Ten years ago, reorganization agreements based on Section 99 of the then bankruptcy code exploded. For example, in 2012, which was the fourth year of recession for the Greek economy, a significant number of businesses were on the brink of viability, with virtually no cash and marginal profitability. During the financial crisis, companies tried to implement restructuring plans, but they only managed to buy time before they disappeared. Although the Great Purge took place mainly in the 2009-2019 decade, subsequent years, despite improved economic growth, years of liquidity problems and, in some cases, chronic mismanagement, brought once-big companies to the brink of death. the end. Their management, which may have changed as happened at Folli Follie, is hoping for a second chance. The reopening of troubled businesses has a direct impact on the country’s production model, a typical example of which is the consolidation of the Elefsina shipyards. It is estimated that the shipbuilding industry, which represents more than 1,500 companies and more than 200,000 employees, could have a value added of 16.5 billion euros to GDP. But there are plenty of obstacles. For Folli Follie, for example, the implementation of the reorganization plan requires the trial of its former executives and other defendants on a number of offenses, but this has been postponed to the summer of 2023. As a result, in addition to a possible statute of limitations on the portion of the timeline between alleged indictments, there is a risk that the Folly Folly restoration project will be derailed. But what companies are trying to start over?

With obstacles to the implementation of the consolidation plan

Consolidation of Folli Follie has become more complicated after the decision of the 5th three-member Court of Criminal Appeals to postpone until June 19, 2023 the trial of former company executives and others facing a number of crimes. We are talking about the actions of a criminal organization, whose actions, according to the materials of the case, caused damage estimated at more than 400 million euros. How will the delay affect the company? It is delaying the completion of the trial (in the first instance) by at least a year and a half, by “freezing” and releasing €28 million worth of property and €3 million of Folly Folly’s bank accounts, its representatives recently said.

Property and bank accounts were frozen in pre-trial criminal proceedings under Law 4557/2018 (against money laundering) and their release is a key condition for the implementation of the Folli Follie reorganization agreement. However, in addition to the risk of failure of the company’s reorganization plan, the statute of limitations for crimes against the protagonists of one of the largest Greek business scandals cannot be ruled out. Defendants Dimitris and Tsortsis Koutsolioutsos have been at large under restrictive conditions since February 2022, since the maximum period of temporary detention of eighteen months has been exhausted. Three years have passed since the initiation of the criminal case, and the decision of the judiciary looks uncertain whether it will be made this year, until a formula is found according to which the court should be appointed before the summer.

The strategic goal is to increase sales.

DI Fidas aims to further bolster its growth momentum through a consolidation agreement, which will again be discussed in the multi-member Court of First Instance of Athens on 8 February. The settlement plan was discussed in May 2022, but the court did not make a final decision, requesting an additional opinion on a number of issues. The ratification of the reorganization agreement will allow the company to repay loans in the amount of 8.7 million euros, combined with the cancellation of debts and liabilities to suppliers and creditors for a total of 13.5 million euros. The strategic goals of the company, which has a turnover of about 6.5 million euros in 2022, include strengthening commercial activities and sales through traditional and electronic channels, with a focus on the Boxer brand. The company was founded in 1919 by Ioannis Fidas, who made handmade leather shoes in Kalamata. In 1968, the company became anonymous (D.I. Fidas), in 1970, exports to Europe began, and then to Russia, America and England. This was preceded by the construction of the company’s first plant in Lambrini (Ano Patisia) in 1961 and a second plant was built in Acharnes in 1974. The company built a third plant in Acharnes VIPE in 2006, and liquidity problems began in 2010.

Re-operation of the plant is in its final stages

A hearing is scheduled for Feb. 15 on the Elefsina Shipyards consolidation agreement, the ratification of which will result in the re-operation of the unit by ONEX Shipyards & Technologies in cooperation with the Italian shipbuilder Fincantieri. The creation of two new companies (Commercial and Defense) is envisaged, which will take over the transferred assets and liabilities of the shipyards.
A commercial company (Onex Elefsis Shipyards Industries), to which a significant part of the shipyards’ assets will be transferred, is expected to receive investments of up to 170 million euros after the transfer. They will be obtained through funding from the US Development Bank (DFC) and Onex equity capital of between 20 million and 80 million euros.

