PPC set for solid start in 2021, €400m inflow in coming days

Power utility PPC, in a positive start to the new year, expects to receive, in January, approximately 200 million euros linked to its large-scale securitization agreement reached last summer with international investment company Pimco for unpaid receivables of over 90 days, and, in addition, a 200 million-euro advance payment from the Greek State, by December 31, for public sector electricity consumption throughout 2021.

The amount to be received by PPC from Pimco represents the bulk of a 300 million-euro agreement.

The power utility intends to utilize this amount, along with a 150 million-euro sum received in November for a smaller-scale securitization agreement with JP Morgan, to initiate its investment plan for 2021.

PPC’s securitization deal with JP Morgan, for unpaid receivables of up to 60 days, is worth a total of 200 million euros.

Overall, PPC stands to receive 500 million euros from the two securitization packages. This sum will be reinforced by a 160 million-euro loan secured from the European Bank for reconstruction and Development (EBRD) last month, as well as a portion of the current year’s profit, once older arrears to market operators have been covered.

PPC’s expected collection of 200 million euros by December 31 from the Greek State as an advance payment – at a discount rate – for public sector electricity consumption in 2021 at the country’s ministries, public enterprises, hospitals and local government buildings, represents the first of two installments, or less than half the agreed sum for the year.

The Greek State’s second and final installment for 2021, to PPC, a 390.5 million-euro installment, is due on February 28.

In the previous two years, PPC had received full advance payments from the Greek State covering the entirety of public sector electricity costs for the respective years ahead.

Furthermore, PPC will achieve a cost reduction in 2021 through its closures of three lignite-fired power stations, Kardia III and IV and Megalopoli III.

The company’s anticipated return to capital markets with a bond issue, expected within the first half of 2021, should provide even greater support for the financing of its investment plan.

PPC to announce initial €150m securitization collection

Power utility PPC is expected to announce, within the next fortnight, a 150 million-euro collection from a small-scale securitization agreement reached with JP Morgan last summer, promising some cash-flow security for the corporation.

PPC and JP Morgan still need to finalize certain procedural matters before the payment can be made.

This initial 150 million-euro collection represents 75 percent of a 200 million-euro total amount PPC anticipates from the small-scale securitization package, concerning unpaid receivables of up to 60 days.

Given its short-term span, this agreement, a non-recourse agreement not requiring PPC to provide guarantees, is rated as a low-risk securitization package.

If the debt collection firms – Qualco and law offices – commissioned to collect unpaid receivables from PPC customers on behalf of the utility fail to do so, then JP Morgan, which has purchased related bonds, or senior notes, will incur corresponding losses.

PPC has also signed a securitization package with Pimco for longer-term unpaid receivables of over 90 days, from which the utility expects to collect part of a 300 million-euro total in December or January and the remainder at a latter date.

The news of an imminent securitization payment for PPC comes at a time when the company share has enjoyed major gains. PPC’s share has risen 278 percent since a low last March.

Forthcoming results for the nine-month period, as well as news on the company’s solar energy projects and new business plan for 2021-2023 should provide a further boost.

PPC awaiting first securitization deal cash injection this month

Power utility PPC, seeking to financially bolster in anticipation of tougher pandemic-related market conditions, expects, within November, to benefit from an initial collection of approximately 150 million euros following two securitization agreements reached last summer with JP Morgan and Pimco for unpaid receivables.

This forthcoming initial cash injection, expected to eventually reach as much as 200 million euros, concerns a small-scale securitization package, for unpaid receivables of up to 60 days, reached between PPC and JP Morgan early last summer.

PPC then established an additional deal with Pimco for longer-term unpaid receivables of more than 90 days, expected to rake in up to 300 million euros, for a combined securitization total that may ultimately reach 500 million euros.

The power utility expects to receive about 200 million euros from the Pimco deal in December or January. This means PPC should have received a total of about 350 million euros in initial payments from JP Morgan and Pimco by no later than the end of January.

