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Lamda Development warns Greek State over obstacles in Hellinikon investment project

Just hours after Eldorado Gold announced it suspends it Skouries project in Northern Greece, another big investor, the Lamda Development, warns the Greek government over violation of terms of the agreement in Hellinikon investment project.

In a statement issued on Friday, Lamda Development states that

  • the unconventional decision of the Minister of Culture to declare in the Greek and new archaeological sites apart from those agreed upon by the agreement,
  • the restrictions imposed, again outside the contractual terms, on the height of the buildings and
  • a series of new sudden upheavals and inconsistencies

“disrupt the necessary climate of trust and create strong reflection on the feasibility of investing and multiple and reasonable questions”.

The reversals and inconsistencies and the constant creation of new obstacles, overturn the necessary trust between the parties and they raise concerns regarding the possibility of the materialization of the development, the investor underlines.

Lamda Development urges the Greek state stick to its commitment and warns all these obstacles “set the basis for a continuous and never-ending negotiation and violates the necessary trust between the parties.

Full Statement by Lamda Development

As per the recent Decisions of the Ministry of Culture regarding the delimitation of the archaeological area and the enforcement of sixteen (16) conditions for the Integrated Development Plan (IDP) to be approved, Lamda Development S.A. (the Company) announces the following:
Concerning the archaeological area
All the archaeological findings located within the site had been previously communicated to the nine (9) prospective investors that participated in the International Public Tender that took place in 2011. Subject findings resulted from the works that were conducted up to this point, both during the Airport construction and also during the deployment of the Olympic Games facilities, the Metro and Tram construction.
The result of the above mentioned works was the delimitation of the archeological area solely in the area of Agios Kosmas. The Company took all the above into serious consideration and included the listed archaeological findings in the development plan, aiming to protect and promote them, as required for an investment of this magnitude. Simultaneously, the Contract, as was ratified by the Greek Parliament in September 2016, includes specific arrangements in case of new archaeological findings, while at the same time the laws pertaining to archaeological monuments still prevail.

However, besides the fact that there are no new findings, the Ministry of Culture declared a new archaeological area.
Consequently, even if the first Contract (November 2014) and the Amendment Contract (July 2016) have been signed and ratified by the Greek Parliament in September 2016, the Company faces an unexpected change in the contractual agreed terms, which adversely affects the Integrated Development Plan (IDP).

This change essentially affects an integral part of the development, it escalates materially and in a non-predicable way the perils from bureaucracy, while it creates further significant obstacles and does not promote further investments.

The uncertainty from the above described situation is further worsened given that the Ministerial Decision practically cancels the already signed “Memorandum of Understanding” that had been previously approved by eleven (11) Ministers participated in the Government Cabinet of Financial Policy (ΚΥΣΟΙΠ).
With respect to the enforcement of sixteen (16) conditions on the Integrated Development Plan (IDP)
The Contract, ratified by the Greek Parliament explicitly mandates as a prerequisite for the transfer completion of the shares of Hellinikon SA, the approval of the Integrated Development Plan “ in the exact form as was submitted” by the Company during the Public Tender process. The Ministerial Decision imposes sixteen (16) new conditions. Thus, further overthrows, gaps and ambiguities are being raised and set the ground for future arbitrary interpretations of the law (irrespective of their origin).

It is obvious that the investment cannot be materialized as long as continuous setbacks and new obstacles lead to amendments in the Development Plan in various ways that are not provisioned in the Contract.

More specifically, the Ministerial Decision includes terms and conditions pertaining to buildings’ height constraints. While the legislation based on which the Development was designed, allowed for the construction of a significant number of tall buildings, with no height constraints, the Ministerial Decision demands the review of the buildings’ height and thus alters the commitment of the laws to the Investors. It is important to mention that the tall buildings of the envisaged development constitute one of its landmark elements, aiming to render Athens into a major modern tourist destination.

As expected, all the above-mentioned reversals and inconsistencies and the constant creation of new obstacles, overturn the necessary trust between the parties. Simultaneously, they raise concerns regarding the possibility of the materialization of the development, the necessity of which is officially declared by the State and it is undoubtedly regarded crucial from all parties.
In conclusion, the Company remains committed to the signed contractual documentation with the Greek State. The Company has no other option but to require the necessary commitment from the other parties since this constitutes the only safe roadmap for the satisfaction of all the prerequisites and the Project launch. The continuous overturn of the already agreed and ratified by the Greek Parliament framework, and the new obstacles raised, set the basis for a continuous and never-ending negotiation, violates the necessary trust between the parties and further raises arguments for a series of matters. – source

The multi-billion privatization project at the premises of the old Athens airport Hellinikon along the Athens Riviera was one of the lenders’ first bailout preconditions to debt-ridden Greece. The project has suffered from several delays, as mentioned in the above statement. Many Greeks consider that the premises were sold at a spot price.

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