DEPA Infrastructure bidder legal files opened ahead of offers

Privatization fund TAIPED has opened first-stage files carrying legal documents submitted by two bidders, Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS, for the 100 percent sale of gas company DEPA Infrastructure.

This is the first step before the financial offers submitted by the two bidders are opened.

TAIPED officials are now examining the legal documents in case any clarification is needed before the sale’s procedure advances to the second and final stage, when the financial offers are opened, probably towards the end of August or early September.

The possibility of the bidders being asked to improve their offers has not been ruled out.

 

Italgas, Czech Republic’s EPH bid for DEPA Infrastructure

Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS (EPH) met yesterday’s deadline to submit binding bids for the 100 percent sale of gas company DEPA Infrastructure, bringing this privatization to its final stretch.

TAIPED, Greece’s privatization fund, will now need to check if the files submitted by the suitors are complete before opening up their respective financial offers.

The privatization fund’s board will inspect the first-stage files, carrying legal documents, at its next meeting, sources informed. If the files are complete, TAIPED will proceed to the next step of opening up the financial offers, but not before some time has elapsed to allow for possible objections.

If the price difference in the financial offers is no more than 15 percent, TAIPED will request improved follow-up bids from both bidders.

The preferred bidder is expected to be announced by the end of August or early September. DG Comp and DG Energy approval will then be required before an agreement can be signed for the transfer, to the winning bidder, of TAIPED’s 65 percent stake control of DEPA Infrastructure and the 35 percent stake held by Hellenic Petroleum (ELPE).

The sale of DEPA Infrastructure, controlling the distribution networks of EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, as well as DEDA, covering the rest of Greece, will spell the end of the Greek State’s control of the country’s low and medium-pressure natural gas pipelines.

DEPA Infrastructure sale now a showdown for two, Italgas, EPH

With the deadline for binding bids in the 100 percent sale of gas company DEPA Infrastructure expiring tomorrow, a latest update from sources indicates that two suitors will submit offers, Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS (EPH). An additional bid by a third participant has not been ruled out.

Besides Italgas and EPH, four other bidders have qualified for the privatization’s final round, these being two Australian funds, FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II) and MACQUARIE (MEIF 6 DI HOLDINGS), international fund KKR and Chinese consortium SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

The Greek State is selling its 65 percent stake in DEPA Infrastructure, through the privatization fund TAIPED, and Hellenic Petroleum (ELPE) the other 35 percent.

Italgas’ chief executive Paolo Gallo, in an interview with Greek daily Ta Nea, has stated the company will be submitting a binding offer for the DEPA Infrastructure sale.

Italgas is Italy’s biggest natural gas distributor, holding a 34 percent market share, and also ranks as Europe’s third biggest network operator. Italgas operates 70,000 kilometers of networks serving over 1,800 municipalities.

Rival bidder EPH is a formidable energy group with vertically integrated investments in central Europe. It owns and utilizes assets in the Czech Republic, Slovakia, Germany, Italy, the UK, France, Hungary and Poland, covering a range of domains such as energy and heat production, natural gas transmission and storage, as well as distribution and supply of natural gas, heating and electricity.

DEPA Infrastructure controls gas distributors EDA Attiki and EDA THESS, both with 51 percent stakes, as well as DEDA.

HEDNO’s Crete assets transfer to IPTO based on market value

A legislative revision needed for the transfer to power grid operator IPTO of distribution network operator DEDDIE/HEDNO’s assets on Crete, a pending issue that must be resolved for the launch of market activity concerning the island’s small-scale interconnection with the Peloponnese, is close to being finalized, according to sources, informing that this transfer will be based on the commercial value, not book value, of assets.

The price of the transfer will be determined by the market value of DEDDIE/HEDNO, as shaped following offers by suitors in a privatization offering a 49 percent of the distribution network operator.

These offers are expected to be submitted very soon.

Asked yesterday on whether DEDDIE/HEDNO’s assets will be valued based on market price or book value, energy minister Kostas Skrekas said the matter is still being processed.

It is already considered certain that the fiber optics network will remain with DEDDIE/HEDNO, bolstering the capital base of parent company PPC, the power utility.

This essentially means that whichever consortium acquires a 49 percent stake in DEDDIE/HEDNO will not have control over the fiber optics PPC intends to install at its subsidiary’s networks, through deals such as one already established with telecommunication company Forthnet.

DEPA Infrastructure sale’s July 15 deadline confirmed, 2-3 bids expected

Privatization fund TAIPED has decided to keep unchanged a July 15 deadline for binding bids concerning the 100 percent sale of gas company DEPA Infrastructure, meaning this privatization procedure, now 17 months long, has hit the final stretch.

The Greek State is selling its 65 percent stake in DEPA Infrastructure and Hellenic Petroleum (ELPE) the other 35 percent.

The deadline date was reconfirmed following the energy ministry’s settlement of pending issues.

