IPTO’s Ariadne Interconnection minority share offer resurfaces

Power grid operator IPTO has reopened the prospect of making available to investors a minority stake in its subsidiary Ariadne Interconnection, established for the development of the Crete-Athens interconnection.

The possible sale essentially remained stagnant during a recent period of administrative changes at RAE, the Regulatory Authority for Energy.

Ariadne Interconnection has been commissioned the project’s construction IPTO but will cease to be involved in any way once the project is delivered to the operator for operation.

IPTO’s administration reminded RAE, in a letter forwarded just days ago, about a concession agreement it has signed with Ariadne Interconnection, offering a detailed description of the relations between the two companies for the Crete-Athens grid interconnection project.

The project was originally planned to be a segment of a wider interconnection plan to link the Greek, Cypriot and Israeli electricity grids, with EuroAsia, a consortium of Cypriot interests, at the helm, before IPTO withdrew the Crete-Athens section for its development as a national project.

IPTO has noted a minority partner in Ariadne Interconnection could be offered a stake of up to 40 percent.

China’s SGCC, a strategic partner of IPTO holding a 24 percent stake, informed, some time ago, that it wants to acquire a 20 percent stake of Ariadne Interconnection. European operators such as Belgium’s Elia and France’s RTE, as well as major investment groups have also indicated they would be interested.

 

IPTO, Ariadne agreement details partnership for Crete link

Power grid operator IPTO has signed a concession agreement with its fully owned subsidiary Ariadne Interconnection detailing their relationship for the Athens-Crete grid interconnection project, energypress sources have informed.

The agreement was prepared with assistance from legal and consulting firms to overcome concerns raised by RAE, the Regulatory Authority for Energy, following a decision by Greek authorities to develop this interconnection as a national project and not as part of the wider EuroAsia project planned to link the Greek, Cypriot and Israeli power grids.

RAE will now assess the concession agreement’s details and make observations, if needed, before procedures commence to bring investors into Ariadne Interconnection for a minority share.

The details of this entry procedure still remain unclear but the energy minister is expected to clarify through related legislation.

One of the ambiguities concerns whether large-scale RES projects on islands will be able to reserve IPTO interconnection capacities.

The Copelouzos group and Terna, for instance, maintain investment plans for Crete. If given the green light by the energy ministry, they will reserve capacities for the Athens-Crete interconnection, provide funds accordingly and be given corresponding stakes in Ariadne Interconnection.

Investors are expected to acquire up to 40 percent of Ariadne Interconnection, according to the IPTO board.

Chinese company SGCC, IPTO’s strategic partner with a 24 percent, has already expressed an interest to acquire a 20 percent stake in Ariadne Interconnection. Other interested parties include European operators, among them Belgium’s Elia and France’s RTE, as well as prominent financial groups possessing major investment portfolios.

IPTO in talks with investors, operators for Crete interconnection

Investors – funds and major operators – are believed to be expressing strong interest for a minority stake in power grid operator IPTO’s subsidiary Ariadne Interconnection, the project developer of the Athens-Crete electricity grid interconnection.

Talks with parties interested in an Ariadne Interconnection stake have commenced, the power grid operator’s deputy chief Yiannis Margaris informed media during a press call for a presentation of the company’s annual financial results.

Prospective Ariadne shareholders must be financially robust, well acquainted with energy-sector matters, and focused on long-term investments, Margaris pointed out, setting terms and conditions.

The operator is focusing its search on big groups with portfolios carrying major investments, the deputy said.

IPTO’s administration is already engaged in talks with European operators such as Belgium’s Elia and French operator RTE, Margaris indicated.

IPTO expects to sign a bank loan agreement this month for an amount between 400 and 500 million euros to help finance the Athens-Crete interconnection. A sum stemming from Ariadne’s cash reserves worth 200 million euros and National Strategic Reference Framework (NSRF) funds of between 300 and 400 million euros are also expected to contribute.

The Athens-Crete link project is set to start and all the funds must be in place, IPTO officials said.

The possible involvement in Ariadne of investors will help achieve better borrowing terms, the officials added, while stressing the two procedures – search for a minority shareholder and capital – are moving ahead independently of each other.

Talks are also in progress with investors for island interconnections to facilitate RES projects, Margaris said.

Additional IPTO stake seen offered within next three months

The government, gearing up for a series of energy sector privatizations, plans to hasten the sale of an additional yet unspecified stake in power grid operator IPTO. The procedure could now be launched within the next three months.

Investor interest in IPTO has risen as the operator’s asset value is projected to increase sharply over the next decade.

The Greek State currently controls a 51 percent share of IPTO, directly and indirectly. Late in 2019, State Grid Corp of China (SGCC), the buyer of a 24 percent stake in IPTO and holder of priority rights should any additional stake be offered, expressed an interest to boost its stake in the operator and also acquire a 20 percent stake in subsidiary firm Ariadne Interconnector, project promoter of the Crete-Athens electricity grid interconnection, a project budgeted at one billion euros.

The size of the additional IPTO stake to be placed for sale remains unclear, but, without a doubt, SGCC’s decision on whether or not to exercise its priority right will be influential.

