Repsol YPF SA (REP), the Spanish oil exploration company, sued Argentina in U.S. court in Manhattan over its initial public offering, seeking unspecified damages for an alleged breach of contract.
Repsol shares fell to a three-year low in Madrid on April 23 after the newspaper La Nacion reported that Argentina would seek to pay Repsol nothing for its majority stake in YPF SA, seized by President Cristina Fernandez de Kirchner last month.
Fernandez said on April 16 that compensation for the seizure will be determined by Argentina’s National Appraisal Tribunal, the government-chartered tribunal established in 1944 to help determine the value of contested goods involving companies or government agencies.
In the New York complaint filed today, Repsol and Texas Yale Capital Corp., a financial investment advisory firm based in Spicewood Texas, allege that Argentina has attempted to “walk away from the contractual obligations” it undertook when it chose to come to the U.S. to raise capital through an initial public offering of its formerly state-owned oil company.
Argentina has “nearly halved the stock market value” of YPF, Madrid-based Repsol and Texas Yale Capital allege in the complaint.
Texas Yale Capital holds shares in YPF through its ownership of American depositary receipts administered by Bank of New York Mellon Corp. (BK:US), the plaintiffs said.
The initial sale of ADRs listed on the New York Stock Exchange “alone delivered proceeds of more than $1.1 billion directly to Argentina as selling shareholder,” the plaintiffs said.
Argentina has seized control of YPF’s facilities and operations without any tender offer, constituting a breach of its contractual obligations to shareholders, the plaintiffs said. YPF is the nation’s biggest oil producer.
Repsol earlier today notified Argentine officials it intends to file a claim with the World Bank’s International Center for the Settlement of Investment Disputes in Washington, starting the clock on a six-month period when Fernandez has an opportunity to negotiate an agreement, the company said in an e- mailed statement.
The case is Repsol YPF v. Republic of Argentina, 12- cv-3877, U.S. District Court, Southern District of New York (Manhattan).
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