Just days ago, a legislative revision was ratified to grant 30-year license extensions to the EDA distribution companies, DEPA subsidiaries.

Also, a rule enabling the removal of geographical areas from the control of EDA companies if delays in their development of distribution networks in these areas have reached 18 months will not be applied if the EDA companies are found to not be responsible for these delays.

Moreover, the legislative revision has introduced a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through price adjustments at all three EDA companies.

A total of six participants have qualified for the final round of the DEPA Infrastructure sale. According to sources, two or three suitors are seen submitting binding bids in just over a week, but this remains to be confirmed.

The six qualifiers are:

  • EP INVESTMENT ADVISORS
  • FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II)
  • ITALGAS SpA
  • KKR (KKR Global Infrastructure Investors III L.P.)
  • MACQUARIE (MEIF 6 DI HOLDINGS)
  • SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd consortium.

 

At least four binding bids seen in HEDNO 49% privatization

Four consortiums have been established involving most, if not all, of the nine participants through to the second round of a sale offering a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary of power utility PPC, indicating that at least four binding offers can be expected, when these are submitted within August, sources monitoring the procedure have informed.

All nine qualifiers have been assessing DEDDIE/HEDNO’s technical and financial data, the sources said.

At its most recent session, PPC’s board approved a plan for the transfer of the group’s electricity distribution assets to DEDDIE/HEDNO.

Also, PPC has commissioned professional services company Grant Thorton for the asset evaluation process, expected in August.

The privatization’s nine second-round qualifiers are:

ARDIAN Infrastructure Funds

BCI – British Columbia Investment Management Corporation

BLACKROCK – BlackRock Alternatives Management, L.L.C

CVC Capital Partners – Advisers Company, S.a.r.l

F2i – Fondi Italiani per le Infrastructure SGR S.p.A

First Sentier Investors EDIF III GP S.a.r.l

KKR – Kohlberg Kravis Roberts & Co. L.P.

MACQUARIE Group Limited

OHA – Oak Hill Advisors LLP

PPC’s distribution network transfer to DEDDIE to pave way for 49% sale

The energy ministry is preparing a legislative revision for the transfer of power utility PPC’s distribution network-related assets to subsidiary DEDDIE/HEDNO, the distribution network operator, required for the sale of a 49 percent stake in the latter.

The board at PPC recently reached a decision on the matter, paving the way for the energy ministry to prepare the legislative revision.

As previously reported, PPC has commissioned professional services company Grant Thorton for the asset evaluation, expected in August.

The legislative revision for the transfer of distribution network-related assets to HEDNO/DEDDIE is required as, until now, PPC, by law, has been  permitted to incorporate the subsidiary’s financial results into the group results and also make balance-sheet entries of EBITDA figures concerning the operator.

According to the privatization’s schedule, the nine participating bidders, leading international funds, will submit binding offers within the first week of August.

Dates will then immediately be set for a general shareholders’ meeting for approval of the transfer of assets and the board’s approval of the preferred bidder.

Assuming procedures are not delayed, the sale of DEDDIE/HENO’s 49 percent should be completed within the third quarter of this year.

PPC’s board plans to focus on its international expansion strategy once this sale has been completed.

 

 

DEPA Infrastructure revisions, for clarity, in Parliament, sale deadline nearing

A legislative revision prepared by the energy ministry for DEPA Infrastructure, containing measures that aim to offer greater clarity to bidders in the ongoing sale of the gas company, has been submitted to Parliament.

DEPA Infrastructure suitors face a July 15 second-round deadline for binding bids.

The legislative revision includes provisions for 30-year extensions of gas distribution licenses as well as the creation of a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through  price adjustments at all three EDA companies.

 

DEPA Infrastructure buyer must also buy Eni 49% in EDA Thess

The winning bidder in a privatization offering gas company DEPA Infrastructure will be obligated to also purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell, according to an agreement between the two sides, revealed by a European Commission post-bailout surveillance report, the 10th edition, on Greece.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holding 49 percent, wants to withdraw.

A total of six qualifiers through to the DEPA Infrastructure privatization’s final round have been informed of the condition requiring the eventual DEPA Infrastructure buyer to also purchase Eni gas e Luce’s 49 percent stake in EDA THESS.

Investors have also been informed on, and agreed to, a formula to be applied to evaluate the additional sum that will be required by the DEPA Infrastructure buyer for the 49 percent stake of EDA THESS.

The finalists face a July 15 deadline for binding bids in the DEPA Infrastructure privatization, according to the European Commission report.

Until then, the government has a series of pending issues to resolve, including legislative revisions to unify the asset bases of the DEPA Infrastructure subsidiaries EDA THESS, EDA Attiki, distributing in Athens, and DEDA, covering the rest of Greece.

These legislative revisions will be needed for both the sales of DEPA Infrastructure and Eni gas e Luce’s 49 percent stake in EDA THESS, sources informed.

