Greeces Hopes OPAP Sale Speeds Privatizations

Greece Prime Minister Antonis Samaras said the sale of gambling monopoly OPAP shows that Greece is serious about making reforms as a condition of rescue aid.  The deal, which will give Czech-Greek consortium Emma Delta a 33 percent stake in the gambling monopoly, will bring in 712 million euros, about $915.48 million.
“It is important as a signal to the international community and markets that the privatization program is moving (forward,)” Aggelos Tsakanikas, Research Director for the Athens-based Foundation for Economic and Industrial Research (IOBE,) told Southeast European Times.
He noted, however, that, “It is also a privatization that did not have a political cost, as it involves lotteries and betting industry … there was no huge foreign interest in this.”
The Emma Delta bid was about 18 million euros ($23.14 million) less than what the government hoped to realize in its first major privatization deal. Emma Delta’s original offer of 622 million euros ($800 million) was rejected, and sent back to the company to debate an increase.
The Hellenic Republic Asset Development Fund (TAIPED) announced the agreement with the group, and said it would be profitable for the country. “If OPAP wasn’t privatized, the state would collect a dividend for the 2013 financial year of just 13 million euros, and over the next decade it would get no more than 360 million euros, which is about 50 percent of the amount it is getting through the privatization,” the fund, which is responsible for privatizations in the country, said.
A total of 622 million euros will be paid in a lump sum upon the signing of the agreement, while 60 million euros ($77.2 million) represents the state’s dividend for 2012. That will be paid to TAIPED by the new owner, and the remaining 30 million euros ($38.61 million) will be paid over the next decade.
Finance Minister Yannis Stournaras hailed the deal even though it fell short of the mark. “Investment funds’ confidence in the Greek economy is being proved,” he said. Italian gaming company Lottomatica said it bought a minority stake in one of the funds that comprise Emma Delta.
The Troika of the EU-IMF-ECB has been pressing the government for three years for quicker privatization. While not a blockbuster in terms of its effect on cutting into Greece’s debt of 303 billion euros, ($390 million) the move is seen as a psychological breakthrough towards ending resistance against privatization.
Antonis Klapsis, head of research for the Konstandinos Karamanlis Institute for Democracy in Athens, said the sale the gambling agency will inject confidence in investors. “OPAP’s privatization is just the first step that will open the door for more that will follow,” he told SETimes.
“It also gives a clear sign that the government is firmly determined, despite the reactions by the opposition, to implement all the necessary reforms in order to give a boost to Greek economy. The climate in Greece is changing and hopefully foreign investors will appreciate it and will choose Greece as a place to make business,” Klapsis said.
OPAP, the biggest gambling operation in Europe, has a 10-year license to operate 35,000 video lottery terminals, as well as the exclusive rights to operate 13 games of chance until 2030.
Dimitris Hatzinikolaou, a professor of economics at the University of Ioannina, said that Greece may have sold itself short for immediate gratification. They sold OPAP for the profits of one year,” he told SETimes.
He added: “The price of a firm equals the present value of all its expected future profits plus the present value of its assets. This, in fact, was a gift, not a sale.”
(Used by permission of Southeast European Times, www.setimes.com)