Greek companies avoid ‘G’ word to access bond markets abroad

Greece has become such a dirty word in international debt markets that companies are shunning any links to the country to access funds.

Globo Plc, the technology company formed by Costis Papadimitrakopoulos in Athens in 1997, has met investors in London and New York since June 19 as it seeks to sell $180 million of senior secured notes due 2020, according to an offering memorandum seen by Bloomberg. The London-listed maker of mobile-device software plans to use funds to refinance existing debt and make acquisitions in the U.S. and Europe.

The company has largely severed connections with Greece, including selling local operations and making overseas purchases to help cut its former home country to 12 percent of sales last year from 80 percent in 2010, according to the memorandum. Other once-Greek businesses, such as Coca-Cola HBC AG and Fage International SA, have made similar moves to disassociate themselves from the nation’s economic malaise and reassure potential bondholders.

“They got a lot of bad comments because of their relation to Greece, but they are a truly international business,” said Arun George, an analyst at Canaccord Genuity Corp. in London, who recommends buying Globo’s shares.

Papadimitrakopoulos, who has relocated to Palo Alto, California, wasn’t available for comment, according to a company spokesman.

Switzerland Move

Coca-Cola HBC moved to Switzerland in 2012 and changed its name from Coca Cola Hellenic Bottling Co. Its 600 million euros ($673 million) of notes due November 2016, which dropped to as low as 97.9 cents on the euro in 2012, are quoted at 105.1 cents, according to data compiled by Bloomberg. The company renewed a 500 million-euro credit line for five years with banks this week.

Fage, which grew out of a small dairy shop in Athens, moved to Luxembourg in October 2012. It changed bond documentation to protect international assets from a potential default at its Greek subsidiary.

Notes of companies still based in Greece and reliant on the country have performed less well during the financial crisis. May 2019 notes issued by state-controlled Public Power Corp SA, the largest Greek electricity company, are among the worst performing bonds this year in Bank of America Merrill Lynch’s Euro Non-Financial High Yield Index. The bonds are quoted at 67.9 cents on the euro.

International Focus

Globo sold a majority stake in its Greek e-business software operations in 2012 to focus internationally, according to its website. Revenue totaled 106 million euros last year.

The company’s growth in recent years across more than 45 countries meant Greece wasn’t mentioned in Standard & Poor’s bond ratings statement. The technology company got a BB- grade, three levels below investment grade. Greece is five levels lower at CCC.

“Globo has a far better rating than the sovereign because of its international footprint,” said Matthias Raab, an S&P analyst in Frankfurt.

The technology company has major offices in London, Palo Alto and Athens. It’s rated B2 at Moody’s Investors Service, or the fifth-highest non-investment grade.

Greece exiting the euro would only hurt Globo if it led to major domestic upheavals, such as a general strike or prolonged power blackouts, that could disrupt local offices, Raab said.

Backup Power

The company has mitigated risks by installing backup generators and satellite Internet connections so offices can run for more than a week without outside power supplies, according to Charles Pemberton, a Globo spokesman employed by Brunswick Group in London. It also uses cloud-computing systems to prevent service interruptions for customers, he said.

Prime Minister Alexis Tsipras, creditors and euro-area leaders are in 11th hour talks to keep Greece in the euro. The country’s bailout program is due to end next week.

“Most investors shy away from Greece risk at this juncture,” said George Zois, a director on the distressed debt desk at Exotix Partners in London. However, funds looking at niche companies, “with good prospects and driven by talented human capital, may find a fantastic opportunities.”

[Bloomberg]