DEPA Infrastructure bids July 16, Commercial sale delayed

Privatization fund TAIPED has set a July 16 deadline for binding bids concerning the sale of a 65 percent stake in gas company DEPA Infrastructure.

This sale represents Greece’s only energy-sector privatization proceeding as planned, based on the fund’s updated Asset Development Plan.

A total of six bidding formations have qualified for the privatization’s second round. They are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

On the contrary, TAIPED has decided to delay bids for the sale of gas supplier DEPA Commercial until the third quarter of this year as a result of the company’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

DEPA Commercial has challenged an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE for alleged overcharging between 2010 and 2015. The appeal has been deferred for September and may be jointly heard with a separate case involving the two companies over a similar amount of unpaid receivables that is allegedly owed by the fertilizer and chemicals producer to DEPA.

The DEPA Commercial sale, offering the Greek State’s 65 percent stake of the company, has attracted all the country’s major energy players as well as foreign companies.

Seven bidders are participating: C.G. GAS LIMITED (Copelouzos group); MET HOLDING AG; SHELL GAS B.V.; GEK TERNA; ELPE & EDISON INTERNATIONAL HOLDING N.V.; Motor Oil Hellas & PPC; and Mytilineos.

HEDNO sale VDR now open to nine suitors, talks set to commence

Potential buyers of a 49 percent stake in power utility PPC subsidiary DEDDIE/HEDNO, the distribution network operator, have been given access to the operator’s video data room after signing confidentiality agreements.

PPC is now set to stage separate meetings with the suitors, nine in total, over the next 30 to 40 days, for talks, observations and negotiations leading to the establishment of a sale and purchase agreement as well as a shareholders’ agreement.

The shareholders’ agreement will stipulate the role of HEDNO’s minority partner, which, as has already been revealed, will offer the eventual buyer reinforced managerial rights, including proposal rights for the operator’s chief financial officer and chief operating officer posts on the board.

Given the pace of preceding privatizations in Greece, talks with the suitors are expected to last until the end of June, while officials are aiming for binding bids to be submitted within September.

The privatization’s nine second-round qualifiers have already begun talks for possible partnerships, between themselves and beyond.

US fund CVC Capital Partners, whose Greek portfolio has continuously grown, investments including three hospitals, Metropolitan, Iaso General and Ygeia, as well as anticipated deals for food production conglomerate Vivartia, dairy company Dodoni and insurance company Ethniki Asfalistiki, is engaged in talks with fellow US fund KKR and Australia’s Macquarie for the establishment of a consortium, it has been reported for some time now.

Legislative revisions to unblock DEPA Infrastructure sale

The energy ministry is planning to soon submit to Parliament legislative revisions designed to resolve pending issues that have held back the final stage of a privatization concerning gas company DEPA Infrastructure, sources have informed. The ministry will aim for the submission of binding offers by July.

Issues that have held back the sale, offering suitors 100 percent of DEPA Infrastructure, include a pending unification of the asset base of DEPA Infrastructure’s trio of EDA gas distribution subsidiaries and the establishment of a sale procedure for Eni Gas e Luce’s 49 percent stake in EDA THESS.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Italy’s Eni gas e Luce, maintaining the management rights with its 49 percent share in the gas distributor, wants to sell its stake.

Eni gas e Luce’s involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

The ministry’s anticipated legislative revisions promise to unify the asset bases of EDA Attiki, distributing to the wider Athens area, EDA THESS (Thessaly and Thessaloniki), as well as DEDA, covering the rest of Greece.

This asset base unification concerning the three distributors will lessen DEDA’s cost burden resulting from its network expansion projects as small distribution surcharge hikes by the two other EDA companies will hasten DEDA’s recovery of investment costs.

EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); and a consortium comprising SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd are the qualifiers through to the final round of the DEPA Infrastructure privatization.

HEDNO VDR opening Tuesday, bidders in partnership talks

Power utility PPC plans to open a virtual data room concerning the sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, on Tuesday, once confidentiality agreements with nine second-round qualifiers, and other documents, have been approved by the utility’s board, expected a day earlier.

All documents necessary for the sale procedure will be forwarded to the nine bidders for observations.

The VDR will offer bidders access to technical and financial data concerning DEDDIE/HEDNO.

As of next week, PPC and each of the nine second-round qualifiers, preparing to make binding bids, will begin separate talks, correspondence and negotiations that are expected to run for months, for the finalization of a shareholders agreement.

Given the width of second-round qualifiers, this privatization’s completion is anticipated towards the end of autumn.

The buyer’s board representation will reflect the minority 49 percent stake to be acquired, with 5 members on an eleven-member board, or 4 members if a nine-member board is chosen.

Some board members will be given reinforced managerial roles for the PPC subsidiary. Proposals for the chief financial officer and chief operating officer posts will be made by the buyer, according to sources.

Though the road ahead towards the DEDDIE/HEDNO sale’s completion is long, the nine second-round qualifiers have already begun talks for possible partnerships, between themselves and beyond.

