The development of the casino in Hellinikon is not progressing

• – Alarm in government seeking plan B

• – Hard Rock appears tired and troubled by the back and forth of the banks

• – They are looking for a way to secure 350 million – 450 million euros in capital from the Recovery Fund

By Data Journalists

Thirteen months after the signing of the concession contract between the Greek State and the Athens IRC concession consortium (MGGR LLC, MGE HELLINIKON B.V. and GEK TERNA S.A. Holdings, Real Estate, Construction), for the license to operate a Casino Enterprise (EKAZ) with a wide range of activities in the Metropolitan City of Ellinikon – Agios Kosmas and the construction of the projects for the erection of a hotel, a conference and exhibition center and a public gathering place for sports or cultural events, new issues have appeared.

The latest of which is the postponement, for the third time in the last two months, of an event that would have marked the start of work on the construction of this flagship project. Although the postponement of the event itself could be said to be of minor importance – the ‘invitations’ had not been printed and were not widely publicized – and is due, according to some, to the two elections and the fact that we are now in the middle of summer, for others it conceals the new difficulties that have emerged in recent times. And no they are not linked to the precursor construction work and the relevant permit expected within the month, say industry executives. But with the financing of the project.

 CONTRACT ANNOUNCEMENT (pdf)

“The financing of the project has not been guaranteed and there are ongoing discussions with banks,” say sources who spoke to Data Journalists. However, this is denied by the parties involved. But the sources insist that the banks have not honored the initial commitments they made to finance this €1.5 billion project and are now asking the shareholders-investors to put in more money.

Data Journalists tried to get in touch with Michalis Karloutsos, the Greek-American lobbyist who acted as an intermediary between Hard Rock and the Greek side for the creation of the project, but he did not return our calls.

“This is a complex project that has no equivalent in Greece and requires significant capital,” bank executives tell Data Journalists, admitting on the one hand that they have asked investors to contribute more money and on the other hand that there is no timetable for the final deal. According to other sources, the banks have asked the investors, namely Hard Rock and GEK TERNA, to put in an additional EUR 120 million from the EUR 250 million originally agreed.

The risk of new delays, at best, or even the collapse of the whole project, has alarmed Maximou, which is looking for a plan B, with the banks and investors not yet having found a common ground for communication and agreement. At the same time, Hard Rock appears tired and troubled by the back and forth from the Banks.

The idea has also been on the table in recent days that part of the investment should be covered with €350-450 million of capital from the Recovery Fund. The Recovery Fund was mentioned during the regular general meeting of GEK TERNA by the head of the company, Mr. G. Peristeris, who, without mentioning the investment in the Casino in Hellinikon, had said that ‘the group will also seek to secure loan capital for selected projects and investments’. In addition to the Casino in Hellinikon, the GEK TERNA group has an investment program of €10 billion, and this year alone it will invest around €2 billion, up from €350 million in 2022.

Whether and when there will be a point of convergence for an investment for which a lot of ink has been spilled remains unknown.

The chronicle

The Casino’s investment in Hellinikon is not the first time it has faced obstacles. Since February 2019, i.e. since the International Bidding Tender for the Concession of a Casino Business License (EKAZ) for a wide range of activities in the Metropolitan City of Hellinikon – Agios Kosmas, with an initial deadline for submission of bids on April 22, 2019, there have been several serious issues.

 CONTEST (pdf )

Finally, the Tender was held on October 13, 2020, by decision of the ESPD, “INSPIRE ATHENS” consisting of the companies “M.G.E. Hellinikon B.V.”, “Mohegan Gaming Advisors, LLC” and GEK TERNA was appointed as the Provisional Contractor. The financial offer submitted by the Mohegan – GEK Terna consortium was €150 million. This is well above the minimum price set by the tender documents at €30 million.

In the “INSPIRE Athens” consortium, which was identified by the ESPD in February 2021 as the preferred investor, leaving Hard Rock out of the process, Mohegan Gaming and Entertainment (MGE) controlled 65% and GEK Terna 35%. The GEK Terena-Mohegan investment plan for the IRC was valued at EUR 1.1 billion (EUR 150 million for the casino license and EUR 950 million for the technical bid for the construction of the complex).

The investment includes, among other things, a 5-star hotel on an area of 120,000 sqm with 3,500 beds, a 24,000 sqm conference and exhibition center, a 10,000-seat sports-conference arena, and a 15,000 sqm casino area. Mohegan CEO Ray Pineault stated, speaking at the Delphi Economic Forum, that the IRC investment would be completed between 2025-2026.

Hard Rock has sought legal action to reverse the outcome, with CEO Jim Allen stating at the time: “The process was unfair from the start. Our bid was better than that of the Mohegan-GEK TERNA partnership, but the committee never evaluated the financial terms.”

Among other things, it appealed to the Council of State in the case of the casino license in Hellinikon after being excluded from the tender for the award of the contractor for the casino license and the Integrated Resort Casino (IRC). The Council of State rejected its appeal.

The Plenary Session of the Council of State, in its decisions No 1819 and 1820/2020, ruled that the company “SHRE/SHRILLC” (Hard Rock) was rightly excluded from the initial stage of the contested tender, in accordance with the legislation on the conduct of public tenders.

But Mohegan Gaming & Entertainment miracle lasted “three days” after throwing in the towel before the ink of the deal was well and truly dry. But the towel that Mohegan Gaming & Entertainment finally threw in, backing out of the consortium leader to walk away from the whole project altogether, paved the way for Hard Rock to take on the role of the white knight. The American conglomerate agreed to replace Mohegan by acquiring 51% of Inspire Athens, while GEK Terna retained 49%.

The procedures for the transfer of 51% of the shares of IRC SA to Hard Rock International were completed last May. The partnership between Hard Rock International (51%) and GEK Terna Group (49%) is for the 30-year concession for the construction and operation of the Integrated Tourism Complex with Casino at Hellinikon. All construction works will be carried out by TERNA S.A., a 100% subsidiary of GEK TERNA Group.

This development will host a five (5) star hotel, a conference and exhibition center and a public gathering area for sports and/or cultural events, and a casino.

The development of the IRC will take place in accordance with the provisions of the Concession Agreement between the Greek State and EKAZ HELLINIKON, which was ratified by law by the Hellenic Parliament (Law 4949/2002 – Government Gazette A’ 126/30.06.2022) and is estimated to be completed within 3 years from the commencement of the relevant works.

It now remains to be seen how the project will develop and whether the timetable set will be achieved. Something that seems impossible at the moment.