Olympic Privatization Process Completed

The Hellenic Republic has announced this morning that Olympic Air, the new Greek flag carrier resulting from the privatisation of certain key assets of Olympic Airlines, has taken its inaugural flight as a 100% privately-owned airline.  The Hellenic Republic has also confirmed that all three privatisation transactions with Marfin Investment Group (“MIG”) involving assets of Olympic Airlines (“OAL”) and Olympic Airways Services (“OAS”) were successfully concluded by 30 September 2009.

The closing marks the end of the chapter stretching back many years which has seen the Hellenic Republic and OAL/OAS targeted by multiple European State aid investigations and the subject of court proceedings before the European Courts.  To resolve these legacy issues, the Hellenic Republic reached agreement with the European Commission on the structure of a sale process by which certain assets of OAL/OAS could be sold to a private investor in order to maximise their value (compared to a straight liquidation of the companies), while ensuring that neither the private investor, OAL/OAS nor the NewCo’s to which the assets were transferred would receive new aid or inherit any residual State aid liabilities of OAL or OAS.

The Commission’s approval came after intensive negotiations led by European legal counsel to the Greek government and Olympic Airlines/Olympic Airways Services: Howrey, LLP in Athens, Brussels and London.  On 17 September 2008 and 10 March 2009, the European Commission adopted landmark and precedent-setting decisions authorising the privatisation processes that concluded this morning. 

Successful privatisation plan

The Commission-approved sales process provided for the carve-out of certain assets from OAL and OAS, and their subsequent transfer to three “NewCos”: “Pantheon” (now renamed “Olympic Air”), which involves certain flight-related assets; “Ground Handling NewCo” (now “Olympic Handling”), which involves the sale of ground handling assets, and “MRO NewCo” (now “Olympic Engineering”), which involves certain assets related to maintenance, repair and engineering facilities.  These new companies would be immediately privatised via direct negotiation processes underpinned by independent asset valuations.  The structure of the process was designed specifically to ensure that the new entities would not “inherit” any residual State aid liabilities. 

At the same time the approved restructuring process safeguarded the continuation of the provision of essential public service obligation routes and ground handling services at outlying Greek islands, taking into consideration the specific circumstances of the present case, the specifics of the aviation sector, regulatory constraints and those of the Greek market with its particular geography.

On 9 April 2009, the Greek Parliament approved the privatizations of certain assets of OAL and OAS based on the three Share Sale and Purchase Agreements signed with private investor MIG on 23 March 2009.  Thereafter, Initial Closing occurred on 30 April 2009 with the signing of the Shareholders Agreements for each of the three NewCos.  Since then, the assets in question have been successfully transferred to the relevant NewCos in advance of the Commission’s deadline for doing so of 30 September 2009.

Howrey advised the Hellenic Republic, OAL and OAS on all European and State aid aspects of the privatisation process, from the stage of the design of the structure of the process and its notification to the Commission, during the tenders and the direct negotiations with MIG and throughout the Transition Periods. 

Howrey partner Paris Anestis, long-standing advisor to the Hellenic Republic and OAL/OAS, said: “It is a considerable achievement to have completed the process within the set deadlines and in conformity with the requirements of the Commission’s decisions, especially in the current difficult economic, financial and political context. In close cooperation with both the Greek government and the airlines we managed to ensure that the Hellenic Republic complies fully with its obligations under the Commission’s approval decisions specifically, and with EU and State aid law in particular.”

Team of advisors

The Howrey team was led by partner Paris Anestis in Athens and Brussels, supported by Brussels partner Julie Gabler, and associates Sarah Jordan, Marixenia Davilla, Dimitri Vallindas, Konstantina Strouvali, and Louise Rabeux in Brussels and London.

In Greece, Bernitsas law offices advised on corporate and regulatory/aviation issues, led by Notis Bernitsas, and supported by Katia Papantonopoulou, Athanasia Tsene, Smaro Anagnostou and Dionysios Tsiros. 

In the UK, Michael Holter and Timothy Corbett from WilmerHale advised on the negotiation and finalization of all corporate contracts with the bidders and finally with MIG.

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