One of the nine qualifiers, the US fund CVC Capital Partners – whose Greek portfolio is continuously growing, investments including three hospitals, Metropolitan, Iaso General and Ygeia, as well as imminent deal completions for food production conglomerate Vivartia, dairy company Dodoni, and insurance company Ethniki Asfalistiki – is engaged in talks with fellow US fund KKR and Australia’s Macquarie for the establishment of a consortium that would bid as one for a 49 percent stake in DEDDIE/HEDNO. KKR and Macquarie are among the nine second-round qualifiers in the DEDDIE/HEDNO sale.

HEDNO sale bids to be delayed by 2 months, for September

The privatization plan for distribution network operator DEDDIE/HEDNO, whose sale is offering investors a 49 percent stake, is expected to be delayed by approximately two months as a result of the need for greater preparation time prompted by the large buyer turnout.

The operator’s parent company, PPC, the power utility, will now aim for a binding-bids deadline and finalization of the sale around September.

According to the sale’s original schedule, candidates were set a July deadline for binding bids.

Nine funds have qualified for the second, and final, round. They could be joined by energy market operators ahead of their binding bids.

PPC chief executive Giorgos Stassis plans to table the distribution network operator’s privatization at the parent company’s next board meeting.

Stassis will, yet again, inform the PPC board on the level of suitability of second-round qualifiers in terms of their energy infrastructure track records and, even more crucially, ability to meet the demands of DEDDIE/HEDNO’s investment plan, requiring 3 billion euros until 2028.

Separate talks are currently being held by the seller with representatives of each of the nine funds, in the process of signing confidentiality agreements for access to the operator’s virtual data room, containing technical and financial data.

Minority role for HEDNO buyer of 49%, cooperation promised

The prospective buyer of a 49 percent stake in distribution network operator DEDDIE/HEDNO is expected to be given minority rights, reflecting the acquired stake, in the company’s new management and board.

The ongoing privatization’s nine second-round qualifiers will be provided full details on the precise administrative model to be adopted and the sale procedure’s next steps in letters to be forwarded by state-controlled power utility PPC, the operator’s parent company, possibly on May 10.

The buyer is expected to be represented by five members in an 11-member board or four members should a nine-member board be favored. Some of the buyer’s board members are expected to have bolstered managerial roles.

In its forthcoming letters to the second-round qualifiers, PPC, to maintain majority control of DEDDIE/HEDNO, is expected to ensure that the eventual buyer will not face obstacles in crucial investment issues as the power utility will be a cooperative chief partner.

Once they have been updated on details by PPC, through its forthcoming letters, the nine second-round qualifiers are expected to sign confidentiality agreements offering access to the operator’s virtual data room.

A series of private meetings between bidder representatives and PPC will follow, ahead of their binding offers, expected to be submitted by September.

All nine qualifiers are believed to be considering partnerships ahead of their binding bids. In recent weeks, a well-known foreign fund already possessing a strong presence in Greece’s food market, as well as other sectors, has been involved in talks, for a minority role, with one of the US or Australian funds through to the second round.

Collectively, the second-round qualifiers in the DEDDIE/HEDNO sale manage over 10 trillion euros, while most have interests in utilities around the world.

HEDNO bidders to next stage of sale with regulatory ambiguities

Second-round qualifiers of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO, a subsidiary of power utility PPC, are entering the procedure’s next stage without a clear picture on the company’s regulatory framework, still not established, despite a March 31 deadline.

Though related talks began well in advance, RAE, the Regulatory Authority for Energy, is still awaiting all the details it requires from the operator on its regulated earnings and network development plan before the authority can reach a decision on the regulatory framework.

The operator’s regulatory framework is crucial for the privatization as it concerns pivotal matters such as extra wacc for certain projects, as well as Opex, Capex settings, amongst other details.

Once established, DEDDIE/HEDNO’s new regulatory framework will be applied retroactively, as of January 1, 2021.

Though its delivery date still remains unclear, it will include two periods, covering 2021 to 2024 and 2025 to 2028, which will give potential buyers a long-term perspective on the returns to be offered by the investment.

RAE has already decided on a formula calculating required earnings from the distribution network as well as the wacc level.

Second-round qualifiers are expected to be given access to DEDDIE/HEDNO’s virtual data room within the next few days for an assessment of the operator’s financial standing as part of due diligence.

PPC set to sign securitization agreement with Pimco

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.

HEDNO suitors all real-money investors with long-term views

All nine qualifiers through to the second round of a tender offering a 49 percent stake of distribution network operator DEDDIE/HEDNO possess extensive experience in infrastructure management around the world and are long-term, real-money investors.

The tender’s shortlist, announced yesterday, includes Blackrock, the world’s biggest investment fund, back in the Greek picture after subscribing to a bond issue staged last month by the operator’s parent company PPC, the power grid operator.

Blackrock has based these investment decisions on Greece’s economic prospects beyond the pandemic as well as common business principles shared with PPC.

