ECONOMY

Government launches tender on sale of majority stake in Olympic Catering

The government on Sunday launched a tender to sell a majority stake in Olympic Catering, a subsidiary of Olympic Airways, in line with restructuring plans for the national flag carrier which includes shaving off non-core activities. The privatization plan for the catering company underscores the government’s new determination to speed up its divestment program, which kicked off 10 days ago with the rapid sale of an 8-percent stake in OTE, as it seeks to raise funds to finance social security reforms and reduce public debt. The state lottery pools (OPAP) are slated next. Publicized over the weekend, the tender for expressions of interest offers a stake of between 51 percent and 68.37 percent in Olympic Catering and management rights in the company to the successful candidate. Plans to privatize the catering company, 31.6 percent of which was floated on the Athens Stock Exchange in 1999, come as the State struggles to find a buyer for Olympic Airways. Following a failed attempt early this year to sell 51 to 65 percent of the debt-laden flag carrier to a group led by a Greek shipping tycoon, the government subsequently announced a restructuring plan for Olympic, key of which is breaking up the carrier and selling off its subsidiaries. It also replaced the privatization adviser, UK investment bank Credit Suisse First Boston, and appointed two domestic banks, National Bank of Greece and Commercial Bank, to help look for Greek investors for Olympic. The new advisers have yet to report success with their quest. Lack of investor interest aside, Olympic also has to deal with an investigation launched by the European Commission early this year into financial aid provided by the State. Following two failed restructuring attempts, the European Union has banned state aid for the carrier. The Commission expressed its concerns about the potential misuse of aid authorized in 1994 and 1998, as well as the legality of a 19.5-million-euro loan granted to the airline in February. It is expected to announce its verdict in the summer. In the meantime, Olympic appears to be having some success with its streamlining plans, which include dropping loss-incurring routes and curbing expenses. The airline lifted its market share in the first quarter of the year to 58 percent from 49 percent. It also predicts a return to the black this year. Olympic last published financial accounts in 1999, showing significant losses. The tender for Olympic Catering will be carried out in two stages. Candidates have until July 10 to submit non-binding bids. Short-listed bidders will be able to do a due diligence on the airline and will need to send in binding offers by August 2. Olympic Catering posted a turnover of 49.2 million euros and a loss of 5.2 million euros last year. Slightly more than half of its revenues come from catering activities at airports and to airlines, 12.1 percent from industrial clients, 30.3 percent from canteen business and 1.5 percent from receptions. It employs 745 people.