Italy’s Terna, holding a 30 percent stake in CDP Reti, an Italian holding company, is also believed to be interested in the upcoming IPTO sale. SGCC would also be involved here as the Chinese company holds a 35 percent stake in CDP Reti. French operator RTE and a variety of funds are also considered believed to be considering the IPTO sale.

IPTO’s assets are seen rising from a present level of 1.5 billion euros to five billion euros over the next ten years as a result of the development of major grid interconnection projects to link the country’s Dodecanese and North Aegean Islands with the mainland.

Greece’s energy-sector privatizations will not be limited to gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade, both underway, nor will there be a gap until the next sale, distribution network operator DEDDIE/HEDNO, scheduled for September, energy ministry officials have informed. The Hellenic Petroleum ELPE sale will be deferred.

 

IPTO in Crete link talks with RTE, Elia, Scottish Power

Greek power grid operator IPTO has begun its search for strategic partners in the development and operation of the Crete-Athens grid interconnection, sources have informed.

Last week, the operator’s chief executive Manos Manousakis informed a tender offering a stake in Ariadne Interconnector, an SPV established by IPTO for the project’s development, would be launched by the end of February with the aim of selecting new strategic investors within the next three months.

At this stage, IPTO appears to be planning to offer a 49 percent stake of its SPV to strategic partners for the Crete-Athens grid link project, budgeted at one billion euros.

IPTO has already approached three European operators, France’s RTE, Belgium’s Elia and Scottish Power, a subsidiary of Spain’s Iberdrola, the sources informed. Talks between IPTO and RTE, a participant in the power grid operator’s recent sale offering a 24 percent stake, are believed to have made the most progress so far.

IPTO has already taken preliminary pre-construction and financing steps for the Crete-Athens project, needed to combat a looming energy shortage threat on Crete. The operator, determined to pursue the link as a national project, is aiming for a 2022 launch.

IPTO has been embroiled in a dispute with Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status Greek-Cypriot-Israeli electricity grid interconnection project, for control of the Crete-Athens segment.

IPTO establishes SPV for major-scale Cretan link

Power grid operator IPTO has established a special purpose vehicle (SPV) named Ariadne Interconnection for the financing and development of Crete’s urgently needed major-scale electricity grid interconnection with Athens.

Last week, RAE, the Regulatory Authority for Energy, decided to award IPTO control of the project’s development. The authority could set official terms during the day. RAE has already given IPTO a related road map whose content includes advice on financing through the Europe Connecting Facility (CEF), an EU funding instrument developed specifically to direct investment into European transport, energy and digital infrastructures.

The Ariadne Interconnection SPV, established as a wholly owned subsidiary of IPTO, will begin operating with startup capital of 200 million euros. It will be responsible for the Greek segment of the wider Euroasia Interconnector, a PCI-status project planned to link the Greek, Cypriot and Israeli power grids via Crete.

Euroasia Interconnector, a consortium of Cypriot interests responsible for the wider project, has been given until December 10 to decide if it will utilize a right offered for a 39 percent stake, or less, in the venture to develop the Crete-Athens link.

IPTO and Euroasia Interconnector have been involved in an extended dispute for control of the wider project’s Cretan segment.

IPTO has been given the right to stage a tender offering the venture’s remaining 10 percent. Belgian operator Elia and France’s RTE have both expressed interest.

 

 

RES producers excluded from Cretan major-scale link’s SPV

Certified network operators, primarily, and possibly financial institutions, will be entitled to take on minority roles in a special purpose vehicle (SPV) to soon be established by Greece’s power grid operator IPTO for the development of Crete’s urgently needed major-scale electricity grid interconnection with Athens.

Companies with existing electricity production roles will not be able to participate in the SPV, whose 10 percent will be offered through a tender. This essentially means holders of licenses of major wind energy projects on Crete will not be able to join the SPV.

The Euroasia Interconnector consortium, responsible for the wider Euroasia Interconnector, a PCI-status project planned to link the Greek, Cypriot and Israeli power grids via Crete, will be offered priority rights for a 39 percent minority stake. If this consortium does not exercise this priority right for all or any of the 39 percent it is entitled to, then any leftover portion will be added to the 10 percent stake to be offered to certified network operators and, perhaps, financial institutions.

IPTO is rushing to form the SPV in an effort to counter to Crete’s looming energy sufficiency threat as of 2020 because an exemption to EU law concerning power station emission limits for local high-polluting units, such as those operating on Crete, ends in December, 2019. A number of power stations on the island will need to be withdrawn.

IPTO and Euroasia Interconnector, a consortium of Cypriot interests, have been involved in an extended dispute for control of the wider project’s Cretan segment.

The SPV will initially stand as a wholly-owned IPTO subsidiary and, three months later, by the end of the year, a tender will be staged inviting investor-operators to bid for a minority stake in the venture.

Belgian network operator Elia and France’s RTE have both expressed interest in the major-scale Cretan interconnection project. It remains unclear if they will seek to join the Euroasia Interconnector consortium for part of the SPV’s 39 percent stake or focus on the 10 percent stake.

