US embassy cable - 05ATHENS2054

UNCLAS ATHENS 002054 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, GR 
SUBJECT: SUBJECT:  GREECE MAKES SIGNIFICANT PROGRESS IN 
PRIVATIZATION PLANS 
 
1.(U) Summary:  The GoG reaped 80 percent of its 2005 
privatization revenue goal with last week,s sale of  52 
million shares of OPAP, the Greek lottery/gambling company. 
The OPAP sale is the first in a series of privatizations that 
the GoG plans to accomplish by 2006.  Other companies 
scheduled to be privatized in 2005 are Olympic Airlines, OTE, 
ATE Bank, and Emporiki Bank.  In 2006, the Postal Savings 
Bank and Athens International Airport are among the companies 
the GoG plans to privatize.  End Summary. 
 
2.(U) The GoG made significant progress in achieving its 2005 
privatization revenue goal of 1.6 billion euros in last 
week,s sale of OPAP, the Greek soccer pool and betting 
organization.  GoG,s public offering of 52.45 million 
shares, worth 1.26 billion euros, reduced the GoG,s stake in 
the company from 51 percent to 34.5 percent.  The revenues 
from the OPAP sale are the most the GoG has ever earned from 
a single placement of a formally state-owned company. 
 
3.(U) The OPAP sale is part of the GoG,s 2005-2006 
multi-million euro privatization plan intended to increase 
competitiveness in the market and help Greece,s tough fiscal 
situation.  The most likely firm to be privatized next, and 
the only one over which the GoG is relinquishing complete 
control, is Olympic Airlines, Greece,s failing state-owned 
air carrier.  The  GoG,s bidder-of-choice for the airline is 
Olympic Investors, a U.S.- based investment consortium.  In 
the fall, the GoG also plans to float approximately 10 
percent of its current 48 percent holding in OTE, the Greek 
telecommunications company, on the Athens Stock Exchange. 
This will be the sixth public offering of OTE, but the GoG 
will continue to exercise enough minority control to 
effectively block any management decisions with which it does 
not agree. 
 
4.(U) By the end of 2005, the GoG also plans to sell 31.36 
percent of its 82.36 percent stake in ATE Bank (formerly 
Agricultural Bank) and its remaining 9.46 percent stake in 
Emporiki Bank so that it can meet its 2005 1.6 billion euro 
privatization target.  ATE  Bank will be sold to 
institutional investors at an estimated value of 250-300 
million euros.  The likely buyer of Emporiki Bank is the 
French Bank Credit Agricole, which already holds an 11 
percent stake in the company. 
 
5.(U)Within the first quarter of 2006, the GoG plans to float 
20-30 percent of the fully state-owned Postal Savings Bank on 
the Athens Stock Exchange.  The sale is worth approximately 
400-800 million euros and issuance procedures are already 
underway.  Also slated for privatization in early 2006 is 25 
percent of the GoG,s 55 percent stake in Athens 
International Airport, a sale worth approximately 400 million 
euros. 
 
6.(U) COMMENT:  The success of the OPAP privatization makes 
it very likely that the GoG will achieve its 2005 
privatization revenue target of 1.6 billion euros, one of the 
key goals under its new EC-imposed austerity program.  While 
the GoG has not been entirely clear on whether it will use 
the privatization revenue to reduce the deficit or pay down 
its debt, now in excess of 116 percent of GDP, privatization 
will provide benefits through increased competitiveness in 
the market, improved firm efficiency, and increased 
transparency and accountability.  Although privatization 
alone will not solve Greece,s deficit and debt problems, it 
is an important part of their strategy in meeting their 
Stability and Growth Pact obligations.    END COMMENT. 
RIES