‘No ELPE sale Plan B’; workers want Latsis group to keep stake

There is no Plan B for the privatization of ELPE (Hellenic Petroleum), offering a 50.1 percent stake of the Greek petroleum firm, plus managerial rights, and the agreement reached with the country’s lenders will lead to new negotiations, from scratch, should the current sale procedure fail to produce results, energy ministry sources have informed in response to yesterday’s claims by union members of an alternative plan entailing a bourse placement of the Greek State’s stake if the sale, orchestrated by TAIPED, the state privatization fund, does not move on.

Members of PSEEP, the ELPE workers union, yesterday made a public appeal to the Latsis group, controlling a 45.47 percent of ELPE through Paneuropean Oil, to not contribute its stake to the sale. The Greek State currently holds a 35.5 percent stake of ELPE.

PSEEP union officials are expected to reiterate this appeal at a meeting they have requested with the Latsis group, whose intentions remain unclear.

Certain sources contend the Latsis group has offered its consent for the sale to proceed, following a request by the government, which has agreed to a specific privatization plan for ELPE.

Even so, it has become apparent that the Latsis group could re-examine its position should the current privatization plan by cancelled.

The ELPE sale effort, originally presented as a fast-track procedure to be completed in autumn, appears to have fallen well behind schedule.

Switzerland’s Glencore and Dutch enterprise Vitol, two of five first-round applicants, have been presented as the favorites to advance to the next round, but a short list of qualifiers has yet to be officially announced. A list of the three disqualified bids has been announced by the privatization fund.

The delayed delivery of the finalized list of qualifiers has been attributed to precautionary steps being taken by the privatization fund in order to avoid any reasons for legal action by the disqualified bidders. Such an outcome would further delay the sale.

It is believed that legal challenges are already being prepared by some of the disqualified bidders. Whatever the case, the submission of binding bids within July and the declaration of a winning bidder in autumn, as initially scheduled in the fast-track sale plan, both seem to have developed into impossible targets.

ELPE refinancing deal, timed with sale, could add some value

A loan refinancing agreement between ELPE (Hellenic Petroleum) and its lender banks, reached a while ago but announced now, meaning it coincides with the petroleum firm’s ongoing privatization procedure offering investors a 50.1 percent stake, is expected to boost the firm’s market value.

ELPE’s refinancing agreement for existing loans, as well as the extension of new loans, worth a total of of 900 million euros, is expected to provide some extra incentive to investors taking part in the privatization.

ELPE has secured an interest rate of approximately 3.5 percent for its loans. The rate could have been lower, at approximately 2 percent, closer to European standards, had the country risk factor for Greece been smaller.

This highlights the potential benefits to be offered by ELPE’s incorporation into a larger international group. The development promises to lift the petroleum firm to a higher tier and enable it to utilize market opportunities emerging in the southeast Mediterranean on better financial terms.

ELPE’s agreement with banks covers all its capital needs until 2020 and will provide savings worth at least 20 million euros per year. This development relays a strong message to prospective investors, essentially being told that all financing issues at ELPE have been settled for the next two years.

Two of the ELPE privatization’s five first-round participants, Switzerland’s Glencore and Dutch enterprise Vitol, both leading oil traders on a global scale, are heavily tipped to advance to the next stage.

Expressions of interest also submitted by three other entrants – a consortium comprised of Carbon Asset Management DWC-LLC and Qatar’s Alshaheen Group; Iraq’s Alrai Group Holdings Limited and the Gupta Family Group Alliance – are not expected to be shortlisted for the second round as it is widely believed their dossiers do not meet all criteria. However, officials at TAIPED, the state privatization fund, have yet to reach final decisions.

Three second-round qualifiers would be preferable for the privatization’s bidding level prospects, pundits closely following the developments have noted, as a dual battle limited to Glencore and Vitol could subdue the sale price.

 

Foreign crude suppliers still distrustful of Greek banks

Foreign crude suppliers and traders exporting to the Greek market are continuing to display little, if any, confidence in Greek banks, despite the fact that the latter have been recapitalized for a third time. ELPE (Hellenic Petroleum) is experiencing this continued distrust first-hand, on a regular basis.

Companies such as Iran’s NIOC, the state-run oil company, Russia’s Vitol, as well as Saudi Arabian suppliers, all of which regularly trade with ELPE, are not accepting letters of gurantee issued by Greek banks for their dealings with the Greek refinery.

ELPE has been forced to have letters of guarantee issued by Credit Suisse as well as a Dutch bank, sources informed.

Despite the wider distrust, a visiting Iranian delegation led by the country’s deputy foreign minister Majid Takht Ravanchi did express an interest to increase trade with ELPE during a series of meetings yesterday with Greek government officials, including energy minister Panos Skourletis, economy, infrastructure, shipping and tourism minister Giorgos Stathakis, and alternate foreign minister Nikos Xydakis.

Ravanchi noted that he would like Iranian crude supply to ELPE to increase from the current level of two million barrels per month to three million. ELPE’s NIOC’s crude supply to ELPE had reached four million barrels per month prior to the western-imposed sanction on Iran, lifted early this year after being implemented in 2011. Ravanchi and his team also expressed an interest for greater Greek-Iranian cooperation in the petrochemical, LNG and renewable energy sectors.

In response, Greek officials suggested that more flexible credit terms by Iran and acceptance of letters of guarantees issued by Greek banks would help increase trade between the two sides.

ELPE is currently forced to make instant cash payments for orders delivered by NIOC as well as all other suppliers from abroad, including Russia’s Vitol, an old trading partner.