Greek State, Latsis group working on 3 issues for ELPE agreement

Though the government, as the Greek State’s representative, and the Latsis corporate group, co-shareholders of ELPE (Hellenic Petroleum), are expected to sign an agreement early next week that will enable TAIPED, the state privatization fund, to offer a 51 percent stake and management rights of the petroleum firm to prospective buyers through an international tender, three issues are still being discussed.

The Greek State, which currently holds a 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, which controls a 45.47 percent stake, are holding continual talks to resolve these matters.

The two sides need to decide on their managerial roles, as prospective minority shareholders. They must also agree on how many members of the new board they will eeach be entitled to appoint. Their future veto rights also need to be determined.

The Greek State and Paneuropean Oil plan to each retain respective 15 percent stakes in ELPE, meaning the former will offer approximately 20 percent of its existing 35.5 percent stake and Paneuropean Oil will offer about 30 percent of its 45.47 percent stake.

Once the two sides have signed an agreement, TAIPED will be able to immediately announce an international tender. Its terms are expected to shape the turnout of interested investors.

Greek State, Latsis group nearing deal on ELPE’s 51% to be sold

An agreement between the government, as the Greek State’s representative, and the Latsis corporate group that would offer prospective buyers a 51 percent stake of ELPE (Hellenic Petroleum) plus managerial rights appears to be just days away.

The Greek State holds a 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, controls a 45.47 percent stake.

The negotiating sides have been engaged in a continuous stream of meetings over the past couple of days and are now believed to be discussing final details. One of these concerns whether either of the two sides will maintain the right to appoint board members following the sale of ELPE’s 51 percent.

The Greek State and Paneuropean Oil plan to each retain respective 15 percent stakes in ELPE, meaning the former will offer approximately 20 percent of its existing 35.5 percent stake and Paneuropean Oil will offer about 30 percent of its 45.47 percent stake.

Once the two sides have signed an agreement, TAIPED, the state privatization fund, will be able to immediately announce an international tender. Its terms are expected to shape the turnout of interested investors.

Insiders have explained that media claims pinpointing prospective investors do not reflect reality as nobody knows anything about the tender’s terms. An indicative picture of the truly interested parties will only be formed once the international tender’s terms have been specified and announced, pundits support.

According to Greek bailout terms, ELPE’s privatization procedure is scheduled to commence within March. With the month now just about through, an April launch is expected.

As for the sale’s price tag, a variety of figures have been aired of late. Insiders have kept a distance from various estimates evaluating the firm at a total of between 5 and 6 billion euros, based on its financial performance last year, which translates into a price of between 2.5 and 3 billion euros for the firm’s 51 percent. Pundits believe that prospective investors, given the current market conditions, would hold back their interest if such price levels are demanded.

At the other end, ELPE’s current equity value of 2.42 billion euros, based on yesterday’s share closing price at the Athens Stock Exchange, may not reflect the enterprise’s actual worth as the bourse index is currently subdued. However, this low level will be taken into consideration by investors when the time arrives for decisions to be made, insiders have pointed out.

Though ELPE’s recent streak of record-breaking figures cannot be disputed, petroleum industry profit margins, especially in the refining sector, have been unstable. An international evaluator to be tasked with evaluating the petroleum company should offer some clarity on the price level of ELPE’s 51 percent stake and management rights to be sold.

 

 

Outcome of gov’t-Latsis talks on ELPE expected within 10 days

Negotiations between the government and the Latsis group for a deal that would offer the prospective buyer of ELPE (Hellenic Petroleum) a 51 percent stake plus managerial rights have reached an advanced stage, suggesting that if an agreement is to be reached, then this will occur within the next ten days, a source closely following the developments has informed.

The government is looking at a plan that would give the buyer a stake of at least 51 percent in the petroleum firm. The Greek State holds a 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, controls a 45.47 percent stake.

The two sides are now working on finalizing the details of this 51 percent offering as well as a series of other issues, primarily technical, the source informed.

The Greek State is expected to offer 20 percent of its 35.5 percent stake and Paneuropean Oil 30.47 percent of its 45.47 percent stake.

Greek privatization fund officials believe this privatization can be completed this year, assuming investors express interest and the sale’s prospective international tender runs smoothly.

