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Newsletter July 2013

INVESTMENT NEWS

ΜcDonald’s Continues to Invest in Greece

Premier Capital Hellas opened Greece’s third largest McDonald's store in Crete.

Premier Capital Hellas opened Greece’s third largest McDonald's store in Crete. Premier Capital is investing 400,000 Euro in Hersonissos. Maltese businessman Melo Healy owns Premier Capital Hellas, the official Development Licensee of McDonald's in Greece since June 1, 2011. According to the agreement, Premier Capital Hellas now operates 18 corporate stores in Greece—in Athens, Rhodes, Crete, Corfu, Zante, and Kos.

The new store in Hersonissos operates 24 hours a day. Premier Capital Hellas managing director Victor Tedesco said: "The investment of 400,000 Euro for the creation of a new restaurant is a testament that we believe in Greece, we support local communities and contribute in our own way to stimulate the economy and boost tourism."

Second Phase for Ports; Eleven Investment Schemes
 
The board of the Hellenic Republic Asset Development Fund (HRADF) announced the green light for a total of eleven investment schemes that will continue to the second phase of the competition for the use of marinas. The tender is for the operation, management and development of a group of ports that includes Alimos Marina, the tourist berth of Nea Epidaurus, part of Hydra port and part of the port and the tourist haven of Poros.

The following schemes are proceeding to the second phase, gaining access to the details and conditions of the tender procedure:

• Kasos Mortgage and Commercial SA "Kasos SA"
• Azimut-Benett Spa
• Global Liman Isletmeleria A.S.
• ATESE SA
• J & P Avax
• Majestic Marine Engineering LLC FZE
• Porto Carras SA
• Envitec
• Archirodon Group N.V. - A1 Yachting Treint Consortium Inc. - Technical Support SA
• Dogus Holding - Lamda Development
• Aktor Concessions - SA Mortgage & Tourism Management Vega - World Yachting Shipping Company

The development of marinas is part of the Nereides project and provides for upgrade (long-term lease) of 46 marinas located throughout Greek territory. Tenders for the upgrade of the tourist ports of Pylos and Chios and for the tourist ports of Argostoli (luxury marina), Lavrion (mega yacht marina) and Aretsou Kalamaria will be announced in the near future.


Chinese Consider Greece for PV Production

At least three of the major Chinese manufacturers of photovoltaic panels are looking at Greece for photovoltaic panel production.

Representatives of Yingli Solar, Huawei, and Canadian Solar met in Athens with Greek photovoltaic panel companies to examine the possibility of cooperation. Possible forms of cooperation range from production carried out on behalf of the Chinese, rental factories, and foreign companies as shareholders of Greek industries.

The European Commission decided in early June on provisional duties of 11.8% for imported solar panels from China for the next two months. From August 6, the Commission will impose on Chinese companies import duties that will range between 37.3 and 67.9%, if no agreement has been reached with China until then. For every company there will be a different rate, as opposed to current measures that are common to all Chinese photovoltaics.

Chinese manufacturers are seeking a solution on European soil. There have been talks with Chinese for the prospect of Greek factories to manufacture solar panels with raw materials from China. The plan (which can be adjusted to include existing Greek factories) is to import key components (solar cells and electronic parts) and assemble the photovoltaics in factories, in cooperation with Greek companies, either in Thriassion, or in the wider region of Central Greece, or the Peloponnese. These products will then be channeled to the Greek market and the rest of Europe that continues to show an upward trend in the photovoltaic sector.

Photovoltaic equipment assembly plants are capital rather than labor intensive. This means that the transfer of this activity from China to Greece will not cause a critical increase in production costs. On the other hand, the panels that will be produced on Greek territory will have the advantage of being European products and will not be subject to additional fees.

2.5% of MLS to Qatari Investment Company

An investment company in Qatar acquired 2.5% of Greece’s MLS Multimedia, from the major shareholder, John Kamatakis. According to the announcement, the transaction was carried out by Alpha Finance and involved 310,425 shares at 2.70 Euro each.

The agreement between the Qatari investment company and MLS provides for joint activity, following the acquisition, in the markets of Qatar and other Middle Eastern countries, to promote the entire MLS product range (browsers, mobile phones, interactive tablets).

For the next 12 months, the investment company has the right to acquire an additional 2.5% at the price the share will close on the day before the investment company chooses to acquire the additional percentage.


Dodoni Seeks Contacts in Russia for Expansion

Greece’s Dodoni Ice Cream Company has decided to teach Russians to eat Greek ice cream and is seeking contacts in the rapidly growing market of Russia and beyond. The company's management is in negotiations for an agreement, which in addition to the Russian market includes the market of Ukraine, to create of a series of Dodoni ice cream shops. Through geographical expansion in Eastern Europe, the company aspires to long-term sales abroad to represent 30% of its turnover, opposed to just 5% today. The company owns shops in Bulgaria and Cyprus and exports its products to the UK and Germany.

In the internal market, Dodoni owns a network of 85 branches and 118 smaller “shop in a shop” retail points and aims to strengthen domestic sales by partnering with Mondelez (formerly Kraft Foods) and Pharmaserve-Lilly, producer of the stevia sweetener Sweete. Through these partnerships Dodoni has introduced a new range of products and has further reduced the price of ice cream through special offers.

