The Government of Greece in an attempt to diminish the market value of EYDAP, is ready to write off more than € 700 m of its, thus making it easier for the prospective buyers to acquire. At the same time part of the sums owed by several municipalities to EYDAP will be paid by the State; this way the citizens will have paid twice, as the sums that are to be covered through taxes have already been paid (to the municipalities) by those who received said water and sewerage services.

The CEO of EYDAP (Antonis Vartholomaios, who is apparently not concerned about his civil and penal liabilities) has already attempted to force the BoD cut down the sums owed by the Greek State to the Company but failed. Due to the resistance of several Board Members the issue will be referred to a Shareholders extraordinary Meeting. The Board Members that opposed said proposal were Bank and Union representatives as well as the TAIPED (Hellenic Republic Asset Development Fund – HRADF) one. The CEO has been forced to convene another meeting to which he is probably going to submit a similar proposal. Meanwhile the Government put forth an act to be discussed and voted by the Parliament whereby all its debts to EYDAP from 1999 on will be written off.

Memoranda Obligations of the Greek State

According to L 4179/2013 the Greek State will have to pay all it owes to EYDAP and EYATh before the companies are transferred to private prospectors. Such debts to EYDAP (services as well as the State’s share in investments and maintenance of the company’s network) amount to ca € 1,05 billion. Of this € 350 m have already been approved by Shareholders’ Meetings and legally entered in the company’s ledgers as claims, while the State has never offered (nor could it of course) any objection for the rest.

However the Government is trying to pay only € 350 m and write off the rest. In this they are assisted by the company’s CEO, who, after having failed to force the Board to decide on this, is referring the issue to the shareholders. Currently the majority (61,33% of the shares) is owned by the Greek State through HRADF. This simply means that the debtor of a company will decide as to how much and when of its debt shall be paid, while HRADF, which has the duty to sell the company’s shares in the highest possible price, will agree to lower its value by at least € 700 m. Still HRADF’s representative in the company’s Board expressed some concerns and hasn’t yet agreed to this.

Municipality Debts

At the same time (through art 52 of L 4186/2013, which deals with Education issues!) municipality debts to EYDAP are fixed to € 160 m, while interest and penalties over € 200 m have been written off. Such amounts however have already been collected from citizen consumers by the municipalities (and spent for altogether different matters) but will now be paid by the State, that is through taxes raised from these same citizens.

Note from SAVEGREEKWATER: To better understand how exactly the Greek government deals with the debts of the public sector towards EYDAP please refer to these two legislative moves before the calling of the general assembly of stakeholders of the company.

• The government proceeded in offsetting debts between EYDAP and the public sector through an amendment tabled by the ministers of Finance, Infrastructure and Tourism in the bill to reorganize the Tourism Organism EOT (31/07/2013). They also provided the power to determin any eventual debts until 30 June 2013 by Joint Ministerial Decision. This decision refers to debts by the State to EYDAP for infrastructure, construction of water projects of public entities, construction and maintenance of flood protection works, etc., and non-tax debts of the company towards the government.

• A joint ministerial decision (26/9/2013) the Ministers of Interior and Finance was issued to regulate the debts of first and second degree of municipalities to water companies EYDAP and EYATH. (FEK 2410B prot.n. 38560). This regulation refers to debts till the end of July 2013, totaling 162.3 million euros (about 150 million to EYDAP and about 13 million to EYATH) and it will be free from fines. The sum will be paid by the central government and will be deducted from each local government that created it, from their future revenues of state grants of the years 2015-2020.

The current capitalization of the company in respect of the fixed assets is (473/324 million euros) are at 39%, compared with the company’s equity (473/857 million euros) at. 55%.This image indicates that the value of the stock and the overall market capitalization is not responding to the real value of the company. From the financial statements of the first quarter of 2012 the net profitability of 5 million euros after removing taxes of 2 million euros approximately. The company, through its policy on requirements, lends indirectly regional organizations and the Greek public values of about 388 million euros. From the company’s investment plans the eight years 2000-2008 the Greek Government dues to the company grants worth 322 million euros. In EYDAP the Public owns 61,33% and capitalization reaching 475 million euros, which means that the value of public involvement is in 290 million.  This picture without further analysis shows the massive devaluation of the current value of the company. If someone bought it on the current value he would have bought it for free and would also receive a grant of 32 million euros (difference value caps and related grants).P.S. 10% of EYDAP’s share capital owned by ATE Bank SA has already been given for free to Piraeus Bank.

