Alshaheen Group

ELPE sale focus now on possible Vitol, Glencore partnerships

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Now that Switzerland’s Glencore and Dutch enterprise Vitol have officially qualified for the second round of an international tender offering a 50.1 percent stake of ELPE (Hellenic Petroleum), as was announced yesterday by TAIPED, the state privatization fund, interest in the privatization will turn to possible partnerships that may be established by the two qualifiers with other energy firms.

Pundits have already noted that partnerships by the two leading international traders with other major players could emerge by autumn, when the tender’s participating schemes will be expected to submit binding second-round offers.

Such a development would increase the chances of intensified bidding by the potential buyers and lead to higher prices, as was the case in the recent 66 percent sale of the DESFA gas grid operator, which required the Snam-Enagás-Fluxys team to make a 535 million-euro offer to secure a winning bid. Rival bidder Regasificadora del Noroeste (Reganosa Asset Investments) teamed up with Transgaz and the EBRD, the European Bank for Reconstruction and Development, to ignite the price lift.

The money involved in the ELPE sale is expected to be at least double this amount. According to yesterday’s bourse prices, ELPE is currently worth 2.1 billion euros, meaning a 50.1 percent stake could be estimated at 1.1 billion euros, not including the value of managerial rights attached to the majority stake.

Local price expectations for the ELPE sale are high but it remains to be seen if the two major traders will respond accordingly.

Glencore, one of the two ELPE sale qualifiers, is currently being investigated by the US Department of Justice over money laundering allegations as well as corrupt practices in Nigeria, the Democratic Republic of the Congo and Venezuela.

Local legal authorities have apparently assured TAIPED that the ongoing Glencore investigation in the US will not influence the firm’s role in the ELPE privatization. Even so, rival bidder Vitol could attempt to take advantage of the situation for a stronger position in the ELPE sale.

Glencore and Vitol were two of five first-round applicants in the ELPE privatization. A consortium comprising Carbon Asset Management DWC-LLC and Qatar’s Alshaheen Group, one of the three disqualified participants, has requested a re-examination of its dossier but TAIPED is not expected to change its decision. The consortium may resort to legal action at a national and European level, sources have noted.

ELPE refinancing deal, timed with sale, could add some value

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A loan refinancing agreement between ELPE (Hellenic Petroleum) and its lender banks, reached a while ago but announced now, meaning it coincides with the petroleum firm’s ongoing privatization procedure offering investors a 50.1 percent stake, is expected to boost the firm’s market value.

ELPE’s refinancing agreement for existing loans, as well as the extension of new loans, worth a total of of 900 million euros, is expected to provide some extra incentive to investors taking part in the privatization.

ELPE has secured an interest rate of approximately 3.5 percent for its loans. The rate could have been lower, at approximately 2 percent, closer to European standards, had the country risk factor for Greece been smaller.

This highlights the potential benefits to be offered by ELPE’s incorporation into a larger international group. The development promises to lift the petroleum firm to a higher tier and enable it to utilize market opportunities emerging in the southeast Mediterranean on better financial terms.

ELPE’s agreement with banks covers all its capital needs until 2020 and will provide savings worth at least 20 million euros per year. This development relays a strong message to prospective investors, essentially being told that all financing issues at ELPE have been settled for the next two years.

Two of the ELPE privatization’s five first-round participants, Switzerland’s Glencore and Dutch enterprise Vitol, both leading oil traders on a global scale, are heavily tipped to advance to the next stage.

Expressions of interest also submitted by three other entrants – a consortium comprised of Carbon Asset Management DWC-LLC and Qatar’s Alshaheen Group; Iraq’s Alrai Group Holdings Limited and the Gupta Family Group Alliance – are not expected to be shortlisted for the second round as it is widely believed their dossiers do not meet all criteria. However, officials at TAIPED, the state privatization fund, have yet to reach final decisions.

Three second-round qualifiers would be preferable for the privatization’s bidding level prospects, pundits closely following the developments have noted, as a dual battle limited to Glencore and Vitol could subdue the sale price.

 

At least 2 of 5 ELPE first-round bids may not meet sale’s criteria

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Two of five first-round expressions of interest submitted by investors to an international tender offering a 50.1 percent (at least) stake of ELPE (Hellenic Petroleum) may not meet criteria to advance to the procedure’s next stage, for which investors will be requested to submit binding bids.

Though appraisals of the expressions of interest have yet to be completed, officials are believed to be taking closer looks at dossiers submitted by a consortium comprised of Carbon Asset Management DWC-LLC and Qatar’s Alshaheen Group, as well as those submitted by Iraq’s Alrai Group Holdings Limited and the Gupta Family Group Alliance.

