Amorim Group pressures State to sell share in Galp

The Amorim Group, the largest shareholder in Portuguese oil and gas company Galp, is putting pressure on the State to sell its share currently worth around €1Bn.

Amorim has sent letters to Parpública, the holding company that runs Portugal’s public companies, pointing out that the State should have sold off its 8.2% share in Galp, and is now in non-compliance.

At issue is the fifth phase of Galp’s re-privatisation, triggered by the government headed by José Sócrates in 2008.

As part of this operation, Galp issued bonds in 2010 that had the shares of the oil company — held by Parpública, the second largest shareholder — as an underlying asset.

With a maturity of seven years, those who acquired those bonds had two options at the end of the term: convert the bonds and hold Galp’s shares or request the repayment of the bonds in cash.

In 2017, most investors opted for the second choice, forcing Parpública to disburse about €885 million. At the time, the newspaper Público reported that only three bondholders chose to receive the shares in exchange, representing a total of 10,512 Galp bonds.

The Amorim group, which controls 36.69% of Galp together with Sonangol, thinks that Parpública should have sold the shares on the market, understanding that this was what determined the rules of Galp’s fifth re-privatisation phase.

In particular, Decree Law 185/2008 of September 19 indicates that “re-privatised shares (…) that are not used by Parpública to exchange or reimburse the obligations are subject to dispersion through disposal on a regulated market”.

The fifth phase of re-privatisation advanced two years later, through a resolution from the Council of Ministers, when the State was expected to alienate Galp’s capital as part of the 2010-2013 Stability and Growth Programme as part of public debt correction measures, through a re-privatisation programme in the energy sector – EDP and REN were also on this list, both companies in which the State has already alienated its financial interests.