SCENARIOS - Possible upshots of Repsol's boardroom spat

By Carlos Ruano and Andres Gonzalez (www.reuters.com)

MADRID, Jan 19 (Reuters) - Cash-hungry Spanish oil company Repsol (REP.MC) shareholder Sacyr's (SVO.MC) desire for a more dividend-friendly chairman at the oil company has greater implications than a mere boardroom reshuffle.

Repsol's board voted unanimously in favour of maintaining chairman Antonio Brufau and his long-term growth strategy at a board meeting last Friday which Sacyr's three board members refused to attend.

Sacyr cannot sell its stake in Repsol at current prices as this operation would generate some 2 billion euros ($2.88 billion) of capital losses. However, the open conflict between Sacyr's and Repsol's chairmen on the board of the oil group is also unsustainable.

Following are the possible upshots of Repsol's boardroom conflict and their consequences.

BRUFAU STAYS
Repsol renews its strategic plan in the next few months and maintains its investment drive to develop the oil and gas resources the company has built up over the last eighteen months.

The company maintains a dividend reduction which cut its 2009 interim dividend by 19 percent in December, and possibly pushes further cuts to help finance its 32 billion euro 2008-2012 investment plan.

Sacyr, with net debt of 12 billion euros, continues to suffer in the short term from a lack of revenue from its 20 percent stake in Repsol.

Sacyr's chairman Luis del Rivero, who has been openly critical of Antonio Brufau, is ignored and loses credibility at the company he manages, possibly even losing his own job at Sacyr despite controlling about 13.5 percent of the builder.

Sources close to Saycr's board have said that two of the company's main shareholders, Juan Abello and Demetrio Carceller, have personally supported Brufau as chairman of Repsol, indicating that Rivero might find himself alone if he pursues Brufau.

BRUFAU GOES
Brufau leaves after the end of Spain's EU presidency and is replaced by a chairman who receives the unanimous support of both Sacyr and Repsol's second largest shareholder, savings bank La Caixa, as well as Spain's government.

Del Rivero's calls for Repsol to cut investments and sell assets to support the company's dividend payout are heard and his position both in Repsol and Sacyr is strengthened.

Sacyr manages to service and even reduce the 5 billion euros of debt it secured to acquire its Repsol stake with a new strategic plan focused on short term cash generation and one-off dividend payments to shareholders.

Repsol's share price becomes more volatile as doubts about Repsol's new management and strategy conflict with hopes of extraordinary dividends from asset sales.

A sharp fall in Repsol's share price if investors are not happy with the company's new direction would increase Sacyr's cost of servicing its 5 billion euro loan and collateral commitments, leading to renewed solvency fears at the builder.