RAE, the Regulatory Authority for Energy, awarded IPTO the task of swiftly establishing a special purpose vehicle, and its majority 51 percent stake, this week in a decision that runs against a European Commission initiative that gave the Euroasia Interconnector consortium until the end of the year to resolve its dispute with IPTO. The European Commission has yet to offer an official response.

It is not yet clear if the issue will be added to the agenda for upcoming talks between the government and post-bailout inspectors.

IPTO given control and task of forming SPV for urgent Cretan link

RAE, the Regulatory Authority for Energy, has decided to award Greece’s power grid operator IPTO the task of swiftly establishing a special purpose vehicle (SPV) for the development of Crete’s urgently needed major-scale electricity grid interconnection with Athens, sources have informed, confirming a previous energypress report.

Highlighting the level of urgency the matter has acquired, IPTO officials were informed of the decision over the phone and asked to set up an SPV as soon as possible.

Crete faces a looming energy sufficiency threat as of 2020 because an exemption to EU law concerning power station emission limits for local high-polluting units, such as those operating on Crete, ends in December, 2019. A number of power stations on the island will need to be withdrawn.

According to sources, the SPV will initially stand as a wholly-owned IPTO subsidiary while, three months later, by the end of the year, a tender will be staged inviting investor-operators to bid for a minority 49 percent stake in the venture.

The Euroasia Interconnector consortium, responsible for the wider Euroasia Interconnector, a PCI-status project planned to link the Greek, Cypriot and Israeli power grids via Crete, will be offered priority rights for a 39 percent minority stake, as noted in a Memorandum of Cooperation signed by IPTO and the Euroasia Interconnector consortium.

If Euroasia Interconnector, a consortium of Cypriot interests, does not exercise this priority right, then the minority 39 percent stake will be offered to network operators such as Belgium’s Elia or France’s RTE, both of which have expressed interest. They would be expected to also seek acquiring the remaining 10 percent stake.

IPTO and Euroasia Interconnector, a consortium of Cypriot interests, have been involved in an extended dispute for control of the wider project’s Cretan segment.

The RAE decision comes as a counterproposal to a European Commission initiative that gave the Euroasia Interconnector consortium until the end of the year to resolve its dispute with IPTO. But it does give the consortium some time to decide.

 

 

Italy’s Terna, China’s State Grid submit offers for IPTO’s 24%

Two of three candidates, China’s State Grid International Development and Italy’s Terna, have submitted binding bids for a 24 percent stake of power grid operator IPTO, currently a wholly owned subsidiary of main power utility PPC, energypress sources have informed. France’s RTE did not make an offer, the sources added.

The sale’s deadline for binding bids expired today following an extension from October 19 to October 21.

Today’s developments confirm an energypress report yesterday tipping Terna and China’s State Grid International Development as the procedure’s favorites.

The two bids and an independent evaluation of IPTO, conducted by HSBC, will be opened up and examined concurrently next week. The amounts offered by the two candidates, both formidable players, remain to be seen.

According to sources, the prospective buyers will be asked to improve their offers if their bids fail to cover the amount specified in HSBC’s evaluation of IPTO’s market worth.

A preferred bidder is expected to be announced next week or no later than October 31, while contracts concerning the deal will be signed in November.

The IPTO sale faces an extremely tight schedule. If the country’s creditor representatives deem that unsatisfactory progress is being made by the current IPTO sale plan, proposed by the Greek government, then the operator will need to be sold entirely.

Binding bids deadline for IPTO’s 24% expires tomorrow

Prospective buyers of a 24 percent stake of IPTO, the power grid operator, will need to submit their offers by tomorrow, the sale’s deadline for binding bids.

The procedure’s schedule, a bailout requirement, is tight. A preferred bidder will need to be selected no later than October 31. Then, by the beginning of 2017, Greek officials will need to offer a further 25 percent of IPTO to investors through the bourse and transfer of a 51 percent stake from main power utilty PPC, the operator’s parent company, to the Greek State.

On the eve of the binding bids deadline, Italy’s Terna and China’s State Grid appear to be the favorites for IPTO’s 24 percent. As for France’s RTE, the third candidate, pundits believe the company will either not submit a bid or make a non-competitive offer.

Officials estimate that a sum of as much as 250 million euros represents a fair price to pay for IPTO’s 24 percent. Surprises that could go either way cannot be ruled out.

 

IPTO evaluation result next Friday, on binding bids deadline day

The results of an independent evaluation of IPTO, Greece’s power grid operator, being conducted by Barclays are expected to be delivered next Friday, a date coinciding with the binding bids deadline for prospective bidders participating in an ongoing international tender for a 24 percent stake of the operator, currently a wholly owned subsidiary of PPC, the main power utility.

PPC will not accept anything less for IPTO’s 24 percent than the figure to eventuate from the evaluation.

Three strategic investors, Italy’s Terna, France’s RTE and China’s State Grid International Development have qualified for the international tender’s second round, involving binding bids. The deadline for bids expires on October 21. Local authorities added a further two days to a preceding one-week extension. The new deadline for bids coincides with the evaluation’s delivery date.

At this stage, China’s State Grid International Development appears to be the most interested of the three candidates – in terms of enquiries and proposals being made, both for the tender’s conditions and the operator’s future plans.

