Cablegate: Subject: Greece Makes Significant Progress In

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ATHENS 002054

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN GR
SUBJECT: SUBJECT: GREECE MAKES SIGNIFICANT PROGRESS IN
PRIVATIZATION PLANS

1.(U) Summary: The GoG reaped 80 percent of its 2005
privatization revenue goal with last week,s sale of 52
million shares of OPAP, the Greek lottery/gambling company.
The OPAP sale is the first in a series of privatizations that
the GoG plans to accomplish by 2006. Other companies
scheduled to be privatized in 2005 are Olympic Airlines, OTE,
ATE Bank, and Emporiki Bank. In 2006, the Postal Savings
Bank and Athens International Airport are among the companies
the GoG plans to privatize. End Summary.

2.(U) The GoG made significant progress in achieving its 2005
privatization revenue goal of 1.6 billion euros in last
week,s sale of OPAP, the Greek soccer pool and betting
organization. GoG,s public offering of 52.45 million
shares, worth 1.26 billion euros, reduced the GoG,s stake in
the company from 51 percent to 34.5 percent. The revenues
from the OPAP sale are the most the GoG has ever earned from
a single placement of a formally state-owned company.

3.(U) The OPAP sale is part of the GoG,s 2005-2006
multi-million euro privatization plan intended to increase
competitiveness in the market and help Greece,s tough fiscal
situation. The most likely firm to be privatized next, and
the only one over which the GoG is relinquishing complete
control, is Olympic Airlines, Greece,s failing state-owned
air carrier. The GoG,s bidder-of-choice for the airline is
Olympic Investors, a U.S.- based investment consortium. In
the fall, the GoG also plans to float approximately 10
percent of its current 48 percent holding in OTE, the Greek
telecommunications company, on the Athens Stock Exchange.
This will be the sixth public offering of OTE, but the GoG
will continue to exercise enough minority control to
effectively block any management decisions with which it does
not agree.

4.(U) By the end of 2005, the GoG also plans to sell 31.36
percent of its 82.36 percent stake in ATE Bank (formerly
Agricultural Bank) and its remaining 9.46 percent stake in
Emporiki Bank so that it can meet its 2005 1.6 billion euro
privatization target. ATE Bank will be sold to
institutional investors at an estimated value of 250-300
million euros. The likely buyer of Emporiki Bank is the
French Bank Credit Agricole, which already holds an 11
percent stake in the company.

5.(U)Within the first quarter of 2006, the GoG plans to float
20-30 percent of the fully state-owned Postal Savings Bank on
the Athens Stock Exchange. The sale is worth approximately
400-800 million euros and issuance procedures are already
underway. Also slated for privatization in early 2006 is 25
percent of the GoG,s 55 percent stake in Athens
International Airport, a sale worth approximately 400 million
euros.

6.(U) COMMENT: The success of the OPAP privatization makes
it very likely that the GoG will achieve its 2005
privatization revenue target of 1.6 billion euros, one of the
key goals under its new EC-imposed austerity program. While
the GoG has not been entirely clear on whether it will use
the privatization revenue to reduce the deficit or pay down
its debt, now in excess of 116 percent of GDP, privatization
will provide benefits through increased competitiveness in
the market, improved firm efficiency, and increased
transparency and accountability. Although privatization
alone will not solve Greece,s deficit and debt problems, it
is an important part of their strategy in meeting their
Stability and Growth Pact obligations. END COMMENT.
RIES

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