PPC and Attica bank (draws 28/9) test government privatization model – Many management mistakes

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PPC is another case where the state, ie the Greek taxpayer loses, while another path quite compatible with free market practices could be followed.

The privatization model of the government is being tested once again in the cases of PPC and Attica bank.
In PPC, consolidation and privatization are being attempted, where the public sector is once again the big loser, while in Attica bank – which is an ongoing scandal – it appears that the black hole may exceed 500 million euros.

The mistakes in PPC and the model of Ethniki… in New York

What caused an alginate impression is that after the sale of 49% of HEDNO of the Network Operator at a price of 2.1 billion euros, it was decided to increase the share capital of PPC.
The main stake of the increase is not the 850 million or more that PPC will raise at 7.5 euros but the way in which the Greek state will be diluted as from 51% it will fall to 33% to 34%.
Capital increases should in no case be demonized, they are a useful tool for raising capital, but in practice every time an increase is implemented, the only one that loses is the Greek state, so the interests of the Greek taxpayer are affected.
PPC is another case where the state, ie the Greek taxpayer loses, while another path quite compatible with free market practices could be followed.
The example is given by the National Bank when it was listed on the New York Stock Exchange in 1999.
A dual model was used where a capital increase and sale of old shares was implemented.
In practice, the government could sell its shares, not just dilution – dilution – dilution and at the same time implement a share capital increase to increase the share base and raise new capital.
Allegedly some claim that PPC had to find funds, but this is hypocritical since it only recently sold 49% of HEDNO.
The solution would be to implement an increase of 850 million or more and at the same time the public with a parallel transaction to implement placement to allocate 17% to investors.
For 17% at present values ​​it could raise 300 to 320 million euros.
The argument that the public sector will gain many times over through a dilution-reduction of the percentage because new shareholders will be able to raise the share is a presumptive reason since PPC with the existing shareholding status of 4 was at 10 euros.
The valuation of the percentage of the state in PPC today is 935 million euros – with a percentage of 51% -.
After the increase, the percentage of the public sector will have fallen to 34% – statutory minority – and PPC will be valued at a total of 2.8 to 2.9 billion euros.
The percentage of the state at 34% will have a similar value, ie 950 million euros.
With the dual model of privatization, however, the state ensures that it optimizes the benefit for the Greek taxpayer.
Once again, advisers to the prime minister – they seduce Mitsotakis – with models of privatization where only individuals win and only the public loses, so the Greek taxpayer.
We have seen this model implemented many times and the permanent loser is the public.
No, we are not statesmen in any case, we clearly believe in the free market, but the Greek state cannot always lose.

A comparison message

On the occasion of our position that the public sector is losing from the privatization model but the small shareholders are also losing, we received a message comparing the capital increases of Piraeus and Alpha bank where in both cases the public sector – Financial Stability Fund – diluted dilution.
The message states….
“Alpha bank increased to 1 euro and Piraeus increased to 0.07 euros.
The price increase of Piraeus has a huge difference of 1.15 euros, but it was preceded by a reverse split of 16.5 new to 1 old share.
What does this mean;
Alpha bank today at 1.12 euros is 12% higher than its price increase to 1 euro and 18% above the beginning of the year.
Piraeus is at 1.40 euros almost 21% above the price increase but -93% since the beginning of 2021.
The old shareholders who did not put, did not want or did not have money were destroyed in Piraeus, while in Alpha bank they are winners even if they did not put money into the capital increase.
10,000 individuals were placed in the capital increase of Alpha bank and the increase was covered by 20% by a public offering in Greece.
Alpha bank has almost 5 times the number of shares from Piraeus with different range of private and institutional investors.
Alpha bank has also been upgraded to the MSCI standard index while Piraeus has not been upgraded. “

Draws for Attica bank

Today, September 28, 2021, it draws for Attica bank, since by 9 pm an investor must appear – who will not appear.
Such is the business downturn of Attica bank that changed strategy and from reports we are looking for a strategic investor, he tells the candidates, tell us what you want to invest in Attica bank.
Unfortunately, to date, Attica bank has not told the truth to investors and potential candidates.
Attica bank’s black capital hole exceeds 500 million euros.
The capital increase of 240 million euros is not enough and obviously investors should not be seduced by the reverse split; the real value of the share of Attica bank is zero.
The basic scenario wants the Financial Stability Fund to take the warrants that will be converted into common shares by acquiring 68% of Attica bank.
Then it will cover the capital increase of 240 million and in the next phase an investor should appear who again with an increase will contribute another 200-250 million euros.
Attica bank is a bankrupt bank in terms of capital but also as a business model.
Investing in capital growth today – unfortunately – is not developmental but comes to fill the negative net worth.
Some say that Attica bank has 187 million capital but the black hole is over 500 million opera means that its real capital is -300 million euros.
The black hole, the negative equity is -300 million so the capital increase of 240 million still maintains the negative net position.
In any case, 240 million is not enough.
The big revelation of bankingnews that if Attica bank broke the funding gap between assets and liabilities in the balance sheet in a good and bad bank would be 1.5 billion proves that Attica bank is a bankrupt bank.
It is recalled that the ECB has warned that from September 30 onwards it will cut off the supply of liquidity to Attica bank, which will return to ELA in the BoG’s emergency liquidity mechanism.
It is recalled that this is a very negative development as only insolvent banks return to ELA.

Source: https://www.bankingnews.gr

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