Bloomberg News

Repsol Shareholders Criticize Brufau’s Handling of YPF Loss

May 31, 2012

Repsol YPF SA (REP) investors criticized Chairman Antonio Brufau over his handling of the company’s Argentine unit, whose expropriation wiped 14 billion euros ($17 billion) from the market value of Spain’s biggest oil producer.

Felipe Izquierdo, a shareholder, said Brufau was distracted from the situation in Argentina by a power struggle with Repsol’s biggest shareholder and missed a chance to repair relations with the government. Others endorsed Brufau’s management.

“You haven’t been sufficiently diligent as you were involved in another conflict,” Izquierdo said during an annual meeting of shareholders in Madrid today. “You weren’t able to act quickly enough.”

The seizure of YPF SA (YPFD) came six months after Repsol fired Deputy Chairman Luis del Rivero, who had lobbied to increase dividends as the construction firm he headed, Sacyr Vallehermoso SA, struggled to meet loan repayments. Argentine President Cristina Fernandez de Kirchner nationalized YPF on April 16, accusing Repsol of draining excessive dividends from the unit instead of investing in oil production, a charge Repsol denies.

Elena Spinosa said Brufau made a mistake by selling a stake in the unit to the Eskenazi family. Spinosa spoke on behalf of Salvador Font, a former Sacyr executive hired by Del Rivero who represented Repsol on the board of YPF.

Repsol fell 0.9 percent to a three-year low of 12.08 euros in Madrid today. The stock has lost 50 percent of its value in the year to date.

“The hypothetical clashes over the control for Repsol haven’t distracted for one minute from creating a better Repsol,” Brufau told the meeting. “I tried to do the best I could and so did the rest of the management team.”

Essential Element

Brufau reminded shareholders that the Argentine government described Repsol as an essential element of the country’s industry in November, just five months before its managers were expelled from YPF’s headquarters.

Repsol, which still holds 6 percent of YPF after Argentina seized a 51 percent stake, is set to acquire a further 6 percent of the company after its former partner, the Petersen Group, defaulted on loans from the oil company it had used to buy its stake, Brufau said.

“Our company, fortunately, plays in a different league from YPF,” Francisco Flores told the meeting. “What we’ve lost in size, we’ve gained in security and, in the long term, profitability.”

Repsol this week said it would reduce dividends paid out of 2012 earnings by as much as 40 percent to bolster its balance sheet following the loss of YPF, which accounted for almost half its oil reserves.

The company’s dividend payout ratio of 64 percent was the highest among 23 members of the Bloomberg Industries Integrated Oil Producers Index in the past year. Eni SpA (ENI) ranked second with 53 percent while Exxon Mobil Corp., the world’s biggest oil producer, paid out 23 percent.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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