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Listed firms act as access to financing tightens

By Anestis Dokas

Greek banks are reportedly refusing to offer listed companies guarantees that they will be able to continue meeting their urgent liquidity requirements in 2012.

Senior executives of firms that managed to settle their debts last year and maintain open credit lines this year after protracted negotiations with lenders told Kathimerini that the current political flux and the postponement of bank recapitalization has cast a heavy cloud of uncertainty over the future. At best, they note, the banking system and businesses have adopted a wait-and-see stance. It’s impossible to predict where the country will stand politically one month from now and no one can rule out the possibility that the government will declare a payments freeze one month from now if the country’s international creditors suspend the scheduled installments.

Banks have notified listed companies that they now control after the securitization of their debts to put financial plans on hold until the political landscape becomes clearer. This is especially trying for firms that cannot reduce production, as that would jeopardize their cash flows. Many of them have tried to improve their survival prospects by reorienting their activities abroad, given the bleak prospects of the domestic economy.

The lack of liquidity is prompting many firms to sell or reduce their holdings in order to protect their assets.

Even healthy firms are beginning to feel the liquidity pinch, and this has not escaped the attention of foreign portfolio managers who are watching the Greek market ready to snap up any opportunities. The overall picture that has emerged for the first quarter of the year is that two out of every three listed firms are facing very acute cash flow woes. On average, firms are two months behind in salary payments and have activated compulsory leave measures (two days a month), anticipating an average reduction in the wage bill of around 10 percent.

“Many firms will wither in 2012, given the sorry state of the Greek business environment. We do not want to be among them, so the group will conduct itself as conservatively as possible in order to deal with the situation,” said Evangelos Mytilineos, chairman and CEO of industrial conglomerate Mytilineos Holdings.

Tumbling turnover has compounded the problems posed by the lack of financing. For instance, the situation is especially tough in the construction sector, as firms involved in public works are being led to collapse. Realty developers who were in the middle of projects when banks froze further credit are in an equally sorry state, while the recession in the tourism sector is giving rise to a similar picture for many cash-strapped hotel businesses.

Even the food sector -- traditionally the most resistant of Greek industries during economically challenging periods -- is seeing sales fall as consumers cut back to the absolute essentials or turn to cheaper options.

Also there have been reports that listed firms with property assets are being refused operating capital loans due to their supposed risk of default.

ekathimerini.com , Monday May 14, 2012 (23:01)  
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