Greek banks to rescue retailer Marinopoulos with a €360mn loan

Greek banks and retailer Sklavenitis have apparently agreed to throw a floating ring to retailer Marinopoulos that is sinking in debts thus risking 12,500 work places.

The Alpha Bank has reportedly given the green light for the rescue deal today, short after a similar decision by the EFG Eurobank. Both banks have unanimously approved the company’s rescue plan, while similar decisions are expected to be taken tomorrow, Thursday, by the Pireaus Bank and the National Bank of Greece.

According to the rescue plan leaked to the media:

1. The banks will provide the new company with a €360 million loan of a ten-year duration at a low interest rate of 1.5%. Most of the repayment will be done towards the end of the loan maturity.
2. The banks will reserve the right to swap the loan and acquire 25% of the new company.
3. The new company will have a new Tax registration number (AFM) and will be owned by Sklavenitis at 100%.
4. Apart from the loan that will be given with Sklavenitis’s guarantee, the Sklavenitis  will provide €125million ‘new money’. In first phase, €15million and €60million when the deal is sealed and another €50million in 2017.
5. The total capital of €485 million will be used as working capital and for the partial payment of suppliers.
   
6. However, debts to suppliers will be cut at a rate estimated to reach 40%-50%.
   
7. Payments to the state and the social security funds will be in full without cut.

The rescue of Marinopoulos will be done via Article 106B of the Bankruptcy Code.

In media reports, it is not clear whether Sklavenitis will take new loans to finance the new company.

In July, Marinopoulos was granted temporary bankruptcy protection, the company has until September 21st 2016 to find a solution.

The Company with 700 stores across the country is said to owe more than 1 billion euro.

Citing the company’s economic data from 2015, Greek media reported end of June  that Marinopoulos that debts mounting €1.3 billion. “Obligations to the state are 100 million, to tax authorities 49 million and to social security funds 51 million. Loans from banks and other companies are 337 million and obligations for leasing 159 million. Debt to employees are some 4.4million”.

PS If I understand right, the rescue plan for Marinopoulos will be half a billion euro in times of austerity, recession and lack of liquidity. The banks will rescue the indebted company, keep the work places for 12,500 people and cut the company’s debts to suppliers by up to 50%.

Then one day, the Marinopoulos/Sklavenitis workers and their suppliers,  and all other Greeks will be called to save the banks that saved the company that saved the jobs that saved…. Ops! THIS has happened already!