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April 14, 2012


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Whoops! http://www.nytimes.com/2012/04/17/business/global/argentine-president-to-nationalize-oil-company.html

Any word on what the payment is going to look like? I would not have predicted a grab of 100% of the company.

“Whoops”? I thought I called it. “Argentina is going to nationalize: it makes political sense.”

The plan as announced is pretty much the same as the bill she introduced last week: the government will take 51% of the company.

It's going to be negotiated, though --- there were rumors that there would be no compensation. Instead, Article 12 of the decree reads as follows: “The prices of the shares subject to expropriation will be determined according to the procedures laid out in Article 10 and the clauses of Law 21499. The valuation will be carried out by the National Appraisal Tribunal.”

Here is the key part of Law 21499: “In case of appraisals for expropriation, it will be appropriate to determine the property objective value ... objective value can square with the market value when it may be determined or with the depreciated replacement cost (CRD) instead.”

The implication is the Argentina will probably offer the market value of the shares. There is a rub: the buyback clauses in the agreement with the Eskenazis could provide a judge with cover to state that the shares have no market value to Repsol. I've bet against that, however.

The "whoops" was for the purchase, which looked slightly premature this morning. Granted, it has bounced some: https://www.google.com/finance?client=ob&q=NYSE:YPF

I misread the article, though, to the effect that the the government was passing a 49% stake (rather than 49% of its new stake) to the provincial governments.

Point taken: if I could have timed it, I would have bought on the post-decree dip. That said, I still think the ultimate settlement will be favorable ... given the incredibly depressed value of the shares last week. It probably won't be favorable by other standards.

Broader question: You mentioned in an earlier post that Argentina had justice on its side with regards to the various ICSID cases. How so?

More pointed question: What do you think "market value" is for this purpose? :^)

Well, if the Spaniards are that angry, perhaps they can lend us one of those Juan Carlos-class LHDs (nice, aren't they?) to look after the Falklands, and a squadron of AV-8Bs to boot...

Hahahahhah hah ha! I'm glad to see somebody clicked the links labeled "not" and "not."

Great minds think alike.

In the next post above on the topic, I've got links to Argentines mocking Britain's lack of a carrier. Not that it matters, really.

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