Spanish Construction Firm Ousts Its Chief Executive

Luis del Rivero, the ousted chairman of the Spanish construction company Sacyr Vallehermoso, learned that the hard way this week.

After failing in his months-long crusade to shake up the management and strategy of Repsol YPF, the largest oil company in Spain, he became the victim of his own boardroom coup on Thursday. The board of Sacyr voted to remove Mr. del Rivero and replace him with the company’s chief executive and his longtime partner, Manuel Manrique.

The move throws into doubt the future of a pact that Sacyr, which owns 20 percent of Repsol’s stock, had signed with another large Repsol shareholder, Pemex, the Mexican state oil monopoly, to agitate for changes at Repsol.

Under the pact struck in August, the two companies agreed to vote together on the Repsol board, where Sacyr held three seats and Pemex held one. Pemex, which held about 4.8 percent of Repsol’s shares at that time, also began increasing its stake and now owns about 9.5 percent.

Before he was fired, Mr. del Rivero had been under increasing pressure as he struggled to refinance the 4.9 billion euros ($6.8 billion) loan that Sacyr had taken on to buy the Repsol stake in 2006. That loan is due Dec. 21, and his removal makes it more likely that Sacyr will sell some of its Repsol stake, worth nearly 5.3 billion euros ($7.3 billion) at current prices, to pay back the loan.

The debt had pushed Mr. del Rivero into a public feud with Repsol’s chairman and chief executive, Antonio Brufau Niubó, as he pushed Repsol to raise its dividend payments and separate the positions of chairman and chief executive.

The Repsol board instead backed Mr. Brufau’s strategy, which has been to invest more in oil exploration. And in late September, Repsol counterattacked. It changed its bylaws in an attempt to strip Pemex and Sacyr of their seats on Repsol’s board on the grounds of conflict of interest. Repsol also mounted a legal challenge to the pact struck by Sacyr and Pemex, arguing that it breached takeover rules.

Sacyr and Pemex had hoped to gain more seats on the board without making a takeover bid for Repsol, which would have been compulsory if their combined share had reached more than 30 percent.

Shares of Repsol rose in the initial days of the battle, but fell back as the standoff dragged on.

That put more pressure on debt-burdened Sacyr to find another approach, or a new leader.

Although Mr. del Rivero owns 13 percent of Sacyr, the company’s other leading shareholders, Demetrio Carceller and Juan Abelló, lined up support to get rid of him. Mr. Manrique, who himself has 6 percent of Sacyr stock, helped tip the balance in the vote to oust Mr. del Rivero.

“The reality is that del Rivero has been pushed out by other powerful shareholders from the Abelló and Carceller families, who had been his backers in Sacyr but got fed up with his mismanagement and shenanigans,” said Luis Arenzana, a partner of Shelter Island Capital Management in Madrid, an asset management company that owns shares in Repsol.

Mr. del Rivero was part of a generation of construction engineers who rode Spanish property development to become among the country’s most powerful entrepreneurs — with ambitions stretching far beyond the sector and Spain’s borders.

Together with Mr. Manrique and two others, he founded Sacyr in 1986 and then leapfrogged some rivals by buying Vallehermoso, a property subsidiary of Banco Santander. But some of Mr. del Rivero’s subsequent bids failed, notably an attempt in 2004 to gain control over the banking group BBVA, with the blessing of the incoming Socialist government, and a takeover bid for a French rival, Eiffage.

Pemex’s role in the Repsol fight was always puzzling, and the outcome is an embarrassment for its chief executive, Juan José Suárez Coppel. A Pemex spokesman said Friday that its pact with Sacyr remained in effect, but analysts said that the partnership was likely to dissolve with Mr. del Rivero’s ouster.

Pemex had long been a passive investor in Repsol, but after it struck the pact with Sacyr, it spent $1.6 billion to nearly double its stake.

Pemex’s goals were unclear, although Mr. Suárez Coppel has recently said he had hoped to persuade Repsol to share technology and work on joint projects with his company.

Now, he will have to justify why he allowed Pemex to get involved in a boardroom battle on the wrong side.

“It looks gloomy for Suárez Coppel,” said Luis Miguel Labardini, a partner at Marcos y Asociados, an energy consulting firm in Mexico City. “People are going to look at this as a failure.”

Petróleos Mexicanos, as the company is officially called, operates in a time warp that shuts it off from investment and cutting-edge technology. Because Mexican law prohibits any kind of foreign investment in the country’s oil industry, international oil companies are virtually barred from working in Mexico.

And it is almost impossible politically for Pemex to form a joint venture outside of Mexico. Pemex’s budget is set by the Mexican Congress, and its mandate is to develop Mexico’s oil industry. Spending taxpayer money to explore outside of Mexico would set off a political storm.

But Mr. Labardini said that in the end, the decision to raise its investment in Repsol would be profitable for Pemex.

“The decision is a good one, as a financial diversification strategy, even if the agreement with Sacyr doesn’t go through,” he said.

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