April 22, 2013 / 4:21 PM / 4 years ago

Greece seeks higher offer in gaming group OPAP sale

ATHENS (Reuters) - Greece is seeking a higher offer for the sale of a stake in gambling monopoly OPAP (OPAr.AT) after a Greek-Czech investment fund made a bid of 622 million euros ($810.50 million), less than the company's market value.

The sale of a 33 percent stake in OPAP, Greece's most profitable company, is considered a test case for a privatization program under the country's international bailout.

But the sale attracted little international interest, highlighting Greece's economic problems and uncertain prospects for OPAP, which faces tax rises and whose monopoly is being challenged.

Emma Delta, the sole bidder, made an offer of 622 million euros, officials with direct knowledge of the sale told Reuters on Monday. Greece then gave Emma Delta until Thursday morning to raise its offer, two officials close to the talks said.

The fund is backed by Czech investor Jiri Smejc and Greek ship-owner George Melisanidis. Helvason, a firm controlled by Greek businessman Dimitris Copelouzos, is also part of the joint bid. Greece had earlier received only two binding bids for the stake, which has a market value of about 740 million euros ($964 million).

Emma Delta's only rival, U.S. activist investment fund Third Point, was disqualified on Monday because it insisted on a right to re-sell its shares to other investors at any point in the future, another official close to the sale said.

The privatization agency confirmed Emma Delta was now the sole valid bidder and that it was seeking a higher offer from it. Emma Delta declined to comment.

Athens has been slow to move on privatizations since its initial European Union/International Monetary Fund rescue in 2010. The pressure is on Greece to show its international lenders it is speeding up reforms and can meet a 2.6 billion euro target in proceeds from state asset sales this year.

OPAP is supposed to account for a large part of that target and any shortfall would mean that the EU and the IMF would need to stump up more money to cover Greece's funding needs.

IMPROVED OFFER

Greece's advisors National Bank and Deutsche Bank have estimated the value of the 33 percent OPAP stake, plus management rights, at 610 million euros and an independent advisor at a minimum 650 million, one of the officials said.

Emma Delta's offer represents a discount of 16 percent based on OPAP's closing share price of 7.08 euro on Monday. Another official close to the sale said that privatization agency would ask for an improved offer exceeding 650 million euros.

"We will definitely not sell below 650 million," the first official said.

Shares in OPAP have gained 30 percent so far this year, outperforming Athens bourse's general index .ATG which rose 2 percent in the same period.

But the country's debt crisis since 2010 has hurt the stock. OPAP's total market value has dropped to about 2.2 billion euros from an all-time high of about 10.5 billion euros in 2006.

Greeks are still among Europe's most ardent gamblers, despite the crisis. OPAP is free of debt and Greece's most profitable company by far, with a return on equity ratio of 49.2, according to ThomsonReuters data. It generated free cash flow of 531 million euros last year, according to Thomson Reuters data.

But the company's outlook is uncertain. Analysts expect future profitability to be hit by a 30 percent tax on gross gaming revenue that the Greece's government introduced in January. Net income in 2013-2016 is expected to shrink 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 could be also at risk 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. ($1 = 0.7674 euros)

Reporting by Harry Papachristou and Angeliki Koutantou; Editing by David Goodman and Jane Merriman

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