LONDON: Egyptian billionaire Naguib Sawiris will struggle to pull the same rabbit from the hat that last year left him in control of ailing Greek telecoms group Wind Hellas at the expense of creditors.
Greece’s third-largest mobile phone operator needs new money barely nine months after junior lenders lost more than €1 billion ($1.3 billion) of debt in an earlier restructuring, hit by economic turmoil in the country.
This time round, sources familiar with the situation say a bondholder revolt threatens to derail plans by Weather Investments — the vehicle through which Sawiris owns Wind — to stay in charge of the company, which is up for sale.
"They are basically having the same discussions as we had a year ago, which is likely to see the owner put in a tiny amount of equity and wiping out the least secure debt," said one of Wind Hellas’s former junior note holders.
Wind Hellas declined to comment.
Weather was able to buy back the telecoms group last year, as well as shave off €1.1 billions of debt in what is known as a pre-pack administration — a sale with a twist, in which the company is bought out, minus a chunk of debt.
The pre-pack deal was possible only because Wind Hellas’s parent company, Wind Hellas II, had set up an office in London, leading out-of-pocket lenders to publicly blast the UK as a "bankruptcy brothel."
Incumbent owners often become the winning bidders in pre-pack administrations, and Weather was able to buy back the telecoms group, putting in €125 million.
The group, which boasts 5.5 million customers in Greece, is up for sale again, after it was forced to secure a standstill with lenders in July to avoid missing debt payments.
Other frontrunners
But this time, senior lenders are fast becoming the frontrunners in the race to take over the company. Just as Weather did, the group of senior secured lenders would have then to fight it out with investors further down the creditor hierarchy.
Unsecured creditors — who are lower down in the capital hierarchy and are holding €355 million of debt — are likely to lose out in any new restructuring negotiations, according to sources close to the lenders.
"The value breaks with the senior secured lenders," said a source close to the talks. This would mean that the senior lenders also might need to foot some of the bill.
But they are likely to be less amenable than ever before to a deal with current owner Weather.
Senior secured lenders hold the biggest portion of Wind Hellas debt through just over €1.2 billion of bonds — making them key backers of any restructuring proposal — and their bid looks serious.
By Wednesday, a committee of these creditors was set to give up trading their Wind Hellas bonds in order to gain access to private information about the company, the official close to the restructuring said.
Another source close to noteholders added that senior secured creditors were in "the best position to take control," possibly through a debt-to-equity swap, and potentially alongside a cash injection from a new investor.
But there are four other investment consortia vying for Wind Hellas ahead of a Sept. 15 deadline, the source said, and senior secured lenders might also end up backing one of those if they don’t want full ownership of Wind Hellas.
But another protracted showdown with unhappy creditors is almost certainly on the cards, with any sale, according to the same source, likely to be completed through yet another pre-pack administration. –Additional reporting by Simon Meads
