Spain’s Repsol Agrees To Sell Gas Natural Stake To CVC

Spain’s Repsol has agreed to sell its 20 percent stake in Gas Natural to CVC Capital Partners for €3.82 billion (US$4.69 billion), a move which could allow the oil major to restart investment after years of debt reduction.

Repsol will sell the stake to Rioja Bidco Shareholdings, controlled by private equity firm CVC, for a price equivalent to around €19 per share, it said on the 22^nd February. Capital gains from the sale were around €400 million, it said.

Repsol did not say what it will use the proceeds from the sale for. Options include further cutting debt or investment in assets like renewables.

Analysts at BBVA said that the company may be tempted to invest the proceeds in renewable or non-fossil fuel alternatives to tempt investors but warned this could expose the group to regulatory and integration risks.

The oil and gas company had long been rumoured to be considering the sale of the non-strategic asset. The reaction to the sale by shares in both companies was muted.

Gas Natural was trading 0.4 percent higher at €18.35 at 09:22 GMT, while Repsol was 0.57 percent lower.

Repsol has focused on cost reduction in recent years to improve its balance sheet, resulting in recent credit rating upgrades.

Europe’s fifth-largest refiner by market value is on track to cut its debt to below €7 billion by the end of 2017, down from €8.1 billion at the end of 2016 and around €12 billion a year earlier.

Repsol and Criteria Caixa, the holding company which owns Caixabank, agreed a near €4billion deal to each sell a ten percent stake in Gas Natural to Global Infrastructure Partners in September 2016.

Source: Rigzone