Line of credit to defaulters drying up fast

Several companies listed on the Athens Stock Exchange now find themselves with their backs against the wall as banks are no longer willing to bail them out. These companies have now reached a dead end and their future is very much in doubt. The first such company threatened with immediate insolvency is Connection, an importer, distributor and retailer of brand-name clothes and accessories. Yesterday, the Athens Stock Exchange board set its stock «under probation» beginning today, following a letter by the company which admitted that its negotiations with creditor banks for a renegotiation of its debt were close to being aborted as the banks were unwilling to extend new lines of credit. «As a result, the company faces liquidity problems and an increased likelihood of losing more cooperation contracts with fashion houses abroad,» the Athens Stock Exchange said. Connection has already lost a contract for the exclusive representation in Greece of Trussardi products. Its stock closed at an all-time low of 0.25 euros yesterday, down 4 cents. The creditors, which include Commercial and Agricultural banks, as well as EFG Eurobank Ergasias, have cut off new credit to Connection since mid-January. According to sources, most banks have now decided to do the same with other clients in a similar position, since there are dozens of corporate loans that are no longer being repaid. Bankers have been saying these past few days that their patience has run out and that the leniency they have shown so far has only exacerbated the problem of company insolvency. In addition to that, non-performing loans are beginning to adversely affect bank results. Market players believe that it is still not too late to give a boost to the flagging stock market by ridding it of certain companies. Today, Connection and its creditors will meet yet again. One of the participants has described today’s meeting as «the beginning of the end of a sad story.» Losing the Trussardi contract, on which Connection depended for at least 20 percent of its turnover, was an especially heavy blow to the company. In his letter to the Athens Stock Exchange, Connection Chairman Stavros Tzioufas admits that after the credit lines dried up, the company has been having difficulties importing products and distributing them to customers.

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