This amount promises to serve as a safety net in the coming months of market insecurity and tightened cash flow, and, in addition, partially fund PPC’s new business plan.

Currently being worked on, and expected to be far more ambitious than a previous version delivered at the end of 2019, PPC’s new business plan should be announced around mid-December.

It is expected to feature swifter RES project development and lignite unit withdrawals, as well as more ambitious electromobility initiatives.

The 500 million-euro securitization amount will certainly be needed for these investments.

PPC writes off €1.7bn in customer debt as uncollectible

Power utility PPC has written off, as uncollectible accounts, 1.7 billion euros in unpaid receivables accumulated over the past decade or so by household, business and industrial customers.

This sum represents over 60 percent of PPC’s unpaid receivables total, estimated to be worth 2.7 billion euros.

The 1.7 billion-euro amount written off by PPC concerns customer debt that is at least five years old. Many enterprises with electricity bill arrears owed to PPC are no longer in business.

Though PPC is clearing its books of these uncollectible accounts to financially restructure, the debt, owed by customers does cease to exist.

Debt collection firms that recently took on the task of managing PPC’s unpaid receivables will continue to pursue customers with arrears, despite subdued expectations of success.

These collection firms will be focusing their efforts on more recent unpaid receivables estimated to total as much as one billion euros.

PPC, according to data released last year that has changed little, estimates that over 580,000 financially able customers are deliberately dodging electricity bill payments totaling 545 million euros and overdue for more than six months. Overall, PPC estimates this category of customers to total 1,477,000, owing over 1.5 billion euros.

Also, the corporation estimates that a further 895,000 customers have switched suppliers, leaving PPC with a total of one billion euros in of unpaid receivables.

PPP recently reached securitization package agreements with JP Morgan and PIMCO, the former for unpaid receivables overdue by up to 60 days and the latter for unpaid receivables overdue by more than 90 days.

PPC nears €350m deal for second securitization package

Power utility PPC is moving fast towards an agreement with a major financial services player for a second securitization package carrying unpaid receivables overdue by more than 90 days.

Less than a month ago, PPC reached a 260 million-euro agreement with JP Morgan for a smaller-scale securitization package of unpaid electricity bills overdue by up to 60 days.

According to sources, PPC’s chief executive Giorgos Stassis has called for an extraordinary board meeting to seek approval of an offer made by a major international financial player for the larger-scale securitization package.

If this offer is approved by the board, PPC stands to receive approximately 350 million euros with an interest rate of around 5 percent. This interest rate is higher than the 3.5 percent rate attached to the preceding securitization deal as a result of the higher risk entailed.

PPC’s ability to attract yet another major financial player reflects the growing faith been placed by the investment community in the power utility, especially its ability to collect unpaid receivables.

The two securitization packages promise considerable cash inflow for PPC. Half the amount to be received through the first securitization package will be used to service debt.

 

PPC, heavyweight firm close to big-scale securitization deal

Power utility PPC is believed to be making sound progress in its negotiations with a financial world heavyweight for an agreement on a securitization package carrying unpaid receivables overdue by at least 90 days, making it a high-risk venture, energypress sources have informed.

A deal is believed to be imminent and could be presented to the PPC board next week, the sources noted, adding that an agreement will definitely be finalized within July.

These talks follow PPC’s recent agreement with JP Morgan for an initial, smaller-scale, lower-risk securitization package carrying unpaid receivables of up to 60 days.

PPC secured a cash injection of approximately 250 million euros through this agreement and an interest rate of 3.5 percent, regarded extremely favorable.

The higher risk entailed in the forthcoming securitization package is expected to lead to a considerably higher interest rate than the figure agreed to between PPC and JP Morgan.

Even so, the overall securitization procedure indicates that PPC’s credibility is gradually being restored as major players are showing greater faith in the utility’s ability to handle its unpaid receivables.

