Developments are expected soon in Hellenic Telecoms (OTE), after government’s decision to sell 10% of its 20% stake.
Deutsche Telekom would have the controlling stake of OTE, as it had stated it would exercise its option to increase its stake from 30% to 40%.
Under the 2008 agreement, Greek government participates equally in the board of OTE, appointing the chairman of board of directors, while Deutsche Telekom appoint the CEO. The state appoints 5 of the 10 board members as long as it controls 15% of the company.
If state’s participation declines to 10% -but over 5%-, the board of director becomes an 11-member board, validated in a relevant general meeting. Greek government would appoint 5 of 11 members, while DT would appoint 6 of 11 members.
This would mean that Greek state becomes a minority shareholder and Deutsche Telekom gains full control of the organization.
The equity changes would not bring upheaval to the rights of veto by the Greek side, as long as its stake remains above 10%.
The approval by the Greek government is essential to issues of national security, public order and national defence, along with some financial, business and corporate matters.
In particular, veto rights refer to:
-All issues provided by law for public companies involved in strategic alliances.
- Business issues such as corporate name OTE and its subsidiaries that use the world OTE. The veto also applies in changing of brands, but only for 24 monthes.
-Company issues such as relocation of change of company’s purpose, mergers and acquisitions, extraordinary dividends, debt issuances beyond certain limits, approval of financial statements etc.
If Hellenic Republic’s stake in OTE drops below 10%, it loses business and corporate veto right, and maintain veto rights regarding national security and economic issues.
Deutsche Telekom would have the controlling stake of OTE, as it had stated it would exercise its option to increase its stake from 30% to 40%.
Under the 2008 agreement, Greek government participates equally in the board of OTE, appointing the chairman of board of directors, while Deutsche Telekom appoint the CEO. The state appoints 5 of the 10 board members as long as it controls 15% of the company.
If state’s participation declines to 10% -but over 5%-, the board of director becomes an 11-member board, validated in a relevant general meeting. Greek government would appoint 5 of 11 members, while DT would appoint 6 of 11 members.
This would mean that Greek state becomes a minority shareholder and Deutsche Telekom gains full control of the organization.
The equity changes would not bring upheaval to the rights of veto by the Greek side, as long as its stake remains above 10%.
The approval by the Greek government is essential to issues of national security, public order and national defence, along with some financial, business and corporate matters.
In particular, veto rights refer to:
-All issues provided by law for public companies involved in strategic alliances.
- Business issues such as corporate name OTE and its subsidiaries that use the world OTE. The veto also applies in changing of brands, but only for 24 monthes.
-Company issues such as relocation of change of company’s purpose, mergers and acquisitions, extraordinary dividends, debt issuances beyond certain limits, approval of financial statements etc.
If Hellenic Republic’s stake in OTE drops below 10%, it loses business and corporate veto right, and maintain veto rights regarding national security and economic issues.