Expressions of interest submitted by two commodity traders, Switzerland’s Glencore and Dutch enterprise Vitol appear to be more favorably placed.

It appears that two bidding teams could be eliminated, while disqualification of a third would be an unfavorable development for the privatization’s sale-price prospects as bidding competition would be severely restricted, pundits closely observing the sale informed energypress.

Qualifiers are expected to be announced during the first week of July, meaning a deadline for binding offers will most likely be set for early autumn. If so, the preferred bidder will be announced towards the end of the year and the finalized sale agreement and transaction payment will not take place until 2019.

Though it is still too early to judge, Glencore and Vitol seem the strongest positioned at this stage.

Vitol sells 7 million barrels of crude per day and petroleum products to petroleum groups, multinationals, industrial enterprises, chemical industries as well as the world’s biggest airlines. Last year, the Dutch firm, founded in Rotterdam in 1966, supplied 349 million tons of crude and posted a turnover figure of 181 billion dollars. It maintains 40 offices in various parts of the world, the main branches being in Geneva, Houston, London and Singapore.

Switzerland’s Glencore, the ELPE sale’s other favourite, headquartered in Baar Zug, trades 6 million barrels of crude per day and refined products. Operating production facilities in Cameroon, the Republic of Chad and Guinea, Glencore also holds a 49 percent stake in the oil storage and logistics firm HG as well as a 10 percent stake in the Singapore-based refinery JAC.

 

TAIPED pushing for swift ELPE sale action, binding bids by July

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TAIPED, the state privatization fund, is pressuring all officials involved with ELPE’s (Hellenic Petroleum) bailout-required sale of a 50.5 percent stake to push ahead with fast-track procedures, the objective being to have a finalized and signed agreement with the new owner by the end of the year.

The privatization fund has ordered the sale’s advisers and all bureaucratic departments involved to move ahead with all necessary approvals concurrently rather than as a step-by-step process. TAIPED wants binding bids by prospective buyers in by the end of July.

Each step of the overall procedure will need to take no longer than an average of ten days if the sale is to move along at the pace demanded by TAIPED.

Expressions of Interest submitted by five investment schemes earlier this week will need to be appraised by next week.

Expressions of Interest were submitted by two of the world’s biggest commodity traders, Dutch firm Vitol and Switzerland’s Glencore; Alrai Group Holdings Limited; a consortium comprised of Carbon Asset Management DWC-LLC and Alshaheen Group S.A.; and Gupta Family Group Alliance.

Their dossiers will need to be appraised by next week and a shortlist of second-round qualifiers must be announced two weeks later. At this stage, qualifiers will also need to be granted immediate access to ELPE’s data room.

Then, a deadline for binding bids, within July, will need to be announced to keep the sale on schedule, as demanded by TAIPED.  Follow-up bids, already anticipated, will need to ensue swiftly. This would enable the privatization fund to announce a preferred bidder within the summer.

If all runs smoothly and this time frame is achieved, then the buyer’s dossier could be submitted to the Court of Auditors for approval in early autumn and followed by the signing of a share purchase agreement.

The agreement’s documents will then need to be submitted to the European Commission’s Directorate General for Competition for its approval. Once this step is completed, TAIPED and the buyer will be clear to sign a finalized agreement. Pundits believe this overall time frame can be achieved, even if it may seem too good to be true.

The ELPE privatization represents a complex procedure and the dossiers of prospective investors could require considerable appraisal time, as was the case with DESFA, the natural gas grid operator. This would delay the sale’s overall schedule. However, a greater number of final-round qualifiers would increase the likelihood of higher bids.

ELPE may be a formidable local force, but the refinery is not an industry powerhouse on a global scale. A greater number of final-round bidders would therefore increase the likelihood of a satisfactory sale price.

Five teams submit preliminary non-binding bids for ELPE sale

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Five investment schemes have submitted first-round Expressions of Interest to an international tender offering a 50.1 percent (at least) stake of ELPE (Hellenic Petroleum), the state privatization fund, TAIPED has announced.

Expressions of Interest were submitted by two of the world’s biggest commodity traders, Dutch firm Vitol and Switzerland’s Glencore, confirming a previous energypress report; Alrai Group Holdings Limited; a consortium comprised of Carbon Asset Management DWC-LLC and Alshaheen Group S.A.; and Gupta Family Group Alliance.

The deadline for non-binding offers expired yesterday following an extension of a previous May 18 deadline.

TAIPED’s advisors will now evaluate these Expressions of Interest and submit to the fund’s Board of Directors their recommendation regarding the candidates that qualify for the next phase of the tender.