Repsol buys back 2.57 bn euros of shares from Sacyr

The purchase, confirmed in a statement by Repsol, threw a lifeline to Sacyr just 24 hours before it faced a major debt repayment deadline.

It also halved Sacyr's stake in Repsol to 10 per cent from 20 per cent and thus sharply reduced its influence on the Repsol board, which the oil group saw as troublesome.

The deal represented the final disavowal of former Sacyr chairman Luis Fernando del Rivero, who led a costly power struggle with Repsol and was ousted as chairman by his own company in October.

On Tuesday, he also resigned from board of Repsol, the oil company said in the statement.

Sacyr Vallehermoso became a symbol of a property market frenzy at the end of the 1990s, launching ever bolder development schemes financed with ever greater debts.

By the end of September this year, Sacyr had accumulated a net debt of 11.1 billion euros.

More pressing, Sacyr faced a Wednesday deadline to repay major creditors who loaned it five billion euros to finance the purchase of its 20.01-per cent stake in Repsol.

The Spanish press has closely tracked Sacyr's desperate attempts to raise money by offloading half of its Repsol stake, evoking as possible buyers China Petroleum & Chemical Corporation or a South American group.

In the end, Repsol itself swept in to snap up the stake.

"This decision enhances shareholding stability, allowing the management team to focus all its efforts on the execution of the company's strategic plan in the interest of all its shareholders," Repsol said.

"The lack of agreement between the banks and Sacyr would have produced a scenario of prolonged uncertainty, resulting in a negative impact for Repsol's share price and could additionally harm the company’s growth plans.

"In addition, the large number of banks involved and the disparity of their interests could have led to a massive and disorderly sale of Repsol's shares."

Repsol said it paid 21.066 euros per share, which represented a five per cent discount to the closing price on Monday and a 22-per cent discount to the average target price of research analysts.

Repsol's total investment was 2.572 billion euros.

Investors applauded the deal, sending Sacyr shares surging 10.26 per cent to 4.44 euros and Repsol stock up 1.20 per cent to 22.44 euros.

The purchase gives Sacyr breathing space with its creditors and it announced that it had struck an agreement to refinance 2.446 billion euros of debt until January 31, 2015.

Over the longer term, Repsol has managed to reduce considerably the builder's influence on the board, with its biggest shareholder now Caixabank, which holds 12.97 per cent.

Relations between Repsol and Sacyr deteriorated sharply in the past months after the building group joined forces with Mexican oil firm Pemex to act in concert on the Respol board.

Sacyr and Pemex had planned to increase their joint stake in Repsol to nearly 30 per cent, and they were pushing for management changes including limiting the powers of Repsol chairman Antoni Brufau.

Those plans evaporated with Tuesday's deal, which was announced earlier in the day by Brufau as he visited Russia to broker an oil exploration deal with Alliance Oil.