Filenews 19 April 2022 - by Eleftheria Paizanos
It is not enough that for years four companies in which the state participated as a shareholder have been shuttered, it will not recover a single cent from the investments, as the liabilities of the companies exceed their assets. This is because their entire book value has been written off.
In the past, the state was a shareholder in 16 companies, while now in recent years it participates in 10 companies. The total amount of acquisition of the shares was €3.49 billion, while subsequently losses of €1.54 billion have been recorded.
The companies that "burned" the state are Laiki Bank, which is in resolution, Cyprus Airways, Eurocypria and the Pancyprian Bakers' Company, which are in liquidation. According to a Fiscal Report of the Treasury for 2021, for Laiki Bank, in the summer of 2012, in the context of the underwriting of the issuance of pre-emption rights of the bank, the government acquired 84% of the issued share capital of the bank. In return, state-owned nominal securities with an initial nominal value of €1.8 billion were issued. In March 2013, the bank entered a resolution regime and, under the decrees issued, the insured deposits and the majority of the bank's assets were transferred to the Bank of Cyprus. The liabilities that remained in Laiki Bank exceed its assets and therefore it is not expected to recover any part of the state's investment in the bank's share capital. In 2013, the entire book value of the investment was written off.
Moreover, Cyprus Airways has been in voluntary liquidation by creditors since 2015. In 2019, the entire book value of the investment was written off, since the company's liabilities exceeded its assets, that is, no part of the investment is expected to be recovered. It is recalled that the state participated in the share capital of the company by 93.67%. The purchase price of the shares was €100.9 million.
In relation to Eurocypria Airlines, the company has been in liquidation since 2010. Three years later the entire book value of the investment was written off, and in this case the company's liabilities exceeded its assets. In this case, too, it is not expected that any part of the investment will be recovered. In Eurocypria, the state held 100% of the shares, which it acquired at a price of €57.9 million.
Regarding the Pancyprian Society of Bakers, according to the Financial Report, since October 2016 it has been in liquidation, according to a decree of the Nicosia District Court. Moreover, in 2019 the entire book value of the investment was written off, since its liabilities exceeded its assets, so it is not expected to recover any part of the investment. The state held 11.09% of the shares, which were acquired at a price of €488 thousand.
Meanwhile, of the total number of legal entities that the State is a shareholder in, in five of them it holds 100% of the share capital. These are the Cyprus Petroleum Products Storage Company (share price €41.2 million), DEFA (purchase price €300,000), the Cyprus Investment Stabilizing Fund, the Cyprus Standardization Organization (purchase price €293,400) and the Hydrocarbons Company (purchase price €1 million). At the same time, the state participates with 99.2% shares in the Cooperative Asset Management Company SEDIPED (share purchase price €1.5 billion), in the Cyprus Real Estate Development Company, where it holds 82.66% (share purchase price €594.thousand) and in the Forest Industries, holding 51% of the shares (purchase price of €679 thousand). The state holds only 1% of the share capital of PD Berate der Offentlichen Hand GmBH and 0.10% of the CPI Holdıng Publıc (purchase price). Finally, the state no longer has shares in Bank of Cyprus Holdıngs and KEO.