An assortment of figures has emerged concerning ELPE’s market value. Officials participating in the negotiations are keeping a distance from one evaluation approach contending that, based on last year’s financial figures, ELPE is worth between 5 and 6 billion euros, meaning that a 51 percent stake would cost investors around 2.5 to 3 billion euros. Given the current market conditions, such a price tag will not easily lure strategic investors.

Though ELPE has been posting record performance figures of late, profit margins, especially in the refining sector, have fluctuated. An international evaluator to be tasked with evaluating the petroleum company should offer some clarity on ELPE’s price.

The government plan anticipates 500 million euros for the national budget in 2018 through the sale of the Greek State’s 35 percent stake in ELPE.

 

Various ELPE sale plans tabled as sale launch date approaches

Various intentions concerning the price and schedule of ELPE’s (Hellenic Petroleum) imminent privatization, the biggest planned for Greece’s energy sector and one of the overall program’s biggest, are still being considered by local officials despite the fact that the government and country’s lenders have settled for the sale of a 51 percent stake of the petroleum group.

The government, representing the Greek State’s 35.5 percent stake of ELPE, and Paneuropean Oil, a member of the Latsis corporate group, which controls a 45.47 percent stake, will need to forge an agreement offering a majority stake for a strategic investor.

Three lines of thought have emerged. The finance ministry, powering the first of these, is pushing to finalize all pending bailout issues by a June 21 Eurogroup meeting. Officials at the ministry know well that the course of the country’s privatizations program will be pivotal for post-bailout terms, including relief measure negotiations.

Energy minister Giorgos Stathakis, the chief advocate of a second approach to the ELPE privatization, appears to have abandoned initial thoughts entailing various alternatives and has agreed on the basics of the plan to offer investors a 51 percent of the petroluem group. However, he seems determined to hold on to some sort of Greek State control for ELPE, currently experiencing one of the most profitable periods in the corporation’s history. ELPE’s board supports this approach.

As for the sale’s other factor, the Latsis corporate group’s Paneuropean Oil appears to have struck common ground with the Greek State for an agreement that would offer investors a 51 percent stake of ELPE.

Developments concerning this privatization are expected to unfold over the next few weeks. The sale’s international tender is, according to the bailout terms, planned to be announced in roughly two weeks’ time.

ELPE buyer will be hard to find amid adverse sector conditions

The Greek government appears determined to stage a bailout-required tender for the privatization of ELPE (Hellenic Petroleum) but the endeavor promises to prove considerably complicated.

The government plan anticipates 500 million euros for the national budget in 2018 through the sale of the Greek State’s 35 percent stake in ELPE. Based on this calculation, ELPE, in its entirety, is valued at 1.4 billion euros.

Taking into account the petroleum group’s performance in 2017, this 1.4 million-euro evaluation is 1.7 times the group’s operating profit in 2017. Normally, operating profit is multiplied by five or six times to determine the current value of corporations. If this approach is adopted for ELPE, then the group is worth between 5 and 6 billion euros, based on last year’s operating profit.

Subsequently, prospective buyers would need to provide an amount of approximately 2.5 to 3 billion euros for a 51 percent stake of ELPE.

The government is looking at a plan that would give the buyer a stake of at least 51 percent in the petroleum firm through an agreement by the Greek State, holding a 35.5 percent stake of ELPE, and Paneuropean Oil, a member of the Latsis corporate group, which controls a 45.47 percent stake.

It remains questionable whether a refinery group can, at present, attract an investment of such magnitude. The refining sector has weakened and, following three consecutive years of high profit figures, appears set for a challenging period.

Sector authorities have made note of a fuel consumption decline throughout Europe, a trend attributed to new and more efficient car engines developed in the auto industry.

In addition, the auto industry’s diesel-related controversy has impacted the refining sector, especially following a verdict by a German court that will restrict the use of diesel in major German cities.

The difficulties faced by the refining sector are also being compounded by rising oil prices, which are wiping out profit margins, considerable until recently.

Without a doubt, these developments are affecting investment decisions. In recent years, oil majors have either halted refining sector investments or, in some cases, reduced their exposure to the sector. This is especially so in Europe, where corporations are facing stricter regulatory and environmental demands, which is dampening their level of competitiveness.

