ECONOMY

Government backs OPAP appeal against Intralot’s indemnification

The government yesterday backed a move by soccer pools lottery company OPAP to challenge a 37-million-euro per year award to gaming systems operator Intralot as fears of a lengthy court wrangle drove OPAP’s shares lower. State-owned OPAP’s shares ended 1.36 percent lower at 8.60 euros, trimming an earlier 4 percent drop. It was the third most heavily traded stock on the Athens bourse. OPAP said yesterday it will appeal an arbitration court decision asking it to pay 37 million euros ($39.43 million) to gaming systems operator Intralot for each year OPAP delays the launch of new games previously agreed to. OPAP said the court ruled Intralot was due the payment for foregone earnings after OPAP failed to introduce horse-racing and greyhound betting games which Intralot would have developed. The decision relates to lost earnings for Intralot dating from March 30, 2001, OPAP said. «We believe this (court) decision is unjust and for this reason OPAP will resort immediately to the regular courts, aiming to annul the court’s decision,» the company said. OPAP, which has a 78 percent market share in lotteries, is the sole fixed-odds betting operator in Greece. The Greek State, which owns about 75 percent of OPAP, said it fully backed OPAP’s move to challenge the decision. «The position of the Greek State is that the court decision is groundless. The company (OPAP) proceeded immediately with an appeal in order to defend the interests of the State, which is its main shareholder,» Economy and Finance Minister Nikos Christodoulakis told reporters. But analysts said the court ruling was a disappointment and expressed concerns about the impact of a lengthy appeals process. «OPAP’s appeal could take considerable time, while in the meantime, the game is not launched and OPAP’s potential payout to Intralot could be accumulating,» Schroder Salomon Smith Barney said in a note. SSSB left its «outperform, medium-risk» rating and target price of 12 euros on the shares unchanged. Intralot, an affiliate of Greek telecoms equipment maker Intracom, jumped 4.33 percent to close at 13.98 euros, after news of the ruling, which analysts said was a windfall for the company. For the first time, Intralot’s capitalization, at 518.4 million euros, exceeded that of its parent company, telecommunications systems manufacturer Intracom (518.2 million). EFG Eurobank Securities said the 37 million euros per annum compensation amounted to about 10 percent of OPAP’s expected pretax earnings for full year 2002 and 50 percent of Intralot’s expected pretax earnings for the year. Concerns about the outcome of the dispute have kept a cap on OPAP’s share price. It is down 12 percent since the beginning of the year – a capitalization loss of 320 million euros – after gaining 40.5 percent in 2002, putting it at No. 2 among European gainers in the year. Intralot has risen 11.3 percent in the same period. «The controversial agreement was signed at a time during which OPAP’s managing director was Mr Christos Salales, member of (the ruling Socialist party’s) central committee. It is also known that, after resigning from OPAP, Mr Salales became a high-ranking manager in Intracom,» said opposition New Democracy spokesman Theodoros Roussopoulos. (Reuters, Kathimerini)