The defense company (Onex Elefsis Naval Maritime) will be actively engaged in the construction of warships for the Greek and foreign defense industries. In this direction, in the middle of last month, ONEX Shipyards & Technologies and Fincantieri signed an agreement to establish a line for the production and maintenance of corvettes at the Elefsina Shipyards shipyards. Modern and high-tech 2 + 1 corvettes will be built, and the project budget will be 80 million euros.

It is also envisaged that of the total debt of 432.7 million euros, about 212 million euros will be transferred to new companies. The liabilities transferred include liabilities to the Navy in the amount of EUR 142.3 million. The total debt of €220.7 million remains with the company as a non-transferable liability and is settled from proceeds from the liquidation of assets that will not be transferred. It is estimated that the reopening of the Elefsina shipyards will generate an additional 1.1 billion euros in revenue for the state over 25 years from direct and indirect taxes, as well as from insurance premiums. It is estimated that the shipbuilding activity in Elefsina will bring liquidity of 1.6-1.8 billion euros for domestic suppliers and the Greek industry.

Into a new era with the GEK TERNA scheme – AD Holdings

This year, LARCO’s consolidation plan will be rolled out, which, according to the law, is based on two pillars. Appointment of a special manager who held a tender for the transfer of the assets of the ferronickel producer. And the tender held by TAIPED for the lease of smelting facilities in Larimna Fthiotis and the Luciu mine in Viotia. Last week, the GEK TERNA-AD Holdings scheme became the preferred investor in a special tender for management, and in November also won the Privatization Fund’s tender process for the lease of mines. The new owner, by law, will receive the plant and mines without obligations and without workers, giving them five years to modernize and bring the industry into line with environmental standards. Sources in the market estimate the volume of investments required for the modernization of metallurgy, the overdue debt of which exceeded 500 million euros, at more than 200-300 million euros. The “new” LARCO will continue nickel production and iron ore mining, which is especially important for changing the country’s production model. The company is the only ferronickel producer in the European Union with nickel-cobalt reserves of at least 20 years. Ferronickel is used in the production of stainless steel, which is in growing demand worldwide.

Glafka Capital fund plans subject to approval

The next period is also critical for casino consolidation in Rio and Alexandroupolis, as the Theros International Gaming and Vivere Entertainment Emporiki and Participation consolidation agreements are due to be heard on February 7 and 8, respectively. The business plan, drawn up by Greek-interested British investment fund Glafka Capital, which bought the two companies’ bank loans, calls for capital gains, a voluntary exit, a transfer of assets to new companies and a significant write-off of debt. At the Rio casino, after the restructuring of Theros International Gaming, creditors will receive a total of 26.6 million euros, or 11% of all debts, an interest that would not exceed 0.3% if the company was brought to bankruptcy. At Alexandroupolis Casino (Vivere Entertainment), the total amount of creditors’ claims is 192 million euros, of which 129.3 million euros are liabilities acquired by Glafka Capital. Lenders will collect a total of 19.6 million euros or 10.2% of claims. The fund will carry out a €4 million and €1.1 million capital increase in the casinos of Rio and Alexandroupolis, and will proceed with the capitalization of loans (debt to equity) in the second phase. It remains to be seen if the gap between investors and workers will be closed by next week when settlement deals are discussed.

Waiting for a decision on restructuring

The Kastaniotis publishing house is awaiting a court decision on the approval of the reorganization agreement. The restructuring plan provides for a significant reduction in liabilities, which are placed for approximately 14 million euros and covered by 37.14%.
Systemically important banks will be satisfied at a rate of 24.04%, while the repayment of loans to them will occur within 18 years. The company will pay 100% of its obligations to insurance funds and AADE, as well as to employees. In addition, the consolidation plan foresees that Kastaniotis Publications will increase the share capital by 300,000 euros, and the sales volume in 2030 will be 2.8 million euros. Average annual sales growth is set at 5% for 2023-2024 and 2.5% for 2025-2030.

The blow dealt to the book industry during the years of the economic crisis and the low penetration of books into Greek households are the main causes of the financial problems of the publishing house, which date back to 1968. It is significant that in the survey conducted by dienosis (April 2022), 33.6% of participants stated that they had not read a single book in the last 12 months, and only 9% of them reported that they had read more than 10 books in a year.