PPC to securitise 1.5 bln in arrears to raise 300 mln in extra liquidity

The Public Power Corporation (PPC), Greece’s main electricity utility, intends to immediately proceed with the securitisation of arrears amounting to 1.5 billion euros in order to generate more than 300 million euros in liquidity and better manage debts to the company.

PPC Chairman and CEO Manolis Panagiotakis, speaking on Monday, said that the company intends to set up two special-purpose-vehicle (SPV) companies for this purpose, to which it will transfer two categories of arrears based on the length of the delay in payment, with the first getting debts up to 60 days in arrears and the second those that are more than 90 days in arrears.

According to PPC executives, these debts will act as the basis for the issue of a bonds (possibly of three-year duration) from which PPC hopes to raise between 20-25 pct of the estimated value of the arrears, which in this case will exceed 300 million euros.

The plan also provides for active management of the arrears portfolio with the hiring of a consultant that will undertake to collect the debts. The PPC has already taken steps in this direction by hiring the company Qualco to implement solutions for improving revenue collection.

According to sources, the sums from the collection of arrears will be used to cover the interest and the principal on the bonds. Alternatively, to the degree that some arrears are collected, a solution may be adopted where some of the arrears that are not included in the initial phases are transferred to the SPVs.

The amount of arrears owed to PPC in 2018 was 2.433 billion euros, down from 2.536 billion euros in 2017, according to a briefing given by PPC staff to analysts during a presentation of the previous year’s results. A reduction of 250 million euros came from the collection of debts from active clients while arrears owed by former clients (companies that have ceased operating, holiday homes where the power has been cut and consumers that have transferred to other suppliers) increased by 157 million euros.

Talking to the Athens-Macedonian News Agency (ANA) on Monday, Panagiotakis said that action to reduce arrears was among those planned to boost PPC’s liquidity and return to profitability in the current year. Others include the abolition of costs for covering the deficit of the special account for renewable energy sources, reducing the amount of PPC’s lignite-coal and hydroelectric production that is sold through auctions and revenue from the sale of lignite-coal plants at Megalopolis and Florina.