The rise and fall of an ambitious stock market trader
Electric and electronic appliances retailer Radio Korasidis, one of the country’s biggest chains, is experiencing falling sales, high losses and a heavy debt load. This contrasts sharply with the heyday of 1999, when the rapidly ascending Andreas Korasidis would go splashing money on anything from telecoms to sports. Korasidis was very fond of buying stocks. Indeed, his passion for the bourse was so strong that some said he should have been a stock market trader instead of just a trader. But the common denominator in all his buys was that he bought on his own account, leaving his own listed company aside. His portfolio might have been described as an endless labyrinth of dozens of direct and indirect acquisitions. This gave rise to confusion and questions in the market, particularly by analysts. Radio Korasidis made a modest debut on the bourse’s Parallel Market in the spring of 1996. In 1999, Andreas Korasidis participated in the scheme that acquired Athenian Holdings, whose share became the object of intense speculation before falling in the doldrums like so many others and being renamed Euroholdings. His biggest move was to buy 36 percent of listed department store Klaoudatos, a rather problematic concern whose share price rose to about 10,000 drachmas (30 euros) at one point. Korasidis now says he aimed to diversify into clothes retailing but recognizes it was a mistake. Klaoudatos absorbed electric goods chain Elephant and is now in the process of merging with Microland-Britannia. Alas, Korasidis proved much better on the offensive than on the defensive. Now, under pressure from banks and with his company’s share having dived more than 96 percent from the highs of 1999, he is in the midst of a bold restructuring drive. The problems in retail trade started appearing in the following year; price wars, expensive acquisitions of doubtful concerns and aggressive credit facilities financed through loans led to an impasse. Today, all firms in the sector are running big debts while sales are falling. Radio Korasidis’s balance sheet for 2001 left no doubt about its dire difficulties. The group’s turnover fell to 225 million euros from 241.5 million in 2000 and profits crashed from 21 million to just 2 million euros. At the same time, debt, the group’s number one problem, swelled phenomenally from 2.6 million to 35.2 million euros for long-term obligations, and, more worryingly, short-term liabilities grew from 32.4 million to 50.7 million euros. Total liabilities reached 170.19 million. Last year, the group, for loan interest alone, paid about 20 million euros, or 9 percent of turnover. In his notes to the financial statements, the chartered auditor says that the liabilities include overdue payments of 3.5 billion (10.3 million euros), for which a provision of only 471 million drachmas (1.4 million euros) has been made. Company officials attribute the bad run to the bold restructuring program launched last year and expected to be completed soon. They say that the changes will allow the group to recover and go on the counterattack in 2003. Efforts have focused on trimming operating costs, changes in the handling of merchandise and a change in commercial policy. But the big question in the market is why the group’s share is continuing to slide, even from its currently abysmal price level; in the stock market’s heyday of September 1999, it traded at 50 euros. Now, it is struggling to stay at 2 euros. Klaoudatos has fared even worse, trading at around 1 euro.