A key issue is the legality of the Promsvyazbank letter of credit

Crucial questions arise on Thessaloniki Port concession

Crucial questions arise on Thessaloniki Port concession


A series of pressing questions have arisen regarding the awarding of the Thessaloniki Port concession, ahead of a new deadline for the submission of a letter of credit from the consortium that won the tender, in which Pontian Greek-Russian businessman Ivan Savvidis has a major stake.

The Hellenic Republic Asset Development Fund, which is responsible for the privatisation, in a statement on the postponement cited the decision of Russia’s Central Bank to place under its control the failing bank that issued the letter of credit for the consortium, the Russian Promsvyazbank.

“Russia’s central bank may have to sink up to $3.4 billion into its bailout on Friday of Promsvyazbank, the country’s 10th largest private lender, the third such rescue this year,” Reuters reported on 15 December.

The entire transaction has raised a series of legal and financial issues, and US Ambassador to Athens Geoffrey Pyatt also raised questions about the transparency of the funding sources of the consortium, which is comprised of three legal entities: Deutsche Invest Equity Partners GmbH, Ivan Savvidis’ Cyprus-based Belterra Investments Ltd., and Terminal Link SAS., which in the April tender acquired 67 percent of the port until 2051.

Under the terms of the concession, the consortium must pay 231.9 million euros and invest an additional 180 million euros over the next seven years.

Nagging questions

A key question that arises is the legality of the Promsvyazbank letter of credit, given the European Union embargo on transactions with Russia, after its illegal annexation of Crimea.

A European Commission Guidance Note on the implementation of the Russia sanctions regulation, issued in December, 2015, states that “payment services and issuance of letters of guarantees/credit constitute financial assistance and are prohibited when linked to the underlying commercial transaction subject to a ban under Article 2a”.

The letter of credit was presented in April, when it was announced that the file of the winning consortium would be submitted to the Court of Audit, which is responsible for auditing contracts of large financial contracts entered into by the state.

It is unclear why the problems with the letter of credit and the banking institution that issued it were not identified earlier.

Another question is whether the 232 million price tag was overvaluated and what were the ramifications of that. The day the deal was announced, the Thessaloniki Port stock price soared from 19 to 34 euros per share, including the premium.

When the deal was initially to have been signed, the share price was 24 euros, and investor made a 30 percent profit in only eight months.

Sources familiar with the deal say that if a proper letter of credit is not submitted by tomorrow, or if it is deemed to be unacceptable for any reason, then all bets are off.

In that case, it is unclear whether The Hellenic Republic Asset Development Fund will invite the second highest bidder to sign, or if a new tender will be proclaimed.



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