The capital managed by the nine qualifiers is worth 10.2 trillion euros. More importantly, the qualifiers are backed by formidable profiles, their portfolios carrying investments in utilities, infrastructure and energy companies.

France’s Ardian, managing assets worth over 100 billion euros, Canadian investment corporation British Columbia Investments (BCI), handling a 100 billion-euro portfolio, the American funds Blackrock, managing assets worth 9 trillion dollars, CVC Capital Partners (120 bn), KKR (250 bn) and Oak Hill (50 bn), Italy’s infrastructure fund F21, as well as Australia’s Macquarie (420 bn) and First Sentier (180 bn) are all long-term investors.

BCI and Macquarie have jointly engaged in a series of takeovers, beginning in 2012 with German networks company Open Grids Europe, and following up, in 2014, with US electricity firm Cleco, and networks company Endeavour Energy in 2017. BCI also controls Chilean power distributor Transelec as well as Canada’s Corix.

Blackrock controls US corporation Hearthstone Utilities and the UK’s Kelas Midtream and Calisen PLC, active in smart meters.

America’s KKR acquired New Jersey water management company Bayonne Water and Wastewater Concession in 2012 and Middletown Water in 2014.

Macquarie’s portfolio includes Spain’s Viesgo, Germany’s Open Grid Europe, and the portfolio of First Sentier (previously First State) includes the UK’s Electricity North West and Anglian Water.

PPC’s 2020 results, out April 20, to reflect company ascent

Power utility PPC, planning to announce its financial results for 2020 on April 20, is expected to release robust figures confirming its positive course, including, according to analysts, an EBITDA level of approximately 900 million euros.

Given the corporation’s 618 percent EBITDA surge in this year’s nine-month period, up to 696 million euros from 96.9 million euros a year earlier, PPC should register operating profit well above the 2019 level, when its recurring EBITDA ended the year at 333.6 million euros.

Sharply declined fuel costs and wholesale electricity prices during the first three quarters, as well as the continual limitation of PPC’s lignite-fired power stations, now loss-incurring as a result of higher CO2 emission rights, have been the driving forces behind the 2020 EBITDA forecast of about 900 million euros.

An EBITDA objective of one billion euros by 2024 now appears achievable sooner, possibly as early as next year.

The company’s capitalization is currently at 2.11 billion euros.

PPC, needing to push ahead with RES investments, will require capital for the effort. An ongoing privatization offering a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, is expected to raise capital for PPC’s investment plans, including in renewable energy, and also lower the company’s debt level.

The shortlist of qualifiers into the second round of the DEDDIE/HEDNO sale is expected to be announced today.

HEDNO 49% privatization shortlist set to be announced tomorrow

A short list of qualifiers through to the second and final round of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO is expected to be announced tomorrow, when endorsed by the board of the operator’s parent company PPC, the power utility.

The qualifiers will be given access to confidential data stored in the tender’s video data room.

Though PPC has not offered details on the first-round participants, informing only that the bidders, eleven in total, are strategic investors, network infrastructure operators and funds, banking officials have leaked their identities, revealing the turnout of leading international investors.

They include US fund Blackrock, the world’s biggest investment fund, as well as fellow American funds KKR, Oak Hill Advisors and CVC Capital Partners, the recent buyer of insurance company Ethniki Asfalistiki.

One of Europe’s biggest funds, France’s Ardian, two Australian funds, Macquarie and First Sentier, Italy’s infrastructure fund F21, Canadian investment corporation British Columbia Investments (BCI), Chinese consortium China South Power Grid – China Three Gorges, and fellow Chinese firm Guangzhou Power make up the other seven first-round entries.

DEDDIE/HEDNO’s new business plan, covering 2021 to 2024 and carrying investments totaling 3.5 billion euros, is a key driver behind the considerable interest, as is a yield rate of approximately 7 percent offered by the operator.

Standout features of the operator’s new business plan include an 850 million-euro project entailing the installation of 7.5 million digital power meters around the country, whose tender is nearing; an addition, to networks, of fiber optics for telecommunication and 5G services; as well as projects for undergrounding, upgrading and modernizing networks in anticipation of mass investments in RES units.

DEPA Commercial privatization on hold, awaiting ELFE dispute

Energy minister Kostas Skrekas’ admission of concern over the impact, on DEPA Commercial’s privatization prospects, of the gas company’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals) increases the likelihood of this sale being deferred until late this year, if not later, sources contend.

The minister, speaking at Power & Supply Forum, an online event staged earlier this week by energypress, admitted being troubled by DEPA Commercial’s unresolved legal battle with “a major consumer”.

DEPA Commercial has challenged an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE for alleged overcharging between 2010 and 2015. The appeal has been deferred for September and may be jointly heard with a separate case involving the two companies over a similar amount of unpaid receivables that is allegedly owed by the fertilizer and chemicals producer to DEPA.