Both PPC and IPTO officials believe that if the Chinese firm decides to submit a binding bid for the Greek operator’s 24 percent, its price will be insurmountable.

Despite being interested in IPTO as part of a wider regional strategy, Italy’s Terna has noted its bid will reflect the sale’s actual commercial prospects. The firm does not want to unsettle its own financial standing or shareholder interests.

Though France’s RTE was recently engaged in talks with Hydro-Quebec, a Montreal-based global powerhouse, for a possible joint bid, the two sides did not reach an agreement. As a result, the French company will most likely not make a binding offer.

 

IPTO bidders given two extra days on top of one-week extension

Prospective bidders for a 24 percent stake of IPTO, Greece’s power grid operator, have been given a further two days in addition to a one-week extension granted just yesterday for their submission of binding bids, the operator’s parent company, PPC, the main power utility, has decided.

As a result, the new deadline has been moved from October 19 to October 21, offering bidders a couple more days of extra time to prepare their offers.

Three strategic investors, Italy’s Terna, France’s RTE and China’s State Grid International Development have qualified for the international tender’s second round. Any bids made will be binding.

Investors granted one-week extension for IPTO binding bids

Main power utility PPC has offered an additional week of time to strategic investors examining the prospect of submitting binding bids for a 24 percent stake in IPTO, its wholly owned subsidiary. The previous deadline expires today.

The utility was prompted to provide more time to participants through to the second round of an international tender as a result of their high level of scrutinization of the sale’s terms and conditions.

According to sources, an independent evaluation of IPTO commissioned by PPC has been completed by Barclays.

Talks over the past ten days or so between France’s RTE, one of three qualifiers through to the tender’s second round, and Hydro-Quebec, a Montreal-based global powerhouse, for a possible joint bid do not seem to have produced any results. In fact, RTE will most likely not submit a binding bid at all, latest developments suggest.

On the contrary, China’s State Grid International Development and Italy’s Terna seem warmer to the prospect, as indicated by the thoroughness and deep interest shown in their second-round preparations.

Besides the 24 percent stake of IPTO being offered to strategic investors, the sale plan also includes selling 25 percent through the bourse and transferring 51 percent from PPC, the operator’s parent company, to the Greek State.

 

Binding bids deadline for IPTO sale just two days away

The part-privatization plan for IPTO, the power grid operator, reaches a crucial stage this Wednesday when a deadline for binding bids by prospective investors expires, one year after the government persuaded the country’s lenders to accept a revised sale plan for the operator.

Failure of the latest IPTO plan – entailing the sale of 24 percent to a strategic investor, followed by 25 percent through the bourse and transfer of 51 percent from parent company PPC, the main power utility, to the Greek State – will prompt a full sale of the operator.

PPC officials expect all three first-round participants, Italy’s Terna, China’s State Grid International Development, and France’s RTE, to submit binding bids for a 24 percent share of IPTO this Wednesday.

Terna and China’s State Grid International Development, both of which had expressed interest in the previous version of the IPTO sale, offering 66 percent, appear to be the favorites at this late stage.

Last week, Terna, it was reported, held talks with funds without reaching any final agreements.

China’s State Grid International Development, which possesses enormous capital amounts, does not need a partner to come up with a competitive offer. Many pundits have already tipped the Chinese firm as the favorite as a result of its financial strength.

However, last week’s contact between France’s RTE and Hydro-Quebec, a Montreal-based global powerhouse, indicates that China’s State Grid International Development will have a strong opponent to outdo should RTE and Hydro-Quebec join forces and make a bid.

Such an outcome, which could spark a bidding war, would benefit PPC.

IPTO virtual data room closes tomorrow, two-horse race seen

An ongoing sale procedure offering a 24 percent stake of IPTO, Greece’s power grid operator, to strategic investors is entering its final stage as prospective bidders have just one more day of access to the operator’s virtual data room.

The prospective bidders, Italy’s Terna, France’s RTE and China’s State Grid, the three operators through to the second stage of the sale’s international tender, will then need to submit binding bids by mid-October.

Based on current indications, RTE appears to be the least interested of all three candidates, so much so that officials believe the French operator may not submit a binding bid for IPTO’s 24 percent.

RTE, a wholly owned subsidiary of EdF, is currently looking to reduce its debt level and, as a result, is examing the prospect of offering an equity share to investors.

As for the other two prospective bidders, Terna and China’s State Grid, both have remained active in the sale procedure, raising hopes that a bidding war may eventuate and benefit the seller, IPTO’s parent company PPC, the main power utility.

Certain pundits believe Terna will not be able to match China’s State Grid’s offer. Others contend that the Italian operator’s strategic interest in IPTO should not be underestimated. Terna plans to expand its presence in the Balkans and play a key role in the region whose electricty market is headed towards intergration.

 

Crete Interconnection a key factor in IPTO bidder interest

Italy’s Terna, one of three candidates vying for a 24 percent share of power utility PPC’s wholly owned subsidiary IPTO, Greece’s power grid operator, is particularly interested in the prospects offered by the operator’s planned submarine interconnection of Crete with the Greek mainland – planned to be developed in two stages, small-scale and large-scale – as was clearly indicated during yesterday’s IPTO management presentation for Terna officials.

