Once a telecom giant, Tim Hellas now in ruins 

by Jathin  Joseph Thursday, June 25, 2015
The company felt like a group of dominos. One thing led to another and before anyone could lend it a helping hand, it went in a dismal stage, far from recovery. This is what happened to a Greek telecom giant Tim Hellas. Since the time of its takeover by private equities TPG and Apax in 2005, this telecom giant entered a dead drop downward spiral. A successful company that used to cater to around 20% of Greece now is in shambles. This ordeal has made a major chunk of market a little skeptical towards workings of the involved equity players.

Apax and TPG are alleged to have prioritized their own benefits over the company’s and robbing it of its capital. The company whose debt before the acquisition was a modest €187m was looking at the mammoth like amount in billions as its net debt in 2007. All this can be attributed to the atrocious financial practices undertaken by the equities. They kept extracting outrageous amount of money from Hellas and its vehicles whilst making them borrow heavily to pay cash to redeem CPECs (convertible preferred equity certificates). After reaping a whopping sum of €350m came the lethal blow from the equities. They redeemed most of the CPECs by evaluating them at 35 times the par value. And much to the market’s desolation, the CPECs were valued at par shortly after this stint by TPG and Apax. The approval for these revaluations came from a board that had Nikesh Arora, current President of the SoftBank Corp, as one of its member. Nikesh has been rumored to have settled his score.

What is all the more appalling is that none of the prerequisites for CPEC redemption were met with. This puts a blot on the workings of Apax and TGP as well as the panel that approved of those unnerving revaluations. These two equities are also under an attack by the Luxembourg taxation authority. They are demanding a hefty fine of €200m from a Hellas vehicle on the accounts of mischaracterized distributions to its equity owners.

A case has been registered in the United States Bankruptcy Court for the Southern District of New York and the proceedings of this case have turned the tables for TPG and Apax.

0    submitted by Jathin  Joseph
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