Eurobank Properties Announces Major Business Move

Eurobank Ergasias S.A. and Fairfax Financial Holdings Limited [based in Toronto, Canada] announced that their management teams agreed on the principal terms of a proposed transaction aiming to further strengthen their relationship, both as shareholders of Eurobank Properties S.A. and to broaden considerably the ability and resources of Eurobank Properties to become the leading real estate company in Greece and the surrounding region.

Key terms of the Transaction are: (a) Eurobank Properties would proceed with a share capital increase to raise c. €200 million with pre-emption rights in favour of Eurobank Properties’ existing shareholders (the “Rights”) at an offer price per new share of €4.80; (b) Fairfax would purchase Eurobank’s Rights at an aggregate cash consideration of c. €20 million and also exercise its own Rights, thereby by investing approx. €164 million, it will be increasing its participation to c. 42% (from c. 19% currently), while Eurobank would hold c. 33.5%, assuming that all other shareholders of Eurobank Properties will exercise their Rights; and (c) Eurobank and Fairfax would enter into a shareholders’ agreement that would allow Eurobank to retain management control of Eurobank Properties until 30 June 2020, while Fairfax would have representation in the board of directors of Eurobank Properties and customary veto rights for transactions of this type. This agreement shall be in force for as long as Eurobank’s participation in Eurobank Properties remains above 20%.

Prem Watsa, Chairman and CEO of Fairfax Financial Holdings said: “The Greek people have worked through tremendous hardship but we think the light is now visible at the end of the tunnel. We believe that Greece has taken significant steps towards addressing many of the key areas of its economy, thus encouraging foreign investment and creating a positive momentum that will foster increased employment and development in the country. Within this context, we have decided to strengthen our cooperation with Eurobank Properties and its parent Eurobank, one of the most prominent banks in Greece and in the region which has been instrumental in setting up and guiding Eurobank Properties during its first years of operation. Indeed, we believe Eurobank Properties to be one of the best run real estate companies in Southern Europe. The company has a strong real estate portfolio, strong earnings, significant growth prospects, and a top tier management team led by CEO George Chryssikos. George is a rare talent, not only in Greece but in the world of real estate investing. His tireless devotion to Eurobank Properties throughout the recent financial crisis is testament to his unwavering commitment to its shareholders, but also to Greece generally.”

Nikolaos Karamouzis, Deputy Chief Executive Officer of Eurobank, in charge of Eurobank Properties, said: “Eurobank has a strong track record in creating franchise value by implementing a clear strategic business vision through top-quality, independent management teams. We are now pleased to embark on a joint partnership with a long-term quality investor like Fairfax Financial Holdings, which has committed to invest approximately €144 million in a €200 million capital increase of Eurobank Properties. This is a vote of confidence to the country, its policies and to the company itself in challenging times. The proceeds from the capital increase, combined with the strong liquidity of the company and its low level of leverage, generate significant financial resources for future investments. This is a transformational transaction for Eurobank Properties, enabling the company to play a leading role in real estate privatisations and the commercial real estate market in Greece and in the region.”

The Transaction is subject to finalising documentation and obtaining all regulatory and other required approvals and is expected to close within the third quarter of 2013. Eurobank expects that the Transaction would further strengthen its capital position following its successful recapitalisation from the HFSF and its recent liability management exercise.

Eurobank Equities acted as financial advisor to Group Eurobank for the transaction. Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. Eurobank is a European banking organisation with total assets of €65 billion, offering universal banking services across eight countries.


Vodafone – Wind: 150-Million Euro Joint Investment

Vodafone Hellas and Wind Hellas are proceeding with the partial integration of their networks to create a new company, which will be staffed by employees from both companies’ technical departments. The aim of the two companies is the best use of existing networks and their development to better compete in the Greek market. The network integration is part of both companies’ efforts to reduce operating costs in a difficult period for the industry. Prime Minister Antonis Samaras met with the heads of the two companies, Mr. Persianis and Mr. Zarkalis, at the office of the Prime Minister, Maximos Mansion, where they announced to him their collaboration and the creation of the new company. According to sources, shareholders Vodafone and Wind will each own 50% of the new company, and both providers will develop the common network antennas and base stations.

The new company, expected to open in the fall, will be staffed by 250-300 engineers, backed by both mobile companies and will invest about 150 million Euro over the next two years in construction-related (55 million Euro) and telecommunications equipment (95 million Euro).

According to the two companies, the investment programme will have additional indirect benefits for other sectors of the economy, reaching 50 million Euro, as well as the creation of 650 new jobs, especially in the construction industry.


Invest in Greece Ombudsman

The Greek government, focused on creating the most business and investor friendly environment possible and responding to investor requests for a more streamlined and efficient infrastructure, has created the Invest in Greece Ombudsman, a service provided by Invest in Greece.

Read more.


Residence Permits to Third-Country Citizens

The Law “Creation of a Development Friendly Environment for Strategic and Private Investments” (4146/2013) of the Ministry for Development, Competitiveness, Infrastructure, Transport and Networks, facilitates the residence of investors in Greece through the granting of residence permits for executives of Strategic Investment projects.

In addition, third-country citizens (non-EU citizens) and their family members, who buy property in Greece, the value of which exceeds €250,000, may obtain residence permits.

Read more.