Both the previous securitization agreement and the one currently in the making are non-recourse agreements not requiring PPC to provide guarantees.

Debt collection services firm Qualco and legal firms hired by PPC will continue handling the collection effort.

PPC aims to receive approximately 300 million euros for the second securitization package.

Besides the absence of guarantees, the securitization agreements represent yet another source of funding for PPC that is not added to the company’s debt figure.

PPC secures financial relief, cash injections worth €300m

Power utility PPC is reinforcing its financial position for protection against challenges already brought about by the coronavirus crisis and ones not yet fully apparent.

The corporation’s board has approved moves worth 300 million euros, including restructuring of high-cost loans, in an effort to boost its liquidity.

Financial tools and alternative borrowing sources have once again become available to the corporation following its return to profit territory and growth prospects.

Investors and banks are expressing renewed faith in PPC, as was made clear yesterday by three decisions taken by the utility’s board promising to inject about 300 million euros into the company.

CEO Giorgos Stassis and his board approved a JP Morgan offer worth between 200 and 250 million euros for unpaid receivables by customers in the low and mid-voltage categories. This package of unpaid receivables totals 260 million euros and concerns amounts overdue for no more than 60 days. The financial services company is offering an interest rate of 3.5 percent over a three-year period. Bonds will be issued by PPC through an SPV.

Also, the country’s four main banks, National, Alpha, Eurobank and Piraeus, have accepted a request by PPC for a delay in the payments of two 25 million-euro installments, respectively due June 30 and December 31, for a one billion-euro, five-year bond issued in 2018. The systemic banks, showing faith in PPC, agreed to receive these payments when the bond matures in 2023.

In addition, PPC has further diversified its borrowing sources. The board approved an Optima Bank proposal for a 15 million-euro debenture loan with floating six-month interest.

 

JP Morgan awarded PPC’s small securitization package

US investment bank JP Morgan has been awarded power utility PPC’s smaller of two securitization packages, carrying unpaid receivables of up to 60 days, after submitting the strongest offer to a tender at a rate of 3.5 percent.

This agreement, expected to be endorsed by PPC’s board today, represents the first, and simpler, step of the utility’s securitization plan, to be followed by a bigger-scale effort in September for unpaid receivables of at least 90 days. PPC expects an interest rate of more than 7 percent for this second package, carrying higher risk.

PPC’s securitization plan reflects the corporation’s ongoing effort to gradually regain its credibility. Offering unpaid receivables packages for cash injections would have seemed unimaginable a year ago.

The deal with JP Morgan is a non-recourse agreement, meaning PPC will not need to offer guarantees.

If companies (Qualco, legal firms) that have taken on the task of collecting unpaid receivables from PPC customers, on behalf of the utility, do not succeed, then JP Morgan, as buyer of securitization titles, will incur losses to the extent of the failure.

 

PPC securitization plan, being revised, draws investor interest

Power utility PPC is making revisions to the previous administration’s securitization plan for unpaid receivables worth 1.5 billion euros.

Recently appointed PPC chief executive Giorgos Stassis and his team are taking cautious, slower steps, believing better preparation is needed for the two packages, respectively grouping unpaid receivables of up to 60 and 90 days. Investors are already showing signs of interest.

The initial plan, spearheaded by former PPC chief Manolis Panagiotakis, was planned to issue two packages in September.

Both packages are being developed concurrently, according to reliable enegrypress sources.

The power utility’s stricter handling of consumer debt generated by customers seen as capable but unwilling to settle their electricity bill arrears, combined with PPC’s new and revised installment-based payback plan, appear to be producing positive results for PPC’s cash flow.

If the securitization packages are to attract investor interest, participating funds will need to be convinced a substantial part of the debt owed is retrievable.

Pimco and CarVal Investors are among the funds believed to be expressing interest. Deutsche Bank is organizing the package for unpaid receivables up to 60 and Finacity the 90-day package. JP Morgan is also rumored to be involved in the procedure.