The session was the first of three, scheduled over as many days, to bring together IPTO’s leadership with the three strategic investors through to an international tender’s second stage, entailing the submission of binding bids for IPTO’s 24 percent. An October 15 deadline is expected for the bids, but the date remains unconfirmed.

IPTO’s management is now scheduled to meet with officials representing the tender’s two other second-stage qualifiers, France’s RTE and China’s State Grid, today and tomorrow, respectively.

According to energypress sources, Terna officials, during yesterday’s meeting, focused on the content of IPTO’s ten-year development plan, especially Crete’s interconnection with the mainland, listed as a fast-track project in terms of expropriation and licensing procedures.

Without a doubt, Crete’s interconnection stands as one of the biggest IPTO-related incentives for all three candidates. Development of the project, listed as one of “major importance” by the operator, promises multiple benefits across the board.

Firstly, household electricity bills stand to be reduced as a result of lower Public Service Compensation (YKO), a surcharge included on electricity bills to cover the high operating costs of Crete’s three aging and inefficient mazut and diesel-fueled stations. Secondly, electricity supply to and from Crete will be greatly improved, facilitating renewable energy (RES) production. Also, IPTO’s annual revenues are expected to increase by as much as 2.5 percent as a result of the Cretan interconnection. This would come as an addition to a guaranteed yield of between 7.5 and eight percent over the next three years offered by IPTO, bringing the total to over 10 percent.

IPTO needs to present RAE, the Regulatory Authority for Energy, with a detailed schedule for the Cretan interconnection within September. The project is scheduled to be completed in 2021, according to the operator’s recently published ten-year development plan covering 2017 to 2026.

Terna, RTE and China’s State Grid were recently provided access to IPTO’s virtual data room to assess technical, economic and legal data before submitting their bids. A preferred bidder will be announced by October 31, as required by the bailout agreement. However, a slight extension of a few days could be granted.

PPC officials are hoping the rivalry between the three bidders will produce an increased offer for IPTO’s 24 percent. This would offer some respite for PPC, whose unpaid receivables figure is estimated to have reached 2.4 billions euros, according to its administration, and 2.7 billion euros, according to Genop, PPC’s main union group.

Besides the 24 percent stake of IPTO being offered to a strategic investor, the sale plan also entails selling 25 percent of the operator through the bourse and transferring 51 percent to the Greek State. If the plan fails, the country’s creditors will push to have IPTO sold in its entirety.

 

IPTO candidates have until mid-October to submit offers

Italy’s Terna, France’s RTE and China’s State Grid, the three firms through to the second stage of an international tender staged by main power utility PPC for a 24 percent stake in its wholly owned subsidiary IPTO, Greece’s power grid operator, have a month and a half to assess technical, economic amd legal data and submit their binding bids. The prospective bidders have now been granted access to IPTO’s virtual data room

Although a deadline has yet to be fixed, sources informed it will be set for October 15 so that a preferred bidder may be announced by October 31, as required by the bailout agreement. However, a slight extension of a few days could be offered if the bids are deemed to be too low, as is often the case in tenders, and PPC ends up requesting improved bids.

It is still too early to make any predictions about the amounts the strategic investors may offer. At the end of 2014, while a tender offering 66 percent of IPTO was in progress after being launched by the country’s previous conservative New Democracy-led coalition, it had been leaked that IPTO’s total equity value was valued at 921 million euros. Based on this estimate, a 24 percent stake of the operator would be worth 221 milion euros, representing the lowest acceptable offer.

Following negotiations with the country’s lenders, the current Greek government relaunched the IPTO tender with new terms entailing the transfer of a majority 51 percent stake from PPC to the Greek State, 24 percent to a strategic investor and the remaining 25 percent to investors through the bourse. However, if this attempt fails, or its overall progress is deemed unsatisfactory, the government will be forced to sell IPTO in its entirety.

Besides gathering IPTO-related information through the virtual data room, the three candidates also have the right to request details from the tender’s consulant, PwC, and the operator’s management, which is preparing to make its own presentations to the bidders, separately, over a series of daily meetings in just over a week.

IPTO’s management is scheduled to meet with Terna officials on September 7, RTE officials the following day, and State Grid officials on September 9. In preparation, the bidders will each meet with the tender’s consultant a day prior to these respective presentations. Bidding company officials will visit IPTO facilities following the IPTO management presentations.

It is estimated that a 24 percent share of IPTO promises a yield of between 7.5 and eight percent to investors over the next three years.

PPC union greets IPTO bidders with extrajudicial statements

Genop, the power utility PPC’s main union group, is preparing to further escalate its action against a government plan to split IPTO, the power grid operator, from the utility, the operator’s parent company, and partially privatize it, with extrajudicial statements that have been prepared by the union. These statements will now be forwarded to three strategic investors preparing to submit binding offers for a 24 percent stake of IPTO.

The union group’s extrajudicial statements, to be delivered to Italy’s Terna, France’s RTE and China’s State Grid, all through to the IPTO international tender’s second stage, will present Genop’s position on IPTO worker rights and contend that these are incorporated into the operator’s fixed assets, therefore constituting one of a number of issues that could lead to the nullification of any investments made in the Greek company.

