ECONOMY

Financial extinction looms for several listed firms, most of them ‘heroes’ of the 99 bubble

Mature markets have learned the lesson a long time ago: zero tolerance for ineffective companies. Investors understand that an enterprise with no profits, no discernible investment plan and which does not apply the rules of corporate governance is doomed to failure by the strength of its competitors and the shrinking of its operating margins. Over the last five years, several companies listed on the Athens Stock Exchange have seen their price fall below half a euro and have been labeled «nickel-and-dime firms.» Their main shareholders had relied too much on the games of the 1999 bubble market and now find themselves deprived of liquidity and at the mercy of their creditor banks. Many listed companies actually face financial ruin. Typical such companies include holding company and former cigarette maker Keranis, appliances retailer Radio Korassidis and IT firm Pouliadis, so burdened by debt that they have wasted away all their own capital. As a result, the main shareholders have been frequenting the courtrooms over the past two years in order to salvage some of their holdings and be protected from their creditors who would like to auction off their assets. Thousands of retail investors who long ago realized that their investment choices were catastrophic are in despair. Some companies have been delisted from the ASE, which means that retail investors are not in any position to make claims on their fixed assets. Three listed companies (Sea Farm Ionian, Mouriades and Ideal), whose trading has been suspended, have been given a deadline of August 2 by the Capital Market Commission in order to provide data that will prevent them from being delisted altogether. Other listed firms in dire straits are Euroholdings, Mesochoritis brothers, whose shares have reached the «nickel-and-dime» level, and textiles firm Klonatex, whose shares are down 35.62 percent this year, versus an overall drop of 2.61 percent for the market as a whole. These are not the only ones: Sheet Steel, for example, has seen its shares tumble and is desperately putting real estate for sale to prop up its finances. Hellatex, another textiles firm, is down 23.53 percent this year. A similar fate has hit IT firm Informatics, construction companies Mochlos and Ergas and Emborikos Desmos. Another construction firm, Proodeftiki, is trying to sell its share in the Rio-Antirio bridge to pay off bank loans. It has not paid a dividend to its investors since 1999.