Pemex airs its complaints about poor benefits from Repsol stake

Mexican firm reportedly exploring alternative to current management

Long-standing Repsol shareholder Pemex is unhappy with the management of the leading Spanish oil firm and is considering sounding out possible support among other shareholders to replace Chairman Antonio Brufau, according to sources aware of the situation.

Pemex, which at one point signed a shareholder pact with fellow Repsol investor Sacyr before unwinding it following opposition from Brufau, is particularly unhappy with Repsol’s rejection of an offer from YPF to settle a dispute over the Argentinean government’s appropriation of its Argentinean unit.

YPF offered 3.5 billion euros in compensation and the creation of a consortium to exploit the Vaca Muerta find in Argentina, in which YPF would hold 51 percent, Repsol 47 percent and Pemex 2 percent. Repsol is seeking compensation of 7 billion euros and its board of directors, including the Pemex representative, rejected the offer as derisory.

After abandoning its alliance with Sacyr, the state-owned Mexican company signed a pact of non-aggression in which it committed itself to not holding more than 10 percent of the Spanish oil firm. Pemex currently holds 9.5 percent of Repsol.

When signing the pact, Pemex said at the time that its relationship with Repsol was important as a means of acquiring technical know-how in deep sea exploration and development and as a means of obtaining “concrete benefits.”

However, in recent remarks to Bloomberg, Pemex Chief Executive Officer Emilio Lozoya said the Mexican company was hoping to get more out of its stake in Repsol.

Pemex spokesman Ignacio Durán also said the Mexican firm was “not happy with its investment” in Repsol and denied any plans to increase its stake in the Spanish oil firm. He also denied any plans on Pemex’s part to call an extraordinary board meeting of Repsol.

However, according to financial sources, Pemex has hired the services of the Spanish legal office Cuatrecasas and the French bank Crédit Agricole. Spanish website reported Monday that officials from the two institutions and Lozoya held a meeting two weeks ago in Houston, Texas with an agency specialized in forging agreements among institutional investors. Pemex’s sole representative on Repsol’s board of directors, Arturo Henríquez, and Pemex director in Spain José Manuel Carrera Panizzo also attended the meeting.

Pemex denied a report by Spanish daily Abc that it had held talks with Mexican telecoms magnate Carlos Slim about him possibly investing in Repsol. Both Pemex and Slim denied the report. In a letter to Abc, the Mexican firm said: “Pemex has not held talks with Carlos Slim nor any other businessman or institution to seek out investment partners in Repsol nor is planning to present to its board any agreement of this nature.” The letter went on to say: “This type of false information, which misinforms public opinion and generates confusion in the business sector with far from clear reasons in no way contributes to the good relation that exists between Mexico and Spain.”

Slim also maintains good relations with Isidro Fainé, the chairman of Spanish lender CaixaBank, which is a major shareholder in Repsol with a 12-percent stake. Slim holds a stake in CaixaBank, while the Spanish lender owns 10 percent of Slim’s financial group Inbursa.

Pemex holds more than the minimum 5-percent stake in Repsol required to call an extraordinary board meeting, but sources said the Mexican firm would not do so without the blessing of the Spanish government. Sources close to the Spanish administration have said they have received no approach on holding an extraordinary meeting and that in any case the government as a matter of policy does not interfere in the affairs of private companies.

Pemex and the Mexican government are also aware that any attempt to oust Brufau would go down badly without the support of other core shareholders, which as well as CaixaBank include Sacyr with 9.5 percent and the Singapore state investment arm Temasek with 6.3 percent.

Temasek is also on good terms with Brufau, who negotiated its entry into Repsol’s shareholder structure through the purchase of treasury stock Repsol itself had acquired from Sacyr.

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