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May 22, 2022

YPF posts record plunge as Argentina spurns Repsol compensation

YPF SA, Argentina’s largest oil company, plunged the most on record in Buenos Aires and New York after the government rejected Repsol YPF SA’s demand for USD 10.5 billion in compensation for the unit’s nationalization, San Francisco Chronicle informs. Shares fell 24 percent to 82 pesos at 2:47 p.m. in Buenos Aires after earlier dropping 25 percent, the most since 1994 when Bloomberg records begin. The company’s American depositary receipts plunged a record 28 percent to USD 14 as trading resumed yesterday after a halt imposed April 16. Argentina’s Deputy Economy Minister Axel Kicillof rejected Repsol’s compensation demand for its YPF unit and said the government will rely on “solid data” to value its takeover of 51 percent of its shares. President Cristina Fernandez de Kirchner moved to seize YPF this week, saying the company hasn’t invested enough in the South American country.Argentina plans to expropriate a natural gas company owned by Spain’s Repsol YPF SA (REP.MC), just two days after the Argentine government said it would expropriate the Spanish oil and gas company’s local subsidiary YPF SA, a top lawmaker said Wednesday. Speaking to reporters after senate committees approved a bill to allow the government to nationalize 51 pc of YPF, Senator Anibal Fernandez said the bill includes the expropriation of Repsol’s local gas company. Fernandez, president of the senate budget and finance commission and President Cristina Kirchner’s former cabinet chief, didn’t name the company.“Nobody knows how much the government plans to pay for the shares and that’s making people nervous,” Juan Jose Vasquez, an analyst at Bull Market Brokers SA. “Also, once the company is controlled by the state, its purpose won’t be maximizing shareholder value anymore.” The government will ensure the profitability of the company “beyond Repsol’s expectations,” Kicillof, who Fernandez named to help lead YPF April 16, said at a Senate hearing yesterday. The EU postponed a meeting with Argentine officials scheduled for this month to weigh its response to the move, European Commission spokeswoman Pia Ahrenkilde Hansen said. Repsol’s first option for winning compensation may be an appeal under an investment treaty between Spain and Argentina, the commission said.According to Wall Street Journal, Repsol’s shares dropped the most in three years in Madrid yesterday. Repsol fell 6.2 percent in Madrid, the most since February 2009, to close at 15.40 euros. That bought the loss in 2012 to 35 percent, the worst performance of the benchmark Euro Stoxx 50 index, which rose 0.5 percent since Dec. 31. YPF’s market capitalization tumbled 35 percent to 30.3 billion pesos this week following Fernandez’s announcement.

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