OPAP parent to take € 50 mln stake in Hellenic Bank capital raise

Gaming giant OPAP’s parent company, the Czech-based Emma Group, is to take a EUR 50 mln stake in Hellenic Bank’s upcoming rights issue, with the total amount of EUR 150 to fund the acquisition of the ‘good assets’ of the Cyprus Cooperative Bank.

Explaining the complex cross-holding scheme, Hellenic Bank announced last week that it entered into a subscription agreement with Emma Group subsidiary Emma Alpha Holding Ltd., with the latter “committed to subscribe for shares up to a total amount of EUR 50 mln that are not subscribed for by shareholders of the company in the upcoming pre-emptive rights issue.”

Hellenic Bank added that “the pre-emptive rights issue forms part of the … planned capital raise of approximately EUR 150 mln relating to the acquisition of a business comprising certain assets and liabilities of the Cyprus Cooperative Bank Ltd.”

The capital raise was approved shareholders’ meeting on Wednesday.

The bank’s announcement said it “intends to strengthen its capital position following the acquisition with the capital

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extraordinary raise, of which approximately EUR 100 mln will be via a preemptive rights issue and approximately EUR 50 mln will be via a private placement to Poppy Sarl, an entity ultimately owned by funds whose investment manager is the Pacific Investment Management Company LLC (PIMCO) or an affiliate thereof.”

Hellenic added that as part of the rights issue, it has already entered into a subscription agreement with major shareholder Demetra Investment Public Ltd., whereby Demetra has agreed to subscribe for its pro rata share of the rights issue and, in addition, for any shares not subscribed for by other shareholders in exercise of their pre-emption rights. At the conclusion of the rights issue, Demetra’s stake is expected to be no more than 20.09%.

The announcement said that Demetra also has an obligation, if required, to acquire additional unsubscribed shares in the rights issue, so that its total contribution in capital raise is “up to EUR 50 mln”.

Hellenic also said that it has an obligation to pay Emma Alpha a commission of 4.5% on the amount of EUR 50 mln irrespective of whether Emma Alpha subscribes or not. Depending on the percentage of the rights exercised, Emma Alpha’s shareholding in the bank will range between 0% and 17.3%.

Emma Alpha is a wholly owned subsidiary of Emma Capital Ltd, an international investment group focusing on Europe, CIS and Asia. Emma Capital has a diversified range of investment activities, with primary focus on consumer finance, lotteries and natural gas distribution. In 2012, Emma Group, through the investment fund Emma Delta, joined a public tender for the privatisation of the Greek government’s stake in OPAP and together with its partners it won the tender and acquired a 33% stake, thus becoming the majority stakeholder.

On the board of Emma Group is Demetris Aletraris, CEO of OPAP Cyprus, who joined Emma Group immediately after its founding in 2012 and became Managing Director of Emma Capital Ltd. The Emma Group also has a 25% stake in SAZKA is the largest lottery and gaming company in the Czech Republic, holding a 95% share of the lottery market and a 90% stake in Premier Energy, a major distributor and supplier of natural gas in Romania.