Investors await moves

Firms listed on the Athens Stock Exchange (ASE) are following defensive tactics, placing emphasis on shoring up their financial positions, cost-cutting and concentrating on their main activities, first-half results show. The majority of listed companies also restructured their debt, taking advantage of low interest rates and turning most of their liabilities into long-term. There was also a marked preference for bond issues. The criminally amateurish moves during 1999-2001 (a period many would rather forget), including company buyouts at extremely high prices that had little to do with a company’s valuations and reckless spending of capital drawn at the ASE, are over. Now, businesspeople are more concerned with strengthening their companies against mounting international competition. The weak point of Greek companies is their low competitiveness, a combination of low productivity and (relatively) high labor costs. Local subsidiaries of multinationals have also been hurt by the trend among parent companies to limit the number of their subsidiaries or move them to lower-cost countries. Privatizations This situation has led to a rather colorless business scene, where developments, big deals or expansions are few and far between. Thus it is not surprising that investor interest has focused on the State’s privatization program, especially the selling of a second tranche in state soccer pools and lottery firm OPAP. In the next few months, there will be a third offer of shares in the Public Power Corporation and a second offer in EYDAP, the Athens water company. What concerns investors is whether there will be any interesting business developments in the last four months of the year to sustain their interest in the stock market. Despite the cautious climate, there will be some action. In the banking sector, the State wishes to sell a 10 percent stake in National Bank, which it holds through the state portfolio management company DEKA, to private investors. It also wants to sell a further stake, about 10 percent, in Emporiki Bank to France’s Credit Agricole, already a shareholder. However, the latter deal may not take place. Private sector moves Next month, Philip Morris International is expected to proceed with its already announced buyout of a 75 percent stake in Greece’s biggest tobacco company, Papastratos, if due diligence proceeds smoothly. Philip Morris International will pay 18.15 euros per share, a total of about 371 million euros. September will also be marked by shareholders’ meetings at Hellenic Petroleum and Petrola Hellas. They will decide on the share swap rate ahead of their merger. According to a study by Grant Thornton, «Hellenic Petroleum shareholders will get one new share with a nominal value of 2.18 euros for an old share with a nominal value of 1.80 euros, while Petrola shareholders will get one new share with a nominal value of 2.18 euros for every 1.853066 old shares with a nominal value of 2.35 euros.» Viohalco, the metals group, is expected to conclude its huge investment program, worth 800 million euros, by the end of the year. Thanks to the investment program, Greece’s largest industrial group has more than doubled its production capacity in the last four years. Group investments still under way are one at the ELVAL aluminum factory at Oinofyta, north of Athens, by subsidiary Bridgnorth Aluminium Ltd in England, copper subsidiary Sofia Med in Bulgaria and by steel company Stomana Industry, also in Bulgaria. The expected recovery of the global economy, added production capacity, cost cuts, the development of trade networks and constant personnel training will significantly improve the results of Viohalco subsidiaries in coming years, the group management says. Developments are also awaited at REDS (formerly the Kambas winery). The latest information is that the property development firm is planning to build a golf course in property it owns at Kantza, east of Athens. The course will be ready ahead of next year’s Olympics, although there is some skepticism about that. Selling ferries In passenger shipping, there is a mystery about the next move of Attica Enterprises, especially after it has sold two of its SuperFast ferries. Is this a tactical move that will bring on added profit, or a necessity, due to saturation in the Adriatic Sea routes? Furthermore, Attica will sell a third SuperFast ferry to TT-Lines, a state-controlled Australian company plying the Tasmania route. TT-Lines will get delivery of SuperFast II in early October and begin operating it on the Sydney-Devonport route early next year. SuperFast II was built in 1995, has a length of 173.7 meters and can transport up to 1,400 passengers at a speed of 26 knots. The ship will be rechristened Spirit of Tasmania III. There have been no exact figures about the price of sale but sources close to Attica mention 105 million Australian dollars. Attica had earlier sold SuperFast III and IV for a reported sum of $167 million. Romanian investment Greece’s largest flour mill, Loulis, is fast becoming one of the most important investors. For 2003, Loulis expects revenues of 42 million euros from its Romanian subsidiary, up from 35 million in 2002. The company has also undertaken a 70-million-euro investment program aiming at improving the quality of its products and boosting its exports. The Volos-based firm will inaugurate its new factory at Cernica on September 26. Currently, Loulis has both production and storage facilities in Bucharest, producing 620 tons of flour, 185 tons of bread, 7.5 tons of cereals and 40 tons of pasta each day. Its storage facilities have a capacity of 350,000 tons.