OTE plan envisages single group share

OTE telecom is determined to buy back its shares and is also considering the absorption of cellular telephony subsidiary Cosmote. OTE Chairman and CEO Panagis Vourloumis has reportedly reached a decision regarding the subsidiary’s minority stakes and realization of the plan is only a matter of time. Regarding the share buyback, this has also been decided and will be submitted to the governing board for approval before being put to the annual general meeting of OTE shareholders at the end of June. Economy Ministry sources commented that while the decision was not aimed at the shares owned by the state, this was not necessarily incompatible with the state’s intentions. «In the context of a share buyback decision, OTE cannot acquire shares from a specific shareholder, not to mention some other technical difficulties such a move would face,» an Economy Ministry source said. «Nevertheless,» the same source suggested, «a share buyback decision could operate as a cushion for the price of the state’s placement.» Already this cushion has helped to some extent, with OTE stock rising significantly since April 19, when word spread of the share buyback. The price of the stock rose last week by about 4.4 percent. This has eased some of the pressure seen on the stock in the last few months, due not only to disappointment stemming from the inability to find a strategic investor but also to the state’s planned placement. It is certain that when the placement is made, it will be with a discount on the market price. Therefore the higher the stock price, the better it is for Economy and Finance Minister Giorgos Alogoskoufis. The minister is expecting budget revenues from privatization totaling 1.7 billion euros, of which at least 1 billion euros must come from reducing the state’s stake in OTE. Meanwhile, OTE has many reasons to spend some hundreds of millions of euros to buy back its own shares. «There are strong cash flows (to OTE),» a market observer recently pointed out, noting that the group’s borrowing remains low. Other options open to OTE include giving its own shares to its personnel, in accordance with decisions made earlier this month at the extraordinary general meeting of shareholders, or exchanging them for Cosmote shares as part of the move to acquire the subsidiary’s minority stakes. Another option would be to simply sell the shares. Of course there is one further option, though perhaps not the best in terms of publicity, namely the destruction of the shares after three years have passed since their acquisition. Well-informed sources reported that the chairman of OTE would not be against the destruction of shares, believing that such a move would give more value to the corporation’s remaining shares. Already in the past OTE has destroyed some 15 million shares. However, the main target for Vourloumis is the Cosmote minority stakes and how they will be acquired by the parent company. The OTE CEO has reportedly said that the stock «must be only one» and reflect the group’s value; he is also said to be ready to borrow in order to achieve his aim. His aides favor the full absorption of Cosmote through a share exchange with OTE, followed by the company’s splitting. «The CEO does not want Cosmote within the parent company,» said a market observer, «but he does want 100 percent of its shares.» To this end, OTE has drafted a plan that will require six to eight months to implement.

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