Argentina's YPF Acquires Option To Raise Stake In Metrogas

Argentina's largest oil and gas producer, YPF SA (YPF, YPFD.BA), has acquired an option to raise its stake in Argentina's biggest natural-gas-distribution company, Metrogas SA (METR.BA).

Metrogas said Monday in a statement to the Buenos Aires Stock Exchange that YPF Inversora Energetica, a unit of YPF, has obtained the right to buy a 54.7% stake in Metrogas from the U.K.'s BG Group PLC (BG.LN, BRGYY).

BG owns the stake through the holding company Consorcio Gas Argentino Sociedad Anonima, or GASA.

GASA owns 70% of Metrogas, while 20% of the shares are traded in Buenos Aires and New York, and 10% are held by employees. YPF already has a 45.5% stake in GASA.

YPF has until Aug. 31 to exercise the option, though that period can be extended to Oct. 5, according to the statement. YPF itself is a unit of Spain's Repsol YPF SA (REP.MC, REPYY).

A year ago, Metrogas filed for bankruptcy protection, leading the government to step in to manage the firm.

Following the bankruptcy filing, ratings agency Standard & Poor's lowered its already low CC rating on Metrogas' $250 million debt to D. The company suffered from "the mismatch between revenues and costs during 2002-2010 due to a combination of frozen tariffs, high inflation, and currency devaluation," according to Standard and Poor's.

Public service companies such as Metrogas have struggled since Argentina's 2001-02 economic meltdown, when the government froze most utility rates. The government has since renegotiated some, but not all, operating contracts.

While many rates have remained frozen, operating costs have skyrocketed amid rising inflation.

But government officials have criticized many of the companies, including Metrogas, and said their financial troubles are not related to government policy.

Metrogas serves more than 2 million customers under a 35-year exclusive license to distribute natural gas in the Buenos Aires metropolitan region, Argentina's most densely-populated area.

-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; [e-mail]