The extrajudicial statements will also make clear to the three candidates the opposition of IPTO’s workers and union to the plan entailing the operator’s split from PPC and entry of a strategic investor, as well as the repercussions this disapproval may have on the management rights included in the tender.

Genop is intensifying its efforts, despite the relaxed wider activity amid the ongoing summer recess. The union’s move to prepare extrajudicial statements represents just part of an escalating campaign against IPTO’s split-and-sale plan. More intitiatives are soon expected.

Last month, Genop officials managed to stop proceedings at a recent PPC general shareholders meeting, held to endorse the IPTO plan, and then managed to interrupt the required follow-up meeting a week later, on July 11. It was shifted from its hotel location to the finance ministry and completed later in the day with reinforced police protection at hand.

Terna, RTE and China’s State Grid are preparing for due diligence procedures before they submit binding offers. All three firms are believed to be very keen on the IPTO investment, viewing it as a key step in their plans for a wider regional presence.

Under the current plan, besides the 24 percent of IPTO being offered to strategic investors, 51 percent will be transferred to the Greek State, while the other 25 percent will be offered to investors through the bourse. The Greek State controls PPC, the operator’s parent company, with a 51.12 percent stake.

 

 

IPTO bidders waiting for virtual data room access, now delayed

Three qualifiers through to the second stage of an international tender offering a 24 percent share of IPTO, the power grid operator, are expected to be granted access into the operator’s virtual data room within the next fortnight, slightly behind schedule.

Once in, the bidders will be able to conduct their due diligence procedures before submitting binding bids.

The virtual data room’s opening was originally scheduled for as early as this week but now appears set for a slight delay as a result of technical issues. Officals keeping a close watch on the developments believe IPTO’s virtual data room will be open for investors by the end of August, at the very latest.

The IPTO tender faces an extremely tight schedule. If the country’s lenders deem that its overall progress is unsatisfactory, then IPTO, a subsidiary firm wholly owned by main power utility PPC, will face the prospect of full privatization.

Under the current plan, 24 percent of IPTO is being offered to strategic investors, 51 percent will be transferred from PPC to the Greek State, while the other 25 percent will be offered to investors through the bourse.

France’s RTE, an EdF subsidiary, China’s State Grid International Development Limited, Hong Kong, and Italy’s Terna are the three contenders for IPTO’s 24 percent.

The virtual data room will remain open for roughly one month. The candidates must be provided a complete picture of the PPC subsidiary within September. Binding bids will need to be submitted in October, at a date to be announced, while a preferred bidder must be named by October 31.

According to sources, all three qualifiers are very interested in the Greek operator and, so far, have only gone as far as to present their respective company descriptions without unveiling any information on their plans for IPTO.

The potential buyers all view investing in IPTO as a move that would support their aspirations to further expand in southeast Europe. The candidates all intend to play leading roles in the region by making new investments in electricity interconnection projects and also establishing a strategic presence in the European electricity market as it heads towards the EU target model of full integration.

A leading priority for the European Commission, energy integration promises to simplify transborder electricity transmission.

The aforementioned factors explain why Italy’s Terna and China’s State Grid International Development Limited, Hong Kong had both also taken part in a preceding IPTO tender staged by the country’s previous administration, offering a 66 percent stake.

Three firms expected to make IPTO tender’s second round

Three of four companies that had submitted non-binding expressions of interest for a 24 percent share of IPTO, the power grid operator, are expected to qualify for the international tender’s next stage, entailing binding bids, according to energypress sources.

Sources informed that Italy’s Terna, France’s RTE, an EdF subsidiary, and China’s State Grid of China Corporation (SGCC) will be selected today by the board at main power utility PPC, IPTO’s parent company, following an assessment of their technical and economic credentials. The fourth bidder, China Southern Power Grid, will not advance to the tender’s next stage, sources said, as, unlike fellow Chinese company SGCC, it does not hold a stake in any European electricity transmission operator. Bidders need to be certified European operators or maintain a corporate association with a European operator.

The effort to split IPTO from PPC – besides the 24 percent share being offered to strategic investors, the plan also entails a 51 percent transfer of the operator to the Greek State and a 25 percent stake to investors though the bourse – represents the first step in a series of major bailout-required electricity market reforms to be implemented in the coming months. These measures are expected to further liberalize the market and reduce PPC’s dominant market share to less than 50 percent by 2020.

Other steps include the imminent introduction of NOME auctions, to provide third parties with access to PPC’s low-cost lignite and hydropower sources, and imposing surcharges on electricity suppliers to help cover the deficit-ridden renewable energy (RES) special account. As the dominant supplier at present, PPC will need to pay the greatest amounts.

Once through to the next stage, qualifiers will be invited by PPC to submit binding offers. Qualifiers will be granted access into a virtual data room providing financial details on IPTO to assist with their due diligence procedures.

The preferred bidder will need to be selected by October 31 and the agreement finalized by February 28, 2017.

Of the three bidders expected to qualify for the next stage, SGCC is considered the favorite for IPTO’s 24 percent. This assessment is based on the Chinese firm’s financial might. It possesses sufficient liquidity to easily outbid the two rival European bidders, pundits believe. Such a prospect promises to offer needed cashflow relief for PPC, burdened by an alarming level of unpaid receivables.

