Billionaire Eskenazis Risk Default As Argentina Takes YPF

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, Bloomberg reported. 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. President Cristina Fernandez de Kirchner ousted Sebastian Eskenazi as the head of Buenos Aires-based YPF April 16, appointing Planning Minister Julio de Vido to run the company and announcing plans to seize a 51 percent stake in YPF from Repsol. The expropriation follows the takeovers of airline Aerolineas Argentinas SA and a $24 billion pension fund by Kirchner since she took office in 2007. Read more.

In a related story, Reuters reported that Spain has threatened to retaliate against Argentina for nationalising the Spanish energy firm, but Madrid will find it hard to put pressure on a maverick nation that has been shut out of world debt markets and has ignored international fines in previous disputes. Read more.