The Greek government may well push ahead with an ELPE tender, but, given these difficult market conditions, it remains questionable whether a buyer will be found.

 

 

Gov’t ELPE thoughts unlikely to alter imminent sale launch

Energy minister Giorgos Stathakis requested revisions to the bailout’s energy-sector privatizations, ELPE (Hellenic Petroleum) being a primary concern, at a meeting with the country’s lender representatives on Monday, but, according to sources, this will not alter the supplementary bailout’s scheduled commencement of a sale produre to offer the Greek State’s 35.5 percent stake in ELPE by late March.

Though a slight extension of this sale’s launch date, by a month or two, could be offered, the only negotiable aspect between the Greek government and lenders seems to concern the size of the Greek State’s ELPE stake to be placed for sale. But this would be conditional, the sources said.

An alternative budget revenue source of equivalent fiscal scale, not desirable and carrying political cost, would need to be found if the Greek government is to be permitted to offer a reduced Greek State stake in the ELPE privatization.

The stance to be adopted by Paneuropean Oil, a member of the Latsis corporate group holding a 45.47 percent stake in ELPE, will be pivotal for this privatization, the sources underlined.

The government and Latsis group are believed to have begun discussions for a plan that would offer 51 percent of ELPE to a strategic investor, plus managerial rights.

The government is also believed to be seeking to promote a convertible bond issue, as an alternative ELPE plan.

ELPE’s market value was recently estimated, by foreigh evaluators, to be worth 4.8 billion euros. Any prospective buyer would also need to shoulder the enterprise’s debt of two billion euros, which takes the total buying price to nearly 7 billion euros.

It remains questionable whether investor interest will be expressed given these figures, especially at a time when rising oil prices appear to represent unfavorable news for the refining sector. Major petroleum groups are once again focusing their investments on extraction.

A total amount of 500 million euros stemming from the sale of a Greek State stake in ELPE has been planned for the national budget in 2018.

 

 

Latsis group seeking deputy director post on ELPE board

The two main shareholders at ELPE (Hellenic Petroleum), Paneuropean Oil, a member of the Latsis corporate group, holding a 45.47 percent stake, and the Greek State, which maintains a 35 percent share, have just about reached an agreement for board revisions, expected to be  finalized today, a source directly involved in the talks has informed.

Though Paneuropean Oil is ELPE’s biggest shareholder, it is represented by just two officials on the refinery’s 13-member board.

The Latsis group, pushing for greater administrative control, will most likely be given a deputy director post enabling a company official to serve alongside ELPE’s chairman Stathis Tsotsoros and managing director Grigoris Stergioulis. It remains unclear how the executive powers would be divided in such a case.

ELPE is scheduled to stage an annual shareholders’ meeting tomorrow, rescheduled from a month earlier, possibly as a result of disagreements between the two main shareholders.

Certain sorces attributed the disagreement to issues concerning the development of Hellenikon, the former Athens International Airport, a prime seaside expanse in southern Athens in which the Latsis group holds an interest.

An agreement today would be presented to ELPE’s shareholders tomorrow.

Rumors rife about board line-up changes at ELPE

Rumors of board line-up changes at ELPE (Hellenic Petroleum) have been rife over the past few weeks, ahead of a company shareholders’ meeting this Friday, but the prospect of a move by the refinery’s chairman Stathis Tsotsoros to the main power utility PPC, in place of its chief executive Manolis Panagiotakis, as was reported by local media on Sunday, has been ruled out by a government source.

Paneuropean Oil, a member of the Latsis corporate group, is the main shareholder of ELPE with a 45.47 percent stake, while the Greek State holds a 35 percent share.

The possibility of board changes at ELPE emerged slightly less than a month ago when disagreements between the two main shareholders led to the postponement of the refinery’s annual shareholders’ meeting by a month.

At the time, Paneuropean issued a statement noting that talks between the two main shareholders had yet to be completed, without providing further details.

It has been reported that Paneuropean is seeking stronger representation on the ELPE board. Other sources have attributed the disagreement to issues concerning the development of Hellenikon, the former Athens International Airport, a prime seaside expanse in southern Athens in which the Latsis group holds an interest.

