The Hellinikon contract – Background
The International Tender procedure for Hellinikon commenced in 2011. The contract, which provided for the transfer of the shares of “Hellinikon S.A.”, was signed in November 2014. The contract specified that within 2 years (November 2016), the transfer procedure should have been completed.
- “Hellinikon S.A.”
The company “Hellinikon S.A.” was established on 31 March 2011; its scope included the management, administration and development of the site of the former Athens International Airport in Hellinikon. In 2012, according to the Law 4062/2012 (art. 7, par. 1), the use, management, administration and development of the property owned by the Agios Kosmas National Youth Sports Centre (EAKN) and the Agios Kosmas (Attica) Olympic Sailing Centre (Marina), as well as their existing buildings and facilities, were also assigned to the company. The total area of the property that was placed under the management and administration of “Hellinikon S.A.” amounts to 6,205,667.31 m2 and constitutes the Hellinikon-Agios Kosmas Metropolitan Hub.
- The Tender
On December 8, 2011, the Invitation of Interest was published in Greek and international media and the final date for submission by the interested parties was April 17, 2012.
During the first phase, expressions of interest were submitted by 9 companies:
- Elbit Cochin Island Ltd (Israel)
- Gazit Group USA Inc. (United States of America)
- Kaglow Holdings Ltd. (Cyprus)
- L&R London and Regional Group Holdings Limited (United Kingdom)
- Lamda Development S.A. (Greece)
- LSGIE SA (Spain)
- Qatari Real Estate Investment Company QSC (Qatar)
- Sovinyon/Air Services International Limited FZE/Varangis Qatar LLC (joint venture) (Qatar)
- Trump Acquisition LLC. (United States of America)
Out of the 9 interested investors, 4 fulfilled the pre-selection criteria required for participation in Phase B. The following companies were selected: a) Elbit Cochin Island Ltd, a) L&R London and Regional Group Holdings Limited, c) Lamda Development S.A., d) Qatari Real Estate Investment Company QSC.
Out of those, only “Lamda Development S.A.” submitted a binding offer.
The improved offer of “Lamda Development” was unsealed on 26 March 2014. The HRADF selected the company as “buyer”.
- Consideration Price and Investment obligations
The purchase price for the shares, based on the offer submitted by Lamda Development, was € 915,000,000, in which the amount of € 1.5 billion which is the budget for infrastructure projects, should be added. Consequently, the total amount is estimated on € 2.4 billion.
It should be noted that the total investment will exceed the above contractual amounts, and is estimated at € 8 billion.
Moreover, the contract provides for the participation of the HRADF in the future economic benefits from implementation of the investment.
The investor will make every possible effort to complete 80% of the investment obligations in a period of 12 years from the date of the transfer of shares.
Part of the obligations undertaken by the company refer to works of public benefit, such as:
- the creation, maintenance and safety of a 2.000.000 sqm of Metropolitan Park;
- the creation of additional green areas and open spaces covering 600.000 sqm;
- the use of 300.000 sqm for public benefit uses;
- primary public transport infrastructure and facilities;
- main facilities and utility networks;
- centre for recyclable materials; transit station for domestic waste and transit/temporary area for the storage of recyclable products on the Property for its waste management;
- the required port works;
- bypass and underground construction of part of Poseidonos Avenue;
- recovery and management of streams;
- an extended network of pedestrian ways and bicycle routes, estimated at about fifty (50) km;
- coverage of 50% of the cost of study and construction of the centre for recyclable materials, the transit station for domestic waste and the transit/temporary area for the storage of recyclable products in an area outside the property under certain conditions;
- increased connectivity through fixed-track means of transport;
- development of most of the cultural and sports uses within the Metropolitan Park;
- renovation and operation of the listed buildings within the property;
- development of facilities for the disabled association within the property, similar to the existing ones;
- development of approximately 1 km of beach.
- Lawfulness Audit and Contract signature
The tender procedure and the draft contract were submitted to the Court of Auditors for a pre-contractual legality check.
Unit VI of the Court of Auditors issued a decision confirming that there were no obstacles to signing the draft contract. The decision was ratified by three decisions (nos. 1183/2015, 1184/2015 and 1185/2015) by the Greater (7-member) Composition Unit of the Court of Auditors.
At the same time, the Plenary Session of the Council of State, by virtue of three decisions (nos. 1902/2014, 1903/2014 and 1905/2014), concluded that the transfer of shares of “Hellinikon S.A.” from the Greek State to the HRADF was absolutely legal.
By virtue of two additional decisions (nos. 2185/2014 and 2186/2014), the Plenary Session of the Council of State rejected the requests for cancellation that had been submitted against the decisions of the Interministerial Committee for Restructuring and Privatisation.
After the issuance of the decisions of the Court of Auditors and the Plenary Session of the Council of State, the purchase/sale contract was signed (Shares purchase/sale contract between the HRADF, “Hellinikon Global I S.A.” and “Lamda Development S.A.” (as guarantor of “Hellinikon Global I S.A.).
The Court of Auditors verified again the purchase/sale contract, after the Amended Agreement was signed in June 2016.
- Execution of the Amended Contract and ratification by the Greek Parliament
In 2016, the Government’s Economic Policy Council approved the HRADF’s Asset Development Plan, which foresaw the execution of a Memorandum of Understanding (MOU) between the parties.
The HRADF adopted the amendments to the initial contract and on 7 June 2016 the HRADF, “Hellinikon Global I S.A.” and “Lamda Development S.A.” (as guarantor of “Hellinikon Global I S.A.) co-signed the MOU via which it was agreed to sign an amended contract.
By virtue of a new decision, the Court of Auditors ruled that there were no obstacles to signing the amended contract, and this led to the execution of the amended contract on 19 July 2016.
In September 2016, the initial and amended contract was ratified by Greek Parliament by a vast majority (more than 260 MPs voted in favour).
- Approval of the Integrated Development Plan by Presidential Decree
The next step in the procedure is the approval of the Integrated Development Plan (IDP) by Presidential Decree, which will have previously been processed by the Council of State. The documents accompanying the said Plan include a Strategic Environmental Impact Study, which is published and subjected to public consultation according to the law. At the same time, the Special Committee of Experts of Law 4062/2012 and the Central Management Council for the Development of Public Property, consisting of the General Secretaries of the involved Ministries, are responsible for submitting an opinion about the Plan.
Therefore, approval of the IDP is preceded by an extensive audit of all its parameters, both by Management and by the judicial authorities. However, it is noted that, as stipulated by the Contract, in order to complete the transfer, the IDP ultimately approved should not contain any substantial differences in relation to the master plan of the Investors, given that in the opposite case it would not be in line with the corresponding Operational Plan.
The master plan of the Investors had been submitted to the HRADF and had been approved during the tender procedure. However, the Greek State, after having signed the Contract, requested amendment of certain issues that concern the master plan. Thus, after execution of the Amended Contract in July 2016, partial re-planning was required. Finally, the IDP was submitted to the HRADF for inspection in December 2016 and re-approved in February 2017.
However, final submission was not possible before solving the administrative issues that were still pending at the time. Finally, in order to accelerate the procedure and despite the fact that certain pending issues has not been solved once and for all, a fact that will most probably have effects on the overall possibility to implement the development plan, the IDP was submitted for approval in June 2017, while the law stipulates that should be approved within six (6) months from submission.
Since then, the public consultation on the Strategic Environmental Impact Study has been completed, and opinions have been expressed by the competent Departments. However, both the aforementioned opinions and the proposal of the competent Ministers and the processing by the Council of State are still pending.