OPAP Greece gets OK for IT deal

Greek betting monopoly OPAP said it has won shareholder approval for a disputed IT services contract with Intralot, a move that could complicate the sale of the country's stake in the gambling firm.
Greece's privatisation agency, HRADF, is selling all but 1% of the government's 34% stake in OPAP as part of efforts to raise 2.6 bln euros in privatisation proceeds this year.
The OPAP sale, along with the privatisation of natural gas distributor DEPA, is among the biggest sales Greece is expected to conclude as part of an EU/IMF bailout.
But two of the seven potential suitors for the OPAP sale – a bid vehicle called Emma Delta backed by shipping tycoon George Melisanidis and Czech investor Jiri Smejc, and a consortium led by gaming equipment company Gauselmann and gaming software group Playtech – have threatened legal action if the contract for a new central hardware and software system was approved.
They say that the contract would involve OPAP paying more than it had stated and that the buyer of the government's stake would be bound to it for five years without any say. Both would-be buyers have called on OPAP and HRADF not to formalise the contract.
But OPAP shareholders who attended the meeting on Saturday voted in favour of the Intralot deal. Investors representing 37.9% of OPAP's outstanding shares voted, with 71% of them approving the contract while less than 1% voted against it.
HRADF did not take a position on the contract and cast a blank ballot at the meeting, saying that it was up to OPAP's management to decide on the deal.
"HRADF is not, in any case, in a position to evaluate the terms of the deal," it said in a statement read out to shareholders. "The approval of these terms is an issue for OPAP's management, which has the specific knowledge of the respective technical and economic parameters."
"For these reasons, HRADF is attending (the meeting) but is not voting in favour or against."
Some small shareholders criticised HRADF's neutral stance, while others complained about the cost of the deal.
After the contract was approved, one potential suitor threatened to take "strong legal action" against OPAP.
OPAP's chairman Constantinos Louropoulos reiterated that the cost of the renewed contract would be about 36% lower than the previous deal and that this was close to what other European peers were paying for technology.
"The investment is around 1.25-1.26% of the company's total revenues," he told shareholders. "So this number is considered pretty competitive in the sense that that's what we are seeing in several other lotteries."
Intralot, one of the world's biggest gaming software providers, has been OPAP's IT contractor since 2001, when OPAP was listed on the Athens bourse.
Its latest contract expires in July and OPAP considers its renewal, which it said would cost 109 mln euros for services and capital expenditure plus 46 mln euros for terminals maintenance, as vital for its uninterrupted operation.
The shareholder meeting, initially scheduled for March 26, was postponed to April 6 to give OPAP's biggest shareholder, HRADF, more time to study the agenda.
OPAP, in which big U.S. hedge and investment funds including Baupost Group own a stake, holds a national monopoly on sports gambling until 2020 and on lotteries until 2030. The company, with annual sales of about 4 bln euros, also has the exclusive licence to launch video lotto terminals in Greece.