• Wed. Dec 6th, 2023

Deciphering Milei’s Strategy: A Comprehensive Explainer


Nov 21, 2023

Following the recent announcement of Argentine President Javier Milei’s intention to privatize YPF, shares of the oil company on Wall Street jumped 41.3% in a day of widespread increases in Argentine companies. However, the privatization process may not be so straightforward for Milei and his ruling party, as they must obtain authorization from Congress to transfer shares to the private sector.

Milei has promised to revalue the value of YPF’s 51% share package before privatizing it, stating that he will sell them in a way that is beneficial for Argentines. However, specialists emphasize that this is an important operation and that the expropriation law from 2012 needs to be repealed before any transfer can take place. The DNU (Decree of Necessity and Urgency) can be used to expedite this process, but it must also be approved by Parliament, which poses a risk for potential buyers.

Once Congress approves the transfer of shares, YPF must then decide whether to sell the entire package to a single buyer or sell shares on the stock market. According to stock market analyst Sebasti├ín Marill, anyone who holds more than 15% of YPF’s shares has an obligation to make an offer for the entire company and agree with 49% of private shareholders before any sale can occur. This adds another layer of complexity to the privatization process.

YPF had a stock market value of US$5,783 million on Monday prior to privatization discussions. The expropriation led by former Minister of Economy Axel Kicillof in 2012 was expensive and resulted in Repsol being compensated with US$5 billion in order to avoid a trial in 2014. In September 2021, New York Judge Loretta Preska ruled that Argentina owes another US$16 billion due to its failure to launch a public offer for retail shareholders when taking control of YPF in 2012. This ruling was appealed and remains open as Milei attempts to advance his privatization plans for YPF.

Overall, Milei faces several obstacles in advancing the privatization process for YPF. He must first gather majorities in both chambers of Congress

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