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

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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

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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

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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.

Global hydropower giant moves into IPTO sale picture

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As strategic investors make final preparations to submit binding offers by an October 12 deadline for a 24 percent stake of IPTO, the power grid operator, on offer through a tight-scheduled international tender, France’s RTE appears to be setting up a partnership with Canada’s Hydro-Quebec, an international energy force.

RTE has shown subdued interest in the sale until now, but a partnership with Hydro-Quebec, a Montreal-based corporation responsible for the production, transmission and distribution of electricity in Quebec, would elevate its IPTO candidacy.

Possessing 61 hydropower stations, one nuclear facility and employing 19,800 persons, Hydro-Quebec ranks as Canada’s main electricity producer and the world’s biggest hydropower producer. Hydro-Quebec’s total installed production capacity stands at 36,912 MW, 99 percent of which is generated by renewable energy sources, while the corporation serves 4.06 million customers.

Two other corporations, Italy’s Terna and China’s State Grid International Development, have qualified for the IPTO sale’s second round, providing them with access to the Greek operator’s virtual data room as part of their due diligence procedures. The virtual data room has just closed.

Terna is believed to be preparing to bid alone, but a joint bid with fellow Italian firm F2i has not been ruled out. There is no indication of any partnership in the making at China’s State Grid International Development for the IPTO tender.

Greece’s main power utility PPC, IPTO’s parent company, is optimistic that three bids may be submitted, which could instigate a bidding war.

Meanhwhile, an independent evaluator, commissioned by PPC, has begun work on estimating the operator’s market value. The resulting report will be handed over to PPC for a clearer picture.

“It’s only natural that we examine whether the offers to be made are reasonable,” a PPC official commented yesterday, implying that improved offers will be requested by the operator’s parent company if necessary.

 

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

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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

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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

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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

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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

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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

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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

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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

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

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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.