Czech-Greek fund Emma Delta is planning to privately place 400 million euros of senior secured notes to finance the partial purchase of majority shares in Greece’s gambling monopoly, OPAP. Emma Delta Finance, a subsidiary of Emma Delta will offer investors two series on notes due 2017.
Emma Delta plans to up returns on equity
Officials familiar with the deal told Reuters that Emma Delta is capable of financing whole deals with its fund, but is looking forward to raising between 250 and 350 million euros through bonds to increase the returns on equity.
In May, the Equity fund headed by Czech investor Jiri Smejc and Greek businessman George Melissanidis announced it would acquire 33 percent of OPAP, which is the largest listed betting firm in Europe. Emma Delta agreed upon paying 652 million euros ($879.71 million) in total for OPAP.
The sale will most probably be completed in early October, after the European Commission gives approval. Emma Delta will pay 622 million euros upfront, and the remaining will be divided into equal annual installments over the next 10 years.
OPAP privatization essential for Greece
Greece will witness its first big privatization through the sale of its stake in OPAP, which is also essential for reaching the target of 1.6 billion proceeds for 2013 under the terms of its International bailout.
The main idea behind the privatization of OPAP was to collect funds to pay debt. The 240 billion euro bailout approved by Troika requires Greece to do away with some of its assets to collect funds for rescue programs.
Dan Loeb was also interested in OPAP
OPAP reported the highest profit in Greece, last year. Net income for the company came in at €505 million and posted a 49.2 percent return on equity. There are chances that the performance of OPAP will suffer as it is stuck into various hurdles including a legal battle against William Hill plc (LON:WMH), as well as regulatory glitches for its proposed video-lottery and online betting businesses.
In the past, there have been many potential firms who wished to buy a 33 percent stake in OPAP. Dan Loeb was one of those investors who showed considerable interest in the company. Loeb’s interest became evident when he announced earlier that his firm Third Point will roll out a Greece-focused hedge fund named Third Point Hellenic Recovery Fund.
Existing stakeholders in OPAP are Seth Klarman’s Baupost Group, who owns a 5.2 percent stake in the company, Fidelity Investments and Silchester Investments. Apart from these firms, the Greek government owns 34.4 percent stake OPAP.