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Greece gets two bids for stake in betting monopoly OPAP

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(Globalpost/GlobalPost)

By Angeliki Koutantou and Harry Papachristou

ATHENS (Reuters) - Greece's first big privatisation drew little international interest from major companies on Wednesday, highlighting how steep a challenge the country faces to meet its ambitious bailout targets amid a deep economic crisis.

Athens attracted two bids in the sale of a 33 percent stake in betting monopoly OPAP <OPAr.AT>, one of its most valuable assets with a total market value of about 2.2 billion euros (1.87 billion pounds) on the Athens bourse.

Bidders include activist U.S. investment fund Third Point, which made fat profits on a speculative investment in deeply discounted Greek government bonds last year, privatisation agency HRADF said in a statement.

The other bid came from Emma Delta, a group controlled by a Greek ship-owner George Melisanidis and Czech investor Jiri Smecj.

Other, better-known bidders from the gaming and investment industries that were initially interested in OPAP decided to quit the race, including German gaming equipment firm Gauselmann <GAUS.UL>, gaming software group Playtech <PTEC.L>, private equity firm BC Capital and Chinese conglomerate Fosun <0656.HK>.

Such players were probably still reluctant to invest in Greece, analysts said.

"Many investors were probably too frightened to take part," said Takis Zamanis, Athens-based chief trader at Beta Securities.

The country is mired in regulatory uncertainty and its deepest peace-time recession and is still at risk of missing its bailout targets and having to quit the euro.

"Ideally, there should not be just funds with short-term interest but big players active in gaming with strong know-how," said Euroxx Securities analyst Yiannis Sinapis.

Italy's gaming major Lottomatica <LTO.MI> declined to comment on a Greek media report that it had a 10 percent minority stake in Emma Delta, one of the bidders.

The financial offers will be revealed in a few days at a board meeting, HRADF said. Greece aims the sale to cover a large part of its 2.6 billion euro privatisation target this year.

TEST CASE

OPAP is a test case for Greece's ambitious privatisation programme, a key element in its 240-billion-euro bailout.

Athens has been dragging its feet on privatisations since its first EU/IMF rescue in 2010. It has raised a disappointingly low 2 billion euros from asset and licence sales, angering its international creditors such as Germany and the IMF.

OPAP alone has contributed about half of the 2 billion raised so far, to extend its monopoly rights and acquire new gaming licences.

The company is free of debt and Greece's most profitable by far, with a return on equity ratio of 49.2, according to ThomsonReuters data.

The debt crisis has not killed off Greeks' punting habits, who still count among Europe's most ardent gamblers. OPAP generated a free cash flow of 531 million euros last year, according to Thomson Reuters data.

OPAP expects operating cash flow of 1.28 billion euros in 2014-2016, it said in a 10-year business plan unveiled in February, suggesting that buyers might recoup their money in a few years.

However, the company's outlook is cloudy. Analysts expect future profitability to be severely hit by a 30 percent tax on gross gaming revenue that the cash-strapped government slapped on the company in January.

Net income in 2013-2016 is expected to collapse to an average annual 184 million euros from 553 million in 2009-2012, according to analysts' forecasts and historical data collected by ThomsonReuters.

The company's expansion plans in electronic and online games might come to naught if competitors such as William Hill <WMH.L> and Stanley Bet succeed in a court challenge against its sports betting and lottery monopoly rights, which expire in 2020 and 2030 respectively.

The European Court of Justice said last year that OPAP must be tightly regulated for its monopoly to be in line with EU law. A Greek court, which had asked for ECJ guidance on the case, is expected to deliver a final verdict later this year.

OPAP has the monopoly in sports betting by 2020 and in lotteries by 2030. It also holds an exclusive licence to launch video lottery terminals.

(Additional reporting by Lefteris Papadimas in Athens and Jennifer Clark in Milan; Editing by Jane Merriman and James Dalgleish)

http://www.globalpost.com/dispatch/news/thomson-reuters/130417/greece-gets-two-bids-stake-betting-monopoly-opap-0