 

Four power operators express non-binding interest in IPTO

The first stage of a bailout-required international tender offering a 24 percent share of IPTO, the power grid operator, has been completed with four bidders submitting non-binding expressions of interest, PPC, Greece’s main power utility and parent company of IPTO, has announced.

PPC, controlled by the Greek State with a 51.12 stake, will now assess the technical and economic credentials of bidders to decide whether they qualify for the next stage.

Four companies submitted expressions of interest, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

Second-round qualifiers will be provided IPTO’s financial details and time to conduct due diligence procedures before they submit their binding offers.

HSBC Bank, Citigroup Global Markets Ltd and NBG Securities are acting as financial advisors, while Rokas is PPC’s legal advisor for the IPTO tender.

PPC was granted permission to stage the IPTO at a general shareholders meeting on July 11. The deadline for non-binding expressions of interest expired yesterday.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. Should Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails transferring 51 percent to the Greek State and offering the other 25 percent to investors through the bourse.

 

Highest bidder to secure IPTO’s 24% in fast-moving tender

The assessment of technical and economic credentials submitted by electricity operators interested in acquiring a 24 percent share of IPTO, Greece’s power grid operator, through an international tender whose deadline for first-round non-binding expressions of interest expired yesterday, is expected to be completed swiftly, by the second week of August.

Qualifiers will then be given time to conduct due diligence procedures before they submit their binding offers. The faster the first-round non-binding stage is completed, the more time qualifiers will have for due diligence.

Facing a tight schedule for the bailout-required international tender, the main power utility PPC, controlled by the Greek State with a 51.12 stake, launched the procedure for IPTO, currently a wholly owned PPC subsidiary, just over a fortnight ago.

According to energypress sources, once the strategic investors are through to the tender’s next stage the only criterion at play will be the price they are willing to offer for IPTO’s 24 percent.

All bids, whether coming from companies with EU or non-EU roots, will be treated equally during the second stage.

Four electricity network operators have expressed non-binding expressions of interest in IPTO, PPC has announced, these being Italy’s Terna, France’s RTE, an EdF subsidiary, and two Chinese companies, State Grid of China Corporation (SGCC), and China Southern Power Grid.

At this stage, it is believed that SGCC, which already holds a 25 percent stake in Portuguese energy company REN, will lead the pack of bidders if it decides to push for IPTO’s 24 percent. SGCC had also taken part in a previous attempt to sell 66 percent of IPTO, staged a couple of years ago by Greece’s preceding conservative New Democracy party-led coalition.

At the time, IPTO’s 66 percent was evaluated at just over 900 million euros, while SGCC was reportedly preparing to offer an amount of between 600 million and 800 million euros. Based on these calculations, a 24 percent stake of IPTO is worth 216 million euros. SGCC can be expected to easily make an offer of over 300 million euros, the amount Italy’s Terna had decided to offer for 66 percent of IPTO during the previous sale attempt for the operator.

Conditions have changed over the past two years. SGCC has since become indirectly linked with Terna after acquiring a stake in CDP Reti, an Italian holding company that maintains an equity share in Terna. Also, the Italian banking sector has clearly deteriorated during this period.

France’s RTE is definitely capable of submitting a competitive offer that could rival or outdo any Chinese bid.

China Southern Power Grid, the second Chinese firm to declare a non-binding interest in IPTO, will most probably not take part in the tender’s next stage as, unlike SGCC, it does not have a European presence. If this remains so, China Southern Power Grid will not meet the tender’s criteria. The IPTO tender’s terms state that bidders must be certified European operators. China Southern Power Grid could seek a European partner, but this is considered unlikely.

The two Chinese firms are also currently participating in an Australian tender offering a share of the country’s power grid.

A prefered bidder for the IPTO tender will need to be selected by October 31 and the procedure completed by February 28, 2017. If Greece’s international creditors deem that the IPTO tender is not making satisfactory progress, then a process to full privatize IPTO will be triggered.

Besides the 24 percent offered to strategic investors, the current IPTO privatization plan also entails keeping 51 percent for the Greek State and offering the other 25 percent to investors through the bourse.

 

 

Terna, RTE definite for IPTO tender’s first-stage deadline

Barring unexpected developments, two European power grid operators, Italy’s Terna and France’s RTE, an EdF subsidiary, will submit non-binding expressions of interest for an international tender launched by Greece’s power utility PPC a fortnight ago to sell a 24 percent stake of subsidiary firm IPTO, the power grid operator, to a strategic investor, in line with terms of the country’s third international bailout. Non-binding expressions of interest by are due by tomorrow.

The technical and financial credentials of interested firms will be assessed during this first stage of the tender’s procedures.

Participants who make it through will qualify for the second stage and be provided access to IPTO’s virtual data room so as to conduct their own financial, technical and legal inspections. Other details to be provided to candidate bidders include vendor due diligence reports and bank letter of guarantee guidelines.

A prefered bidder will need to be selected by October 31 and the procedure offering IPTO’s 24 percent share must be completed by February 28, 2017.