The government will most likely wait for the outcome of this legal dispute to be settled before taking any further steps in the DEPA Commercial privatization, planned to offer the Greek State’s 65 percent stake of the company and a 35 percent stake held by Hellenic Petroleum (ELPE).

Regardless of the outcome at the appeals court, this legal wrangle is expected to be taken all the way to the Council of State, Greece’s Supreme Administrative Court, the sources noted.

Should ELFE be vindicated in the overcharging case, other DEPA customers – even bigger consumers than ELFE – can also be expected to also take legal action, which could end up costing the gas company as much as a billion euros in refunds, the sources said.

Cancellation of the current privatization procedure and an ensuing company split of DEPA Commercial that would enable the sale of subsidiary Fysiko Aerio/Hellenic Energy Company is an unlikely prospect, the sources added.

Desfa-Gek Terna, Energean to S. Kavala UGS tender 2nd rnd

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second-round, binding-offers stage of a tender offering use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”, while China’s CMEC-MAISON GROUP failed to qualify, privatization fund TAIPED has announced in a statement.

Following the signing of confidentiality agreements, the two qualifiers will be granted access to the tender’s virtual data room, where financial and technical data will be uploaded for due diligence procedures.

However, much work lies ahead before this project matures to enable the submission of binding offers. A number of regulatory issues remain pending, officials monitoring developments have informed, describing the project as complex and highly technical.

Pending issues include determining the percentage of the UGS’s capacity to be regulated for pre-determined earnings, and the percentage of capacity whose earnings will be shaped by market forces. The regulatory period and WACC level also need to be decided and set.

Given these tasks, as well as obstacles raised by the pandemic, binding offers are not expected to be submitted any sooner than late-2021. The final stage of this tender appears most likely to take place early in 2022.

Privatization fund names 2nd round qualifiers for tenders

HRADF pre-qualifies interested parties for the next phase of the tenders of Alexandroupolis and Kavala ports, the UGS “South Kavala” and the lease of smelting plant, mines and relevant mining rights owned by the Hellenic Republic

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF) convened today and pre-qualified the interested parties that meet the eligibility criteria to participate in Phase B (Binding Offers Phase) of the following tender processes:

  • Alexandroupolis Port Authority

The HRADF’s BoD decided that four interested parties meet the criteria to participate in Phase B for the acquisition of a majority stake of at least 67% of the “Alexandroupolis Port Authority” (in alphabetical order):

  1. Consortium composed of the companies CAMERON S.A.- GOLDAIR CARGO S.A.- BOLLORE AFRICA LOGISTICS
  2. Consortium INTERNATIONAL PORT INVESTMENTS ALEXANDROUPOLIS, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EUROPORTS-EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE &DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A.

 “Philippos II” port, operated by Kavala Port Authority

For the tender of the sub-concession of the right to use, maintain, operate and exploit a multi-purpose terminal within “Philippos II” port (currently operated by Kavala Port Authority S.A. – O.L.K. S.A.), the Fund’s BoD pre-qualified the following Interested Parties (in alphabetical order):

  1. Consortium composed of the companies IMERYS GREECE S.A. – GOLDAIR CARGO S.A. – I.M.G. S.A.
  2. Consortium INTERNATIONAL PORT INVESTMENTS KAVALA, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE & DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A. 
  • UGS “South Kavala”

The Fund’s BoD pre-qualified two interested parties to participate in Phase B (Binding Offers Phase) of the tender for the concession of the use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”.

The pre-qualified interested parties are (in alphabetical order):

  1. DESFA-GEK TERNA
  2. ENERGEAN OIL & G.A.S. 
  • Smelting plant, mines and relevant mining rights owned by the Hellenic Republic

For the lease of the Larymna smelting plant, the Larymna and Loutsi mines and relevant mining rights and other assets owned by the Hellenic Republic and currently leased to “LARCO General Metallurgical & Mining Company S.A.” (LARCO), in Phase B of the tender will participate the following interested parties (in alphabetical order):

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd.

Following the signing of the relevant confidentiality agreement, the pre-qualified investment schemes for each tender will receive the documents of phase B’ (submission of Binding Offers) and will grant access to the virtual data room (VDR), where data and information related to the assets and the tenders will be uploaded.

Energy privatization plans delayed by negative conditions

The government has decided to slam the brakes on procedures for major energy-sector privatizations, preferring to defer bidding deadlines as a result of a series of administrative hurdles and external factors, exacerbated by challenges and uncertainties caused by the pandemic over the past year.

Binding-bid deadlines for the sales of two gas utility DEPA offshoots, DEPA Commercial and DEPA Infrastructure, initially planned for this month by privatization fund TAIPED, will now be reset for early autumn, sources have informed.

Lockdown measures have prevented possible buyers from visiting the DEPA Commercial and DEPA Infrastructure headquarters and facilities as part of their due diligence procedures.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

As for issues surrounding the DEPA Infrastructure sale, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. Officials are now examining a solution that would enable the DEPA Infrastructure privatization to be completed and followed up by the sale of Eni’s 49 percent stake in EDA THESS.

