Natural selection for the country’s troubled firms
Restructuring the Greek business sector will require some 25 billion euros for the viable enterprises to stand out from the unsustainables, PricewaterhouseCoopers (PwC) estimates in a report presented on Monday in Athens.
Titled “The Prospects of Greek Enterprises on their Way Out of the Crisis: Stars & Zombies,” the study is expressly in favor of the immediate liquidation of 650 problematic corporations with the write-off of 15 billion euros of debts by the banks, while the funding needs of the companies with sustainability features amount to 10 billion euros.
The PwC study, which focused on 2,950 firms, has concluded that 650 enterprises have trapped funds as they absorb more resources than they produce and therefore deprive potentially healthy firms of the resources they have greater need of.
According to PwC’s general director in Greece, Costas Mitropoulos, the liquidation of troubled enterprises and the write-off of those debts is feasible for banks as they have already made their provisions. Such an initiative would allow for the more efficient management of the firms that have resisted the pressures from the financial crisis and are showing potential.
The survey found that 1,269 enterprises are showing cash flow and borrowing problems and require initiatives for restructuring, funding and share capital increases, with which the banks will have to deal separately and individually. According to PricewaterhouseCoopers, the economic climate favors the restructuring of enterprises, as it confirms the liquidity that exists in the market and the investment interest by private equity firms, with over 2,000 investment opportunities waiting.
The debts of the 650 so-called zombies amount to 25 percent of loan portfolios and their restructuring will release liquidity and assets worth 2 billion euros that will return to economic production, the study found.
