Greek Public Power Company PPC at risk of “sudden death”, stocks -17.32%

Public Power Corporation is in a state of emergency, with the utility’s management currently engaged in a desperate effort to secure 300 million euros in cash in the next 10 days, which would avoid the activation of clauses forcing the immediate repayment of loans due.

According to daily kathimerini, at a recent meeting chief financial officer Alexandra Konida informed PPC’s management about the problems that have arisen in the corporation due to the very negative financial results in the year’s first quarter. According to sources, she raised the question of PPC meeting its obligations to suppliers, contractors and market entities after August.

Konida is said to have promptly informed the PPC management of the need for measures to strengthen the utility’s finances in the first quarter of the year with a sum of 300 million euros, saying that without that, measures of 600 million euros would be required in the second quarter.

The PPC administration, which operates under the close monitoring of Energy Minister Giorgos Stathakis, ignored both Konida’s warnings and those last year by McKinsey about the sustainability of the utility; instead, PPC’s management has shelved the streamlining plan the international consultancy delivered with the approval of the board, kathimerini stresses.

All this is taking place against the backdrop of last year’s dire financial results, with losses of 903.8 million euros, while this year’s first quarter appears to have ended with losses of 254 million euros and negative earnings before interest, tax, depreciation and amortization (EBITDA) of 80 million euros.

In a bid to pass the problem on to the next government after the July 7 election, the management is scrambling to achieve two key objectives: The first concerns the improvement of EBITDA so that the banks cannot activate the key clause for the loan repayment, and the second involves improving liquidity so as not to see a further deterioration in the company’s response to financial obligations to suppliers and contractors – which would also trigger a bank demand for the full repayment of loans.

The PPC did not dismissed the media reports but it was Energy Minister Giorgos Stathakis who accused New Democracy of “wanting to harm the government before the elections and to prepare the way for the full privatization of the PPC.”

However, late in the afternoon, PPC issued a statement saying that “there is no evidence and estimates that PPC is urgently seeking €300 million or that the security of supply to the islands or in general is at risk.” PPC Press Release here in Pdf (Greek)