TAIPED’s announcement of second-round qualifiers in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece is expected in April. But the overall procedure will not be completed until next year.

A privatization plan for ELPE (Hellenic Petroleum) has been put on hold given the unfavorable conditions surrounding the global oil industry at present.

RES spatial plan to be delivered within 2021, Action Plan notes

The completion of a RES sector spatial plan within the current year has been included in an energy ministry Action Plan for 2021, just published along with the respective action plans of all other ministries.

The energy ministry’s action plan lists interventions planned for 2021 in nine areas under its authority, including energy-sector privatizations, energy market reforms, support for decarbonization and recycling, adoption of circular economic principles, greenhouse gas emission reduction, the tackling of climate change effects, as well as green energy transition.

RES sector measures this year will help cut down the time needed by new RES projects for licensing procedures to two years, the ministry anticipates in its action plan.

It also expects the installation, by the end of the year, of at least 2,000 recharging units for electric vehicles in public areas, including along highways, and at private properties, including domestic and commercial.

On the privatization front, the energy ministry expects all seven energy privatization plans to have been completed or reached an advanced stage by the end of the year.

On energy market reforms, the adoption of a remuneration mechanism for grid sufficiency, to replace a transitional mechanism remunerating flexibility, is a standout feature.

The energy ministry also intends to adopt, as Greek law, an EU directive promoting energy storage and demand response systems.

The ministry’s action plan also anticipates the signing of agreements this year for distribution network development and RES penetration support. It also expects DEDDIE/HEDNO, the distribution network operator, to announce a tender for the installation of smart power meters within the current year.

Taking into account plans by DEDDIE/HEDNO and power grid operator IPTO, the ministry expects investments in distribution and transmission networks to reach one billion euros this year.

Investments for gas network upgrades and expansion are expected to reach at least 300 million euros, primarily driven by projects planned by gas distributor DEDA, covering all areas around the country except for the wider Athens, Thessaloniki and Thessaly areas.

On international projects, the action plan notes that a Greek-Bulgarian gas pipeline project, the IGB, promising to significantly diversify Greece’s gas sources, will be completed by the end of 2021.

A latest edition of the Saving at Home program subsidizing energy efficiency upgrades of properties, budgeted at one billion euros, will stimulate work on 80,000 buildings in 2021, according the energy ministry’s action plan.

This activity will contribute to a National Energy and Climate Plan objective for an improvement, by 2030, of energy efficiency at buildings by 38 percent, reducing energy consumption to levels below those registered in 2007, the action plan notes.

 

DEPA Commercial, Infrastructure sales delayed, new June bids deadline seen

The privatization schedule for gas utility DEPA’s two offshoots, DEPA Commercial and DEPA Infrastructure, appears headed for further delay as a result of four main issues holding back procedures, sources closely monitoring these sales have informed.

The privatization fund TAIPED had initially planned to accept financial offers for DEPA Commercial and DEPA Infrastructure this month but has since unofficially extended these offer deadlines to April. Further revisions cannot be ruled out, the most likely outcome being a deferral of these deadlines to the end of June.

As for the DEPA Commercial sale, lockdown restrictions have made it difficult for potential buyers to visit the company facilities for on-the-spot technical and financial appraisals as well as clarification on vague points. This has delayed the accumulation of information needed by possible buyers for a complete picture on the gas company’s financial standing.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

Two issues are also obstructing the DEPA Infrastructure sale. Firstly, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. As a result, two options are being examined. One entails DEPA Infrastructure buying Eni’s 49 percent stake in EDA THESS. The other involves incorporating EDA THESS into the DEPA Infrastructure sale.

The other concern holding back proceedings for the DEPA Infrastructure sale has to do with pending appraisals, by the possible buyers, of new distribution network development plans prepared by the gas company’s three distribution subsidiaries, which, besides EDA THESS, include EDA Attiki, covering Athens, and DEDA, covering the rest of Greece. Suitors may require as much as two months to complete their respective appraisals.

DEPA Infrastructure sale could include Eni’s 49% in EDA Thess

The likelihood of revisions to Greek privatization fund TAIPED’s ongoing sale of DEPA Infrastructure that would incorporate the sale of a 49 percent stake in gas distributor EDA THESS, held by Italy’s Eni gas e Luce, into the procedure is now seen as probable as talks on the prospect have advanced.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce maintains the management rights with its 49 percent stake in the gas distributor.

Though Eni gas e Luce has been particularly upbeat in its judgement of EDA THESS’s performance until now, its involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

Eni gas e Luce’s 49 percent stake in EDA THESS is the Italian company’s sole distribution investment.

Prior to TAIPED’s launch of the DEPA Infrastructure sale, Eni gas e Luce had made clear its intentions to withdraw from its Greek investment in gas distribution.

