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Petroleum

Repsol Announces Largest Capital Increase in Spanish Corporate History and Euro-Denominated Bond Issue

Strategic Insights

— 2 min read

Repsol, the Spanish oil and gas group, has unveiled plans to issue a record-breaking number of new shares and euro-denominated bonds to finance its proposed $13.44 billion acquisition of YPF, the Argentine oil company. The company will offer its shareholders between 240 million and 288 million new shares, as well as a €2 billion convertible bond, in an effort to raise up to €5 billion in capital. The funding will be used to refinance part of a short-term $16 billion syndicated loan secured last week, which will provide a first line of financing for the YPF acquisition.

Key Takeaways:

  • Repsol will offer its shareholders between 240m and 288m new shares in two separate issues, with a maximum total value of €5 billion.
  • The company will also issue a €2 billion convertible bond as part of the capital increase.
  • The funding will be used to refinance part of a short-term $16 billion syndicated loan secured last week.
  • Repsol's takeover bid for YPF received the support of the company's board last week, with an offer ending on June 23.
  • The company's proceedings from the bond issue will be used to finance part of the proposed acquisition, with analysts predicting that Repsol will have taken control of a majority stake before the offer ends.
  • The capital increase and bond issue were aimed at financing part of the proposed acquisition of YPF, with Repsol seeking to raise €5 billion in capital.
  • Repsol is the second company in two days to break the record for the biggest corporate bond issue in euros, following Mannesmann's €3 billion offering on Tuesday.
  • The company will allocate 48 million new shares to financial institutions that were part of the coordinating syndicate in a similar operation to a "green-shoe" share issue.

Statistics:

  • $13.44 billion: The proposed acquisition price of YPF by Repsol.
  • €2 billion: The value of the convertible bond to be issued by Repsol.
  • €5 billion: The maximum total value of the new shares to be issued by Repsol in the capital increase.
  • €3.25 billion: The value of the 18-month floating rate bond issued by Repsol.
  • €16 billion: The short-term syndicated loan secured last week by Repsol to finance the proposed YPF acquisition.
  • 48 million: The number of new shares to be allocated to financial institutions that were part of the coordinating syndicate.
  • €3 billion: The record-breaking bond issue by Mannesmann on Tuesday.

Sources:

  • Financial Times Limited 1999. "Repsol to issue record-breaking bond".

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