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Greece's OPAP sale at risk of legal challenge

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(Globalpost/GlobalPost)

By Kylie MacLellan and Nikolas Leontopoulos

LONDON/ATHENS (Reuters) - The flagship sale of the Greek government's stake in betting monopoly OPAP <OPAr.AT> is being challenged by two of the potential buyers, who say the sale is not being run fairly.

Two of the eight initial suitors for the 33 percent stake have independently written to OPAP and the Greek privatisation agency HRADF complaining the process is not being run in a transparent and objective way.

Both suitors - a bid vehicle called Emma Delta backed by Greek shipping tycoon George Melisanidis and Czech investor Jiri Smejc, and a consortium led by gaming equipment company Gauselmann <GAUS.UL> and gaming software group Playtech <PTEC.L> - threaten to take legal action if necessary.

Any setback to the sale could have broader economic implications for Greece, given that the stake in OPAP, worth around 660 million euros (559.8 million pounds) at the company's current share price, is being sold by Athens under privatisation plans which were a key part of the country's EU/IMF bailout.

The government expects to raise 11 billion euros from privatisations by 2016.

"Our company certainly reserves any and all of its rights to use any legal possible means, including the possibility of submission of indictments and notices for the investigation of possible punitive acts," said the letter from Emma Delta.

Among the complaints in the letters, dated earlier this month and seen by Reuters, is a decision by OPAP to renew an IT services contract with local gaming software firm Intralot <INLr.AT>, one of the other potential bidders.

Both letters call on OPAP and HRADF not to approve the contested contract.

Earlier OPAP postponed until April 6 a shareholder meeting scheduled for Tuesday to vote on the renewal of the contract in order to give the privatisation agency's newly appointed board of directors more time to study the meeting's agenda.

Both OPAP Chairman Cοnstantinos Louropoulos and a spokeswoman for the privatisation agency declined comment on the letters or confirm whether they had been received.

A source at one of the potential buyers said the letters had been acknowledged but there had been no formal response.

BOUND FOR THE FUTURE

Intralot, one of the world's biggest gaming software providers, has been OPAP's IT contractor since at least 2001, when OPAP was listed on the Athens bourse.

Its latest contract expires in July and OPAP considers its renewal, which it said would cost 109 million euros for services and capital expenditure plus at least 46 million euros for maintenance, is vital for its smooth operation.

The Gauselmann letter said the contract, for the provision and maintenance of a new central hardware and software system, would involve OPAP paying more than it had stated, and the buyer of the government's stake should have a say in it.

Both letters also said potential buyers had not been provided with details of the contract, despite the successful bidder being bound to it for as long as five years.

"The new majority shareholder of OPAP must have the possibility of control and decision on all the company's projects and contracts and not be found at the last moment (to be) bound for the future," the Gauselmman consortium's letter said.

In its letter, Emma Delta also calls on the privatisation agency to investigate the legality of the participation of companies linked to Intralot in the OPAP privatisation process.

"OPAP, which is the target company, 'gives a bonus' to the technical provider by a new agreement and reinforces the financial and cash liquidity of the group and the related group companies, giving in such a way an advantage in the competition process," the letter said.

A spokeswoman for Intralot said the agreement to provide technological infrastructure and services to OPAP was based on an international tender.

"The recent agreement announced between OPAP and Intralot ... was won by Intralot without any complaint for the transparency of the process. Any comments or actions from participants in the privatisation process of OPAP ... may serve other motives," she said.

OPAP holds monopolies in Greek sports betting and lotteries until 2020 and 2030 respectively. It also holds an exclusive 10-year licence for video lottery terminals and a 12-year licence to offer scratch cards.

Final bids for OPAP are due in the second half of April, but contenders must state the final composition of their consortiums by March 28.

Private equity firms TPG Capital and BC Partners, activist investor fund Third Point, Triple Five World Group Properties and a unit of Chinese conglomerate Fosun <0656.HK>, also responded to a November 9 deadline for expressions of interest, along with Intralot, Gauselmann-Playtech and Emma Delta.

(Additional reporting by Sophie Sassard in London and Angeliki Koutantou in Athens; Editing by David Holmes)

http://www.globalpost.com/dispatch/news/thomson-reuters/130326/greeces-opap-sale-at-risk-legal-challenge