Headline:
Argentina to Preadjudicate IMPSA Shares to IAF; Commission Approves Deal to Boost Argentine Company
Article:
Argentina’s national government and the province of Mendoza have confirmed the preadjudication of the shares of IMPSA, a historic move that signals the first privatization under the leadership of Minister of Economy, Martín Guzmán. The Commission Evaluadora has recommended accepting the offer of IAF and its partner, Arc Energy, stating that the deal will strengthen the Argentine company and ensure its continued operation.
Why IMPSA?
Founded in 1907, IMPSA holds strategic importance in Argentina’s economy. Its shares are divided among three classes: A (5.3% owned by the Pescarmona family), B (9.8% owned by creditors through fiduciary trusts), and C (63.7% owned by the Fondo Nacional de Desarrollo Productivo – FONDEP, with the remaining 21.2% belonging to the province of Mendoza). The decision to divest the public sector’s stake aligns with the government’s zero-deficit objective and the principle of non-assignment of federal resources to private enterprises.
The IAF Offer
IAF offered $27 million in capital, subject to an integration schedule according to the company’s needs. The offer also includes a request for an extended deadline until January 31, 2021, to secure refinancing for the $576 million debt that IMPSA owes to its creditors. The Commission Evaluadora carefully considered the offer, determining that it significantly improves upon the initial conditions presented.
Privatization’s Benefits
The Commission Evaluadora’s analysis revealed that IAF’s offer meets the necessary financial and operational requirements for IMPSA’s revitalization. The offer maintains the validity of the surety bond and adapts to the company’s immediate operational needs. Pending IAF’s confirmation of the debt renegotiation with creditors, the preadjudication process will proceed, culminating in the drafting of a sales agreement.
IMPSA’s Role in Argentina’s Economy
IMPSA focuses on the production of key equipment, including turbines, cranes, and reactors, serving the metal industry, energy generation, and technology sectors. Its privatization aims to restore the company’s financial health and ensure its continued operations within a competitive market framework.
Mr. Caputo, Argentina’s Minister of Economy, took to social media to celebrate the successful negotiation, applauding the team effort led by Juan Pazo and Palace Lavigne, along with Governor Alfredo Cornejo of Mendoza.
Arc Energy, the only bidder in the international tender launched by Minister Guzmán in October, has ties to U.S. President Donald Trump. The company will make an initial payment of around $7 million, representing 25% of its total capitalization proposal of $27 million. The remaining capital will be infused gradually by 2025, with a focus on securing new contracts for maintaining centralized hydroelectric stations and building port cranes in the United States.
In addition to renegotiating existing contracts with the Ministry of Defense, YPF, and other state entities, the successful privatization of IMPSA will allow the company to tackle its $570 million debt, primarily owed to Banco Nación, BID, BICE, and Chile’s Grupo Moneda corporations.