The above economic sata are based on the condensed published financial reports of EYDAP group on 31 March 2012

Here follows the translation in english  of the alterthess relative article

If EYDAP is sold, the purchaser should receive within 90 days the huge uncontested debts of the State and of the municipalities that were created decades ago. This will happen if the new owner simply proceeds in “legal proceedings against the debtor,” according to EU legislation”, mentioned in a statement from the press office of SYRIZA.

“These are derived from the response to the relevant Commissioner for taxation and opposition against fraud,” claimed Mr. A. Šemeta, when he was asked by a member of EEC Parliament of SYRIZA Mr. Chountis in relation to the State’s debts and municipalities to “EYDAP”.  Later the press office of SYRIZA added: “This reply is a bomb on the economics of government and the municipalities, which both owe 522 million euro (without supplements) to EYDAP. Simultaneously we can see the grotesque situation created by the sale of EYDAP that while they want to sell it for about 250 million euro, the new buyer from the first day can easily demand 522 million euro and surcharges that are confirmed debt. ”

On the question of Mr. N. Chountis which he notes that “the Greek government and municipalities are in debt to EYDAP (Corporate Body) hundreds of millions of unpaid invoices … and yet there are huge debts of the state to the company from grants for capital expenditures “, he asks the Commission to clarify whether  the Directives 2000/35/EC and 2011/7 / EU can be applied to these debts. These Directives provided in case of late payment in commercial transactions between businesses and public authorities, the payments are demandable directly by the company and its shareholders.

In his reply Mr. Šemeta, emphasizes clearly that “The Directive 2000/35/EC  Is abolished beginning from the 16 March 2013, by the Directive 2011/7/EU. Both Directives provide for the procedure of making out a practicable title to the creditor for the recovery of uncontested debts in case the creditor has commenced legal proceedings against the debtor. “

Here is the full question and answer:

Question N. Chountis

State’s debts to EYDAP (Corporation Body)

According to information the Greek State and Municipalities are in debt to EYDAP (Corporation Body) hundreds of millions of unpaid invoices.

Moreover, according to the same sources, there are huge debts of the State to the company from grants for capital expenditure in the period 2000-2010 and from the contractual obligation of the State to pay 60% of the capital costs related to the conservation, operation and expansion of water and sewerage system.

In view of the fact that in my question 008870/2011, the Commission responded that it had been given “detailed analysis of institutional characteristics and financial accounts of public corporations, as provided by the rules set out in the European System of Accounts (ESA-95) “, and given the Directive 2000/35/EC as reworded by the Directive 2011/7/EE taking into consideration the opposition against late payments in commercial transactions.

The Commission requests

Is it possible to inform us about the amount of debt the State has and the municipalities relating to outstanding invoices to EYDAP, for the outstanding grants and the amount of commitments for capital expenditure on water and the sewerage system?

For debts on unpaid services, the current legal framework provides, according to the Directive 2000/35/EC in addition to the reworded Directive 2011/7/EE considering the opposition against the late payment in commercial transactions, if the debts are due from the company and its shareholders.

Reply by Mr. Šemeta

The data for due debts of the Greek state and municipalities have been submitted to the Commission (Eurostat) by the Greek Statistical Authority at a mass level. This data has been submitted to Greek Statistical Authority by the Greek authorities and therefore should include any arrears of the state and municipalities in EYDAP (Water Supply and Sewerage of Capital). The Commission (Eurostat) does not collect data on arrears in individual companies.

The Directive 2000/35/EC is being abolished from the beginning of 16 March 2013, by the Directive 2011/7/EU. Both Directives provide for the procedure of making out a practicable title to the creditor for the recovery of uncontested debts in the case which the creditor has commenced legal proceedings against the debtor.