.
In what could become yet another worry for Spain's battered
economy, Argentina's move to seize Repsol's unit could hit
companies in two of the country's already long-suffering sectors -
banks and construction.
Speaking in Barcelona, where CaixaBank Thursday presented
first-quarter earnings, Chairman Isidro Faine said Spain's
third-largest bank by market value doesn't see an urgent need to
write down its 13% stake in Repsol. Caixabank has a EUR3.34 billion
valuation of the Repsol stake, according to its 2012 annual report.
The market value of the stake Thursday was EUR2.41 billion.
Faine said that Argentina must pay a "fair price" for the stake
it is claiming in YPF, backing up Repsol's official stance on the
matter. However, he acknowledged the issue would take time to be
resolved. A potential writedown of the Repsol stake could further
erode Caixabank's results, after first-quarter net profit dropped
84% as it set aside most of its earnings to cover potential losses
on its real estate holdings in line with new requirements set by
the government.
The problem is especially acute for Sacyr-Vallhermoso SA
(SYV.MC), a construction company that took on debt to buy a large
Repsol stake in 2006 and has struggled to service that debt ever
since. Analysts believe Sacyr, which was already forced by
creditors to sell half of its Repsol stake earlier this year, may
find it hard to keep the banks at bay.
As shares of Repsol tumbled Thursday for a third consecutive
day, those of Caixabank and Sacyr also headed lower amid fears that
the loss of YPF would lower Repsol's contribution to their
earnings, and that accounting rules may eventually force them to
write down the value of their stakes in the oil firm.
Borja Castro, an analyst with Cheuvreux in Madrid, said that
Sacyr has valued Repsol at EUR26 per share in its books, compared
with the current market value of EUR15.10. However, he added that
Sacyr and other shareholders may delay a writedown of their Repsol
stakes until Repsol itself formalizes the loss of YPF. This will
likely follow a potentially lengthy legal battle.
At the same time, creditor banks can force Sacyr to add
collateral to back outstanding loans when Repsol shares drop below
EUR10, said Javier Barrio, a BPI analyst. But Sacyr's construction
and real estate business is in bad shape, and the whole company is
now valued at EUR700 million--little more than one third of the
value of its stake in Repsol.
A Sacyr spokesman declined to comment.
The problems for Sacyr come as other Spanish construction
companies struggle with assets that they bought using bank loans
during the boom years. In an attempt to diversify, the companies
bought assets including stakes in energy companies.
Wedensday, Actividades de Construccion y Servicios SA (ACS.MC)
sold a 3.7% stake in Iberdrola for EUR798 million, booking a EUR540
million loss on the asset. It is also set to announce further asset
sales.
Argentina's government took control of YPF's operations earlier
this week, and an Argentine Senate committee approved Wednesday a
bill to re-nationalize the firm, originally a state-owned company
that was bought by Repsol in 1999.
The committee approval sets the stage for a vote next week by
the full Senate on President Cristina Kirchner's proposal to take
over 51% of YPF. The plan, likely to be passed, would leave the
Argentine federal and provincial governments in control of the
company and reduce Repsol's stake to 6% from just 57%
currently.
Repsol shares had already fallen in recent weeks as speculation
about a nationalization of YPF intensified. The stock has lost
about a third of its value since the beginning of 2012.
At 1253 GMT, Sacyr was trading down 3.6% to EUR1.64, its lowest
level since 1993, and CaixaBank was down 3.8% at EUR2.51. Repsol's
shares were down 2% at EUR15.10.
-By David Roman and Anna Perez; Dow Jones Newswires;
+34913958127; christopher.bjork@dowjones.com
(Pablo Dominguez en Barcelona contributed to this story.)
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