Time’s almost up for Olympic
The crucial negotiations that are under way this week will determine the outcome of the tender for the sale of Olympic Airlines and test the credibility of the preferred suitors, Olympic Investors – York Capital. «Things will be tough unless a memorandum agreement is signed now with this consortium, although the other bidder, Klesch and Company, will also be invited,» a government official told Kathimerini, reflecting concern at the Economy and Transport ministries. This climate, however, does not coincide with the more optimistic estimates by Lazard, the privatization consultant. Last week the ministerial privatization committee announced in a laconic statement that a short period of exclusive and conclusive negotiations is beginning with the Olympic Investors – York Capital consortium. The latter is reportedly committing itself to a total investment in excess of 200 million euros in Olympic Airlines. Certainly this is not the amount the seller – the Greek state – will receive for OA, due to its negative net worth and the losses accumulated during the 19 months of its operation. The draft agreement proposed by the consortium is said to include the following terms and conditions for completing the deal with the state: The renegotiation of OA’s major contracts concerning ground handling and technical support; securing EU approval for the sale of OA, along with the lifting of the company’s obligation to return illegal state subsidies; a temporary commitment about Olympic’s management in the transitional administration period until the transfer of the company’s shares in September; and additional due diligence in the company’s financial figures. Despite the progress in negotiations and the alternative solution of Klesch and Company, the sale of Olympic remains a difficult proposition and will undergo the close scrutiny of the European Commission, with which the Transport Ministry and Lazard will consult hoping for a political amnesty on Olympic’s burdened record by the end of the month. Doubts, losses Separately, doubts have emerged about the profiles and credibility of each participant in the consortium. The government is relegating Olympic Investors’ role to that of local management, advertising instead the involvement of York Capital. Olympic Investors appears to be represented by Costas Alexakis, who is involved in a bankruptcy suit concerning one of his restaurants in the US, according to Bizjournals, a business review in Baltimore. Asked by Kathimerini, government officials stated ignorance of Alexakis’s other business activities and said they needed time to look into the matter. Olympic Airlines yesterday posted a 2004 net loss of 87 million euros, remaining deep in the red for the second straight year after its relaunch, Reuters reported. Olympic Airlines, the successor to Olympic Airways, lost 23 million euros in 2003 when it was launched. Along with last year’s poor results, accumulated losses are dangerously close to the airline’s equity of 130 million euros. To make things worse, the carrier is being sued by former employees for wage claims of 55 million euros, according to auditors’ notes on its financial results, which were based on Greek accounting standards.
