Pimco

PPC net debt drops below €3bn, Macquarie deal may push figure lower

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Power utility PPC, expected to post first-half results today, will reportedly announce a net debt figure (total debt minus cash reserves) of less than three billion euros, following an extended period above this level, brought down by the company’s two securitization agreements with JP Morgan and Pimco for unpaid receivables.

The two securitization deals, worth a total of approximately 370 million euros, have helped reduce PPC’s net debt to less than three billion euros for the first half. PPC’s net debt for the first quarter was worth 3.27 billion euros.

The power utility’s net debt could drop even further once a recent 2.116 billion-euro agreement with Australian fund Macquarie, for its acquisition of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a PPC subsidiary, is finalized.

PPC’s net debt was at 5 billion euros in 2014 and could plunge well below the three billion-euro mark as a result of the recent deal with Macquarie, the winning bidder in a DEDDIE/HEDNO tender.

Overall, PPC is expected to post weaker financial results, compared to previous quarters, as a result of escalated prices for CO2 emission rights, fuel and gas, and the company’s market-share contraction. However, these unfavorable factors are believed to have been partially offset by an increase in demand for electricity over recent months.

 

PPC set to sign securitization agreement with Pimco

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Power utility PPC is set to sign a large-scale securitization agreement with international investment company Pimco for unpaid receivables of over 90 days.

PPC will receive approximately 200 million euros of 300 million in total, sources said.

This securitization package was preceded by a small-scale agreement with JP Morgan late last year for unpaid receivables of up to 60 days. PPC received 150 million euros in a deal worth a total of 200 million euros.

PPC and Pimco have both approved this latest securitization agreement, a 14,000-page text, with just their signatures pending, the sources informed.

The 350 million-euro sum coming from PPC’s two securitization agreements, along with 775 million euros raised by the corporation through two recent bond issues, represents major cash flow relief worth 1.2 billion euros that promises to facilitate the utility’s upcoming investments and cover operating costs.

In addition, funds to come from the anticipated privatization, in the second half, of a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, the distribution network operator, promise to further boost the power utility’s investment ability.

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

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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

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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

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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

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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 securitization plan, being revised, draws investor interest

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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.