Other reports contend that the Greek State and Paneuropean have reached an agreement for the ELPE board and can be expected to deliver a common proposal at Friday’s meeting.

At present, the Latsis group is represented by just two officials on ELPE’s 13-member board, despite being the refinery’s main shareholder.

Prime Minister Alexis Tsipras, commenting a month ago on ELPE’s recent record profit figures, noted that the company’s results were impressive, while adding: “winning teams don’t change their line ups.”

Paneuropean motives behind ELPE meeting delay unknown

A request made by Paneuropean Oil – a member of the Latsis corporate group holding a 45.47 percent stake in ELPE (Hellenic Petroleum) – for a latter date concerning the oil refinery’s next shareholders’ meeting, has been accepted but the motive behind the move remains unknown.

Prior to this request for the meeting’s delay, the Latsis group had remained discreet with regard to its ELPE stake in years. However, last July, Paneuropean did increase its stake in ELPE from 42 percent to the current level.

Reports claiming to know the reason, or reasons, behind the Latsis group’s move to delay the next ELPE shareholders’ meeting are merely speculative.

ELPE’s future as a shareholder in DEPA, the public gas corporation, and DESFA, the natural gas grid operator, is one issue that needs to be cleared up.

The utilization of the Greek State’s 35 percent share in ELPE also needs to be addressed. TAIPED, the State Privatization Fund, has already announced a tender seeking a consultant for this stake’s prospective sale.

The administrative rights of ELPE’s two main shareholders, Paneuropean Oil and the Greek State, also need to be clarified.

At present, Paneuropean holds two seats on the ELPE board, while officials stemming from the Latsis group hold key executive posts at the refinery, especially in financial management and planning.

Certain reports have claimed the Greek government has accepted a request by the Latsis group for the appointment of a Paneuropean official on the ELPE board. Prime Minister Alexis Tsipras responded to these reports by declaring that “winning teams do not change their line-ups,” a reference to ELPE’s recent company record profit figures. Even so, an increased Paneuropean representation at ELPE has not been ruled out.

Other reports have linked the Latsis group’s request for a delay of the next ELPE shareholders’ meeting to discontent felt by the group in its relations with the government for its wider corporate interests, beyond ELPE.

 

New rumors arise for Latsis partial sale of ELPE stake

The recent equity share increase by Paneuropean Oil, a member of the Latsis corporate group, in ELPE (Hellenic Petroleum) from 42 percent to 45.5 percent has been interpreted by market officials as an attempt, by the Latsis group, to increase the market value of its share in the venture in preparation for a partial or full sale of its ELPE stake at a higher equity price when TAIPED, the State Privatization Fund, announces the sale of the Greek State’s 35 percent share of ELPE within 2017.

The Latsis group has not offered any comments on its increased ELPE stake.

Earlier this week, when it was announced that Paneuropean had increased its stake in ELPE from 42 percent to 45.5 percent, ELPE’s share rose by 4.42 percent to 3.78 euros. Yesterday, it increased by 1.59 percent to 3.84 euros.

Although officially denied by the Latsis group, its disengagement from ELPE has been contemplated since at least 2012, when a previous attempt was made to privatize the Greek State’s share in the oil refinery.

If the Latsis group is to abandon ELPE, it will need to sell along with the Greek State as the respective stakes of the two, if offered to an investor separately, are not commercially appealing. Any potential investor, whether from Russia, Iran, or anywhere else for that matter, would want control of a majority stake in ELPE. Acquiring the ELPE stake held by either Paneuropean or the Greek State, both under 51 percent, will not do.

In 2012, TAIPED’s then-administration had worked on a formula that would have offered the Greek State’s share of ELPE along with a portion of Paneuropean’s share to facilitate a privatization deal.

At the time, it had been reported that the Latsis group wanted to maintain a considerable share in ELPE but was willing to sell a portion and lower its 42 percent stake to a level of about 30 percent.

This partial surrender by the Latsis group would have stood as an attractive prospect for any strategic investor as it would have offered majority control of ELPE. This prospect, alone, increased the market value of the Latsis share that would have been sold.