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

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.

 

Glencore, Vitol the hot favorites for ELPE privatization shortlist

Just two of five first-round ELPE (Hellenic Petroleum) privatization applicants, Switzerland’s Glencore and Dutch enterprise Vitol, seem set to advance to the next round of the sale, various sources agree.

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 their dossiers do not meet all criteria, reliable sources informed.

If this is confirmed, then Glencore and Vitol will be left to do battle for a 50.1 percent stake of the Greek petroleum firm, plus managerial rights. The sale’s second-round qualifiers are expected to be announced during the first week of July.

Though a greater number of qualifiers would increase the probability of firmer bidding, strong binding offers could still be submitted by Glencore and Vitol, the world’s two biggest oil traders.

Both have the financial strength to deliver bids of around 1.1 to 1.2 billion euros, the estimated worth of ELPE’s 50.1 percent. It remains unknown how much they would be willing to spend on the ELPE sale as the Greek refinery may be a domestic powerhouse but ranks as a small-to-medium sized player in the bigger international picture.

Once the privatization’s short list has been announced, qualifiers will gain access to ELPE’s data room. TAIPED, the state privatization fund, is aiming for binding bids to be submitted by early September. If so, a preferred bidder could be announced by the end of the year. The transaction is not expected to be completed until 2019.

 

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

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

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

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.

Major traders, Socar tipped to submit first-round ELPE bids

Two of the world’s biggest commodity traders, Dutch firm Vitol and Switzerland’s Glencore, will probably feature among the participants to officially express interest in ELPE’s (Hellenic Petroleum) international tender offering a 50.1 percent stake of the enterprise, according to latest information provided by sources.

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

Besides the aforementioned commodity traders, Azerbaijan’s state-run energy firm Socar, joined by a European firm, possibly Spanish, is also tipped to declare non-binding interest in the bailout-required ELPE sale, sources have informed. This would represent a surprise development.

Socar had taken part in a previous DESFA (natural gas grid operator) sale and was declared the winning bidder before its long-running acquisition attempt was blocked by European Commission competition concerns.

News on the possible participation of major European energy players is not good. European petroleum groups such as Italy’s Eni, Hungary’s MOL, France’s Total, and, possibly, Spain’s Repsol, have reached decisions to not submit initial expressions of interest for the ELPE sale, according to energy market pundits.

A clearer picture on the sale’s preliminary turnout is expected later in the day when TAIPED, the state privatization fund, is expected to announce the list of first-round bidders.

 

 

Big decisions for Larco this fall, Glencore seems reinterested

Swiss-based multinational Glencore, a commodity trading and mining powerhouse with corporate interests around the world, appears to be reexamining the prospect of buying into Larco, Greece’s state-controlled general mining and nickel producer, recent reports have suggested.

Glencore’s alleged reinvigorated interest in Larco, a troubled enterprise, has been primarily attributed to rebounding nickel prices, internationally, and forecasts of their maintainenance at higher levels.

Over just a few weeks, Nickel prices rose sharply from 9,600 dollars per ton, an eight-year low, to 10,300 dollars per ton for immediate delivery and over 10,800 dollars per ton for December futures contracts.

Larco has been placed on Greece’s privatizations list. The company’s shares have been transferred to TAIPED, the state privatization fund. The recent rise in nickel prices may help the troubled Greek nickel company improve its difficult financial position, analysts believe. This prospect has drawn the attention of Glencore.

Offering insight into the multinational’s investment plans, Gllencore CEO Ivan Glasenberg, speaking at a recent industry conference, recently declared that a potential large-scale rise of electric cars and development of energy storage systems will significantly boost demand for minerals, including copper, cobalt, zinc and nickel, in the coming decades.

Almost all car-makers are increasing investment in electric vehicles as governments adopt tighter emissions targets, he added.

Electric vehicles require more copper wiring than standard internal combustion engines. For example, the battery in an electric car contains about 38kg of copper, 11kg of cobalt and 11kg of nickel, according to Glencore. These materials, along with manganese, stand to benefit from more demand for electric cars, Glasenberg said.

Demand is growing for battery-powered vehicles. European sales of alternative-fuel models, which include fully electric cars as well as hybrid vehicles, jumped 36% in the first quarter to 235,438 units, according to the European Automobile Manufacturers’ Association.

Glencore appears to be maneuvering to acquire Larco as a reshaped unit without burdens. If this is to be achieved, the mining and nickel producer would need to be shut down and its assets auctioned off.

A loss-incurring enterprise that stands as the country’s second-biggest electricity consumer, Larco currently owes the main power utility PPC an amount estimated at 210 million euros.

Big decisions will certainly need to be taken on Larco’s future this comng autumn, as was recently pointed out by energy minister Giorgos Stathakis to Greek Parliament’s Production and Trade Committee.

To date, the government has gone no further than to make note of the need for a short-term plan aiming to resolve Larco’s cashflow problem as well as a long-term strategy to bolster the company’s standing in the future. It remains to be seen what all this actually means.