DEPA has decided not to exercise priority rights it holds for EDA THESS’s 49 percent stake.

Eni gas e Luce initially seemed to reach an agreement to transfer its EDA THESS stake to Italgas, Italy’s biggest gas distributor and Europe’s third largest. However, Greek officials objected, deeming such a move would have given Italgas an advantage over rivals in the sale of DEPA Infrastructure. Italgas is one of six bidding teams through to this privatization’s second round.

Following a period of stagnancy, Eni gas e Luce returned, late in 2020, with a fresh proposal to TAIPED, calling for the attachment of its 49 percent stake in EDA THESS to the DEPA Infrastructure sale.

Besides Italgas, the other five bidding formations that have qualified for the second round of the DEPA Infrastructure sale are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

Operator DEDDIE 49% sale first-round bids submitted today

State-controlled power utility PPC and the government will be hoping today’s first-round, non-binding deadline for expression of interest in the 49 percent sale of the utility’s subsidiary DEDDIE/HEDNO, the distribution network operator, can attract a solid turnout of formidable bidders.

An onslaught of criticism against DEDDIE/HEDNO over the past few days following widespread power outages caused by Medea, as the extreme weather system was dubbed, certainly has not been good for the operator’s reputation.

On the other hand, the network’s deficiencies, exposed by extensive weather-related damages in the wider Athens area, lends tremendous support to the need of a powerful investor ready to finance the network’s badly needed upgrade, expected to cost 3.5 billion euros.

Expectations of a solid investor turnout have been high in the lead-up to today’s first-round deadline. PPC plans to announce this sale’s first round participants during the day.

Many prominent funds have shown interest in the sale but the identities of those that will follow through and participate have remained unclear. It also remains unclear if any of these funds will establish partnerships – for the DEDDDIE/HEDNO sale – with European network operators.

A market test staged in December, as well as contact with interested parties, has indicated that the American funds KKR and Blackrock, Australia’s Macquarie Group, and France’s Ardian, could participate in the sale.

The managerial rights to be attached to the minority 49 percent stake will be bolstered to not block potential buyers from crucial decisions.

DEDDIE/HEDNO possesses a regulated asset base worth over 3 billion euros, networks totaling 242,000 km in length, 240 high-voltage substations, 163 low-voltage substations, a 5,800-member workforce, and a client base numbering 7.5 million.

The company caters to annual demand of 43.194 TWh and 57,752 RES units with a total capacity of 3,926 MW.

Two funds submit DEDDIE interest ahead of sale’s preliminary deadline

Two undisclosed funds have jumped the gun to submit non-binding, first-round expressions of interest for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO three days before a February 19 deadline, highlighting the heightened level of buyer interest that surrounds this privatization.

European and US investment teams, more so than network operators, have shown particular interest in the DEDDIE/HEDNO sale during its lead-up.

A market test in December revealed that 19 potential bidders include New York-based Blackrock, the world’ biggest investment fund, managing capital worth 7.8 trillion dollars; American giant KKR, handling 220 billion dollars; as well as French fund Ardian, one of Europe’s most dynamic, with involvement in over 150 enterprises and capital management worth more than 100 billion dollars.

Though it remains unknown if any of the aforementioned players were early birds, it has become very clear that funds will play a big role in this sale.

In an effort to add to the sale’s appeal, power utility PPC, DEDDIE/HEDNO’s parent company, has decided to bolster the 49 percent minority rights by offering potential buyers equal powers with PPC over crucial network operator decisions.

Between four and seven investment teams have displayed the greatest level of interest in the DEDDIE/HEDNO sale. Some of these teams are believed to be engaged in negotiations to establish new formations for this sale.

DEDDIE bidders shaping teams as first-round deadline nears

Investors preparing to participate in the 49 percent sale of power utility PPC’s subsidiary DEDDIE/HEDNO, the distribution network operator, a procedure whose deadline for non-binding expressions of interest expires on February 19, are busy negotiating the details of their partnerships.

Between five and seven existing formations involving European system operators and funds, all appearing extremely interested in the sale, are seen reshaping into approximately three investment teams ahead of this week’s deadline, according to sources.

The investment interest is serious and lives up to the operator’s investment plan, estimated at 2.3 billion euros, for the next five-year period, sources said.

Meanwhile, sources at PPC have confirmed that investors will be offered a one-off 49 percent stake in the distribution operator following thoughts of a two-stage sale resulting in this stake.

The managerial rights to be attached to the minority 49 percent stake will be bolstered to give potential buyers equal powers with PPC over the operator’s new business plan and company expenses, PPC sources informed.

DEDDIE/HEDNO possesses a regulated asset base worth over 3 billion euros, networks totaling 242,000 km in length, 240 high-voltage substations, 163 low-voltage substations, a 5,800-member workforce, and a client base numbering 7.5 million.

The company caters to annual demand of 43.194 TWh and 57,752 RES units with a total capacity of 3,926 MW.