On Tuesday, Repsol announced that it would be buying 10% of its own shares back from Sacyr, the Spanish construction company that in August entered into an agreement with Pemex to syndicate their voting rights. The deal brought an end to the agreement between Sacyr and Pemex, following the problems Sacyr had in refinancing its €4.9 billion loan, initially taken out in 2006 in order to buy its 20% stake in Repsol. The banking syndicate that financed the 2006 loan demanded that it repay half of its loan in order to finance the remainder, which was due to mature on Wednesday December 21st. The loan is now rolled over until January 2015.
With the buyback of 10% of its shares, Repsol seems to have spared itself continued pressure from Pemex and Repsol in their attempts to influence the direction and leadership of the Spanish oil company. When Pemex and Sacyr announced their agreement in August, one of their first demands was the separation of CEO and Chairman positions at Repsol, both of which are currently held by Antonio Brufau. Repsol reacted strongly against what it saw as an attempted coup, and today, following the end of the partnership, they might be feeling as if they have finally won the battle against the companies.
As a result of the breakup of the Pemex-Sacyr partnership, many of those who initially criticized the Pemex move to increase its stake in Repsol might be tempted to call the venture a failure. But there are still positive aspects that Pemex has taken from the deal.
Financially, acquiring the shares at the moment it did made a lot of sense for Pemex. 30% of the stake was financed by cash from Pemex’s overseas trading arm. The rest was financed by debt, the interest of which will be paid by the dividends from the stake in Repsol. As a result of Repsol’s recent discoveries of shale oil and gas in Argentina, the shares are now worth significantly more than they were before. Additionally, the deal has served to expand Pemex’s horizons, showing that the company can successfully invest in foreign ventures, even if it will inevitably face criticism from commentators who believe that Pemex should focus only in Mexico.