Bloomberg News

Pemex Completes 4.6% Repsol Purchase, Foresees Ventures

September 02, 2011

(Adds stake purchase filing in second paragraph.)

Sept. 2 (Bloomberg) -- Petroleos Mexicanos, the shareholder doubling its stake in Spanish oil company Repsol YPF SA, wants to jointly drill in deep waters though media reports say Repsol is resisting the growing power of Mexico’s state-owned company.

A deep-water project is “an alternative that we haven’t discussed with Repsol, but could be a win-win for Repsol and us,” Juan Jose Suarez Coppel, chief executive officer of the company known as Pemex, said yesterday in Mexico City. The company bought 56.38 million Repsol shares to increase its stake by 4.62 percent, according to a Madrid regulatory filing today.

Pemex is seeking joint foreign projects to get knowledge and technology applicable to Mexico, Suarez Coppel said. While Pemex on Aug. 29 agreed with Sacyr Vallehermoso SA, the largest shareholder in Repsol, to boost its stake and vote in a bloc to revamp management, Repsol Chairman Antonio Brufau has asked Spain’s government to block the accord, El Mundo reported today.

The Pemex-Sacyr agreement would alter the power balance in Madrid-based Repsol, Spain’s largest oil company, which has a market value of 24.4 billion euros ($34.8 billion) and represents 7.8 percent of the weighting in the country’s IBEX 35 benchmark stock index, according to Bloomberg data.

Sacyr needs Repsol’s dividends to make interest payments on the 4.9 billion euros it owes to a syndicate of banks for funding the share acquisition in 2006. The loan comes due Dec. 21 this year, unless an extension is made.

Direct Competitor

Cinco Dias today reported that Sacyr didn’t activate an “automatic” one-year loan extension by a July 31 deadline and is holding talks with banks, citing unidentified people in the financial industry. A Sacyr spokeswoman declined to comment.

The Aug. 29 accord calls for Pemex to increase its Repsol stake to 9.8 percent within a month. As of June 30, Pemex reported a stake of 4.8 percent. Today’s announced stake, which would have a market value of 1.16 billion euros as of Repsol’s closing price yesterday, boosts Pemex’s stake to 9.4 percent.

Pemex acquired the new stake through several financial institutions, including HSBC, Credit Agricole CIB, Natixis and Grupo Financiero Inbursa, the filing said. Pemex financed 70 percent of the acquisition with debt and doesn’t plan further purchases, Suarez Coppel said.

Sacyr, a Spanish construction company, plans to maintain its 20 percent stake, according to the accord.

Pemex and Sacyr want to split Repsol’s chairmanship from the chief executive officer role, also held by Brufau, and to increase their board representation.

Repsol’s Challenge

Brufau and Repsol plan to challenge Pemex’s plan, saying that the Mexican oil company is a direct competitor and it creates a conflict of interest, Madrid-based El Pais newspaper reported yesterday. A Repsol spokesman in Madrid declined to comment today.

Suarez Coppel said there are no conflicts of interest or personal disputes behind the accord with Sacyr.

“This transaction is to bring more transparency” to the administration of Repsol, Suarez Coppel said. “This operation is not about a specific project, not about dividends.”

Repsol gained 8.8 percent in the first three days after the accord and today fell 3.7 percent to 19.795 euros in Madrid.

--With assistance from Todd White in Madrid. Editors: Robin Saponar, Jessica Brice

To contact the reporters on this story: Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net; Juan Pablo Spinetto in Rio De Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Jessica Brice at jbrice1@bloomberg.net


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