By A. Doga
Lenders of Greece's state-run power company, bourse-listed Public Power Corp. (PPC), on Friday lobbed a "bombshell" at one of the most prominent privatizations being successfully -- up until now -- shepherded by the leftist Greek government.
Creditor banks charged that PPC's transfer of a 51-percent stake in the power transmission grid operator (ADMIE) without compensation is unconstitutional. They also pointed out the fact that the pro bono transfer deprives their major borrower and client (PPC) of a significant asset, thus worsening its economic prospects.
The transfer of PPC's majority ownership in ADMIE is a necessary condition to sell the management and 24 percent of the latter to a Chinese multinational.
PPC announced last October that China’s State Grid Corp. submitted the winning bid for a 24-percent stake in ADMIE. The Chinese company tabled a bid of 320 million euros. The other candidate was a consortium led by Italy-based Terna.
The letter by the creditor banks warned PPC that its credit line will be cut, as their interests are directly threatened by the privatization procedure followed for ADMIE. Specifically, they pointed to a higher risk of PPC not being able to meet its borrowing obligations.
PPC is the dominant wholesale and retail power producer and provider in the country, while it previously held a rock-solid monopoly in Greece's electricity sector.
All four of Greece's systemic banks -- NBG, Alpha, Piraeus and Eurobank -- along with non-systemic Attica Bank, have signed the letter, which is addressed to Finance Minister Euclid Tsakalotos.
The first result was the cancellation of Thursday extraordinary general assembly of PPC shareholders, where the foremost issue on the agenda was the establishment of a holding company to transfer the utility's 51-percent stake in ADMIE.
Another point that generated the unprecedented action on the part of PPC's creditors is legislation tabled by the government that abolishes banks' rights to seek legal redress, as contractual agreements provided, in case of "significant changes in PPC's property portfolio".
In March 2014 the five banks had extended a five-year syndicated loan contract to PPC worth 2,227 billion euros for the refinancing its existing loans.
In a subsequent bid to head off an utterly negative conclusion for one of the embattled government's memorandum-mandated actions, i.e. ADMIE's privatization, a hastily called meeting was held on Friday evening between Tsakalotos, relevant Energy Minister Giorgos Stathakis and representatives of the four systemic banks.
In a bid to deflect concerns, the ministry later issued a brief statement merely saying that "... specific actions were agreed which, after the necessary technical and legal processing, fully ensure the timely completion of the (privatization) process."