World’s second-largest bottler of Coca-Cola products seeks lower costs of financing and better liquidity
In a major blow for the Athens stock market and another misfortune for the debt-ridden Greek economy, Coca-Cola Hellenic (CCH), Greece’s largest quoted company, has announced it is leaving the country.
The firm, which generates 95 percent of its revenues outside of Greece, will be moving its headquarters and its main listing to Switzerland and the UK, respectively.
The move happens after rating agencies downgraded the company’s credit score to three ranks above ‘junk’ due to the uncertainty surrounding Greece’s ability to remain in the eurozone.
According to the Wall Street Journal, moving to a more stable environment will allow CCH, which is 23 percent owned by Coca-Cola and displays a strong financial profile and good fundamentals, to avoid a ‘Greek discount’ on its valuation. It will also allow the company, which relies on capital markets rather than Greek banks for its funding, to pay lower yields on its next bond issuance.
In addition, liquidity is a significant concern for companies listed on the Athens stock market, where trading volumes have plummeted by 90 percent since 2007. Some international brokerage firms are now reportedly refusing to deal in Greek securities.
CCH is not the first Greek company to move its domicile to greener financial pastures. Last week, major dairy group Fage, which was under review by Standard & Poor’s for a possible rating downgrade, announced it was moving its headquarters from Athens to Luxembourg, citing better tax conditions, lower costs of financing and reduced exposure to the Greek financial crisis.
Although these moves show ‘how serious the situation is’, according to Constantine Michalos, head of the Athens Chamber of Commerce and Industry, speaking to the WSJ, it is hoped these domicile changes will prove only temporary.
On CNNMoney, Yanos Gramatidis, president of the American-Hellenic Chamber of Commerce in Greece, declared that companies weren’t acting ‘in a hostile way’ but were taking such action ‘only to protect their short-term interest. I am optimistic the decision is temporary, even though I know what it means to transfer a corporate seat. I believe these two groups will return when the situation stabilizes and growth returns.’
CCH accounts for one fifth of the Greek stock market, with a capitalization of €5.7 bn ($7.4 bn). The company, which is aiming for inclusion in the FTSE 100 index, will offer a one-for-one share swap in its Zurich-based subsidiary Coca-Cola HBC and then list the Swiss company on the London Stock Exchange in January.
Candice de Monts-Petit
Candice de Monts-Petit joined IR Magazine as a senior editor in 2012. Prior to this, she worked in investor relations, first as an IRO for oil and gas firms in Paris and Moscow and subsequently as an IR consultant in London. She graduated in business...