The tender’s regulations specify that participating operators must be registered with ENTSO-E, the 42-member European Network of Transmission System Operators.

HSBC Bank, Citigroup and NBG Securities will act as financial advisors.

Terna and RTE, tipped for IPTO 24%, need to resolve issues

Exploratory talks between Greek authorities and strategic investors considering a 24 percent stake in Greece’s power grid operator IPTO have taken a step further now that the sale’s international tender has been officially launched. Given the tight schedule imposed by the country’s creditors, preliminary talks with potential bidders had jumped the gun prior to the tender’s announcement, on Tuesday.

According to sources, officials of Italy’s Terna visited IPTO’s headquarters just days ago. Terna had also expressed an interest in IPTO when Greece’s preceding conservative New Democracy party-led government attempted to sell 66 percent of the operator.

Government officials are convinced Terna will submit a bid in the latest sale effort, a procedure through which IPTO is being split from its parent company PPC, the main power utility. Besides the 24 percent being offered to a strategic investor, a 25 percent share of IPTO will be sold to investors through the bourse and 51 percent will be transferred to the Greek State, which currently holds a 51 percent stake in PPC.

Certain sources contend that the 24 percent stake of IPTO being offered to strategic investors has been specifically customized to match with an older decision reached by Terna’s administration for a 400 million-euro spending limit on IPTO. The Italian company withdrew from the previous IPTO tender in February, 2015, shortly after the Syriza party had been elected to lead a coalition government.

Though Terna’s interest in the latest IPTO tender is considered certain, the company may need to overcome hurdles as a result of the Italian banking crisis, Europe’s latest threat, now surfacing. However, as Terna’s interest is based on a strategic decision to expand its presence in the Balkans, the country’s banking crisis is not expected to influence the decision. But this cannot be ruled out, especially if the Italian banking sector’s issues deepen. Italy’s Deposits and Loans Fund is Terma’s main shareholder.

France’s RTE, an EdF subsidiary, is also keeping a close watch on the IPTO developments. Though the French company is in a better financial state than Terna, European Commission competition regulations could get in its way.

Though the aforementioned Italian and French enterprises rate as the favorites for IPTO’s 24 percent stake, the State Grid of China Corporation (SGCC), which had taken part in the previous IPTO tender, could reemerge.

It has been widely misperceived that SGCC cannot take part as the corporation is a non-EU company. However, SGCC already holds a 25 percent stake in Portuguese energy company REN, acquired in 2012, meaning it can bid for IPTO. Although Chinese firms are generally looking to invest in Greece, SGCC has yet to renew its interest in IPTO.

 

 

Terna Rete Italia, France’s RTE interested in IPTO’s 24%

Envisioning an expansion into the Balkans with Greece as their base, at least two major European electricity network operators, Terna Rete Italia and France’s RTE, an EDF subsidiary firm, appear to be interested in acquiring a 24 percent share of Greek power grid operator IPTO, to be offered to strategic investors as a bailout-required measure.

An international tender offering this 24 percent stake of IPTO is expected to be announced within the next few days.

According to sources, both Terna Rete Italia and RTE are closely following the developments at IPTO, currently a wholly owned subsidiary of main power utility PPC, which, in turn, is controlled by the Greek State with a 51.12 percent stake, including a 17 percent share already transfered to a Greek privatization fund.

The tender’s terms and conditions have been finalized by Greece’s energy ministry and PPC. Not wasting any time amid a tight schedule, the two have been working on the matter since a marred general shareholders meeting on June 30, which had been interrupted by PPC’s main union group Genop but was restaged yesterday, a key item on the agenda being the endorsement of the IPTO sale. Part of the procedure was endorsed yesterday.

RTE employs 8,400 persons and ranks as Europe’s biggest power grid operator. The company controls a network with a total length of 105,331 kilometers, while 46.2 percent of its high-voltage lines offer long-distance transportation to 48 cross-border connections with neighboring countries.

In 2014, RTE posted a total turnover figure of 4.5 billion euros while its investments exceeded 1.3 billion euros. Its customers include eleven railway companies, 258 industrial enterprises and 54 power stations. In 2014, RTE transferred 494 billion KWh and marketed 112 billion KWh as cross-border transactions.

Terna Rete Italia, Italy’s power grid operator, has been interested in expanding into the Balkans through Greece for years. It had taken part in a preceding IPTO tender staged in 2014 by the then-ruling conservative New Democracy-led government, which had offered a 66 percent stake of IPTO. The Italian opertor withdrew when it became apparent the procedure was headed towards a dead end, but, even so, remains interested in branching out into the Balkans. Terna Rete Italia operates 72,000 kilometers of high-voltage lines in Italy.

PPC shareholders, or, essentially, the Greek State, yesterday approved the sale of 49 percent of IPTO to private-sector investors. Of this, a 24 percent share will be be offered to strategic investors and 25 percent to investors through the bourse. Based on the plan, a 51 percent share of IPTO will be taken over by the Greek State.

The tender’s procedures will need to move fast to avoid IPTO’s full privatization later in the year, as specified in the bailout agreement.

Based on IPTO’s new administrative terms, its chief executive will be appointed by the Greek government, while its managing director will be jointly appointed with participation from the strategic investor.