Replies to post #4744 on The Rising Influence of Rising Affluence

[DewDiligence]

I would avoid YPF at all costs. Non-government shareholders other than Repsol might end up getting nothing when all is said and done.

Moreover, after what happened with YPF, I would avoid any company with substantial fixed assets in Argentina. (Fortunately, MON is not such a company—they sell a lot of seed in Argentina, but they produce hardly any of it there.)

[DewDiligence]

“Argentina’s capacity to err seems unlimited,” said Míriam Leitão, one of Brazil’s most influential columnists on economic issues, in an essay comparing the YPF expropriation to Juan Domingo Perón’s nationalizations in the 1940s and ’50s, which left Argentina hobbled with anemic state enterprises.

http://www.nytimes.com/2012/04/19/world/americas/dismay-over-argentinas-nationalization-plan.html

[si39]

http://www.moneynews.com/InvestingAnalysis/Billionaire-Eskenazi-default-YPF/2012/04/18/id/436263

Argentina’s billionaire Eskenazi family risks default on more than $2 billion of debt after the government seized control of oil company YPF SA and said dividends would probably be reinvested in the company.
The family’s Petersen Group, which has 25 percent of YPF, owes Spanish partner Repsol YPF SA 1.45 billion euros ($1.9 billion) after it bought a stake in YPF, the Madrid-based company said April 16. The Eskenazis counted on YPF dividend payments of as much as 90 percent of profit to repay Repsol and about $680 million of loans with banks including Citigroup Inc.

“Should the Argentine government cut the dividend at YPF (which is the most likely scenario), the Petersen Group would default on its loans,” Exane BNP Paribas analysts Alexandre Marie and Charles Riou said in a note to clients yesterday. “A dividend payout of less than 90 percent triggers a default.”

YPF’s 2011 profit will not be used to pay dividends this year and will probably be re-invested, Deputy Economy Minister Axel Kicillof said yesterday in a congressional hearing.