ARGENTINA STARTS FIRST PUBLIC SALE OF YPF STOCK

Argentina's government last week began selling stock in state owned petroleum company Yacimientos Petroliferos Fiscales (YPF). At first, the government will put 35% of YPF stock on the market, a move it hopes will net it $2.1-2.5 billion. Argentina arguably has made the most rapid progress in recent years of any Latin American nation in privatizing state owned petroleum assets. The privatization of YPF, recently valued at $7-7.5 billion by U.S. investment bankers, has met with some

June 7, 1993

2 min read

Argentina's government last week began selling stock in state owned petroleum company Yacimientos Petroliferos Fiscales (YPF).

At first, the government will put 35% of YPF stock on the market, a move it hopes will net it $2.1-2.5 billion. Argentina arguably has made the most rapid progress in recent years of any Latin American nation in privatizing state owned petroleum assets.

The privatization of YPF, recently valued at $7-7.5 billion by U.S. investment bankers, has met with some opposition in Argentina's congress. Some private studies conducted in 1991 valued YPF at $20 billion.

SALE DETAILS

Congress has authorized sale of 58.5% of YPF stock, but the government would like to sell an additional 20%. Of the first 35% of stock to be sold, the government is reserving about $400 million worth for small investors putting up $1,000-10,000 apiece. Minister of the Economy Domingo Cavallo estimated the company's 126 million shares will sell for $17-20/share.

Under the privatization plan, no shareholder can own more than 5% of the new company. The government will continue to hold 20.3% of YPF interests, oil and gas producing provinces 11.2%, and YPF employees 10%. The government's remaining stake would eventually be sold at some later date.

YPF Pres. Jose Estenssoro expects foreign investors to buy most of the YPF stock on offer and plans trips soon to the U.S., Europe, and Japan to promote the sale.

YPF BACKGROUND

State owned YPF, established in the early part of this century after oil was discovered in Patagonia province, long has been a leader among Argentina's state owned enterprises. In recent years, however, financial woes have crimped YPF's upstream investment.

YPF, with almost 11,000 employees, has annual revenues of about $4 billion. It owns 50% of Argentina's oil reserves, 64% of its gas reserves, and 54% of its service stations. YPF exported petroleum products valued at $800 million in 1992. Production was 544,300 b/d of oil and about 1.5 bcfd of natural gas.