Repsol YPF to Sign Sale of 14.9% of YPF to Eskenazi

MADRID, Dec 21, 2007 (Dow Jones Newswires)

Spanish-Argentine oil company Repsol YPF SA (REP) plans later Friday to sign a benchmark deal to sell 14.9% of its key Argentine division YPF to local financier Enrique Eskenazi, an Eskenazi spokesman said Friday.

The long-awaited deal, which follows months of talks with Eskenazi, will also include a buy option for an additional 10.1% stake of YPF and will be followed by the listing of 20% of the division during the first half next year, added people close to the situation.

As part of the memorandum of understanding to be signed later Friday, Madrid-based Repsol will commit to finance part of the deal through a vendors loan, with YPF's stake as collateral, one of the persons said. Repsol unveiled its plan to divest 45% of YPF earlier this year, after a similar plan that sought a direct Buenos Aires listing of the unit was canceled due to poor demand. YPF accounts for about one-third or earnings and half of the company's hydrocarbon reserves.

With the partial YPF divestment, Repsol aims to raise funds for its expanded push into oil exploration - the company's weakest area, compared with European peers such as Eni spA (E) or Total SA (TOT) - particularly in Northern Africa and the Gulf of Mexico.

Just as importantly, the deal will allow Repsol YPF to improve its delicate relationship with the Argentine government, which has often criticized the 1999 sale of YPF, a former oil state monopoly and one of the few national oil companies sold to foreign majors in the world.

Eskenazi is a close associate of Argentina's president Cristina Fernandez. He owns Grupo Petersen, which includes the construction firm Petersen, Theile & Cruz, and four regional banks in Argentina.

Another person close to the situation said that Grupo Peterson will acquire the YPF stock in a deal that values the division at $15 billion - the same price paid by Repsol in 1999.

Eskenazi will sign the purchase of 14.9% of YPF Friday for $2.235 billion, with an option to buy later another 10.1% stake for $1.515 billion, the second person said.

The same person said the deal will be mostly funded by international banks. No other details on the financing - considered a sticking point during the latest talks between the parties - are immediately available.

MADRID, Dec 21, 2007 (Dow Jones Newswires)