Carlos Slim acquires stake in Argentine power co.
Jun 15, 2012, 5:53 PM
Associated Press
MEXICO CITY (AP) – The world’s richest man, Mexican telecommunications billionaire Carlos Slim, has acquired an 8.4 percent stake in Argentina’s newly state-controlled oil and gas producer, YPF S.A., but it’s unclear what he intends to do with it.
While it could be seen as part of a recent buying spree of assets in Europe and Latin America, Slim’s office is coy about whether he intends to keep the YPF shares. Slim has a reputation for purchasing under-valued companies and distressed assets in times of crisis to later sell them off. But he also has a real interest in the oil industry, with companies like Swecomex providing offshore oil platforms and equipment.
A filing with the U.S. Securities and Exchange Commission said Slim and members of his family acquired 32.9 million shares of YPF Class D shares on Tuesday and Wednesday.
But Slim’s spokeswoman, Concepcion Rivera, said Friday that there had been no purchase. Rather, she said, Slim’s Inbursa bank had converted debt obligations to shares, as stipulated in a contract on a syndicated loan made by a consortium of banks to the Argentine company years ago.
“We didn’t buy any shares in the company,” Rivera said. “What we had is a loan that Inbursa made to the company more than four years ago.”
When the loan expired without repayment, “the shares were the collateral for the loan.” She said that other banks in the syndicate also got shares.
Whether Slim will keep the stock “is something we’ll see in the future,” Rivera said.
But in a statement, Slim’s office said that YPF “is a very solid company with important growth potential,” precisely the kind of companies such as the retail, real estate, tire and cigarette firms Slim bought during crisis years in Mexico in the 1980s and 1990s, and later made a profit on.
In 2010, when Slim was named world’s richest man by Forbe’s magazine in 2010, his spokesman, Arturo Elias Ayub, noted “In periods of crisis, he has always invested.”
YPF would certainly match the description of a battered asset. Argentina’s center-left government expropriated YPF by seizing a majority stake from Spain’s Repsol seven weeks ago, arguing Repsol failed to invest enough to boost production while the country sits on what could potentially be the world’s third-largest reserves of unconventional gas and oil.
The Argentine company issued a statement Thursday saying Slim “was starting a long-term investment.”
YPF CEO Miguel Galuccio said “the incorporation of the Mexican businessman to the shareholders is a clear signal to international financial markets” and “a big gesture of confidence in Argentina and the company’s new project.”
YPF wants investment to step up exploration and production of shale gas.
Marcelo Olguin, chief economist for Argentine financial group Grupo SBS, said Slim has shown he is a strategic investor,” adding “this is a good time (to invest) , the share price has dropped 59 percent so far in 2012.”
In interday trading Friday on the New York Stock Exchange after Slim’s announcement, YPF ADR shares rocketed 11.87 percent to close up 1.24 points at $11.69.
Olguin said YPF estimates it will need $7 billion annually over the next four years to develop the shale deposits, but it’s unclear if Slim will be the man to back it.
“Slim’s involvement is clearly financial in the first stage, but we don’t know what the next stage will be,” he noted.
Slim has gone a buying spree recently, mainly in his core business of telecoms, making his first incursions into the European mobile phone markets. Slim’s America Movil company dominates the sector in Latin America.
On Friday, America Movil announced it had bought a 5-percent stake in Austrian phone carrier Telekom Austria AG and will buy an additional 16 percent _ for a total 23-percent participation in the firm, counting a previously held small stake _ once regulatory authorities approve the deal.
“This acquisition … is part of America Movil’s strategy for geographic diversification and gives it tan importante presence in central and Eastern Europe,” the company said in a statement to the Mexican Stock Exchange.
In May, America Movil announced a $3.4-billion public offer to acquire an additional 23.2 percent of Dutch carrier Royal KPN NV. Slim’s company had previously acquired a 4.8 percent stake in the Dutch cell, internet and television carrier, bring America Movil’s total holdings in KPN to 28 percent.
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Associated Press reporters Almudena Calatrava in Buenos Aires, Argentina, and Luis Henao in Santiago, Chile, contributed to this report.
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