Intense meeting with the bankers the previous days at Herodou Attikou. Who is Michael Karloutsos, former Trump associate and friend of Biden who “mined” the investment
by Data Journalists
– The banks are asking Hard Rock and GEK Terna to put in an additional EUR 120 million from the EUR 250 million originally agreed.
– The investors are telling the government that they do not agree with the banks’ terms and that if no solution is found they will withdraw.
– The fateful role of Biden’s family friend Michael Karloutsos, who takes hits from all sides.
By Data Journalists
There are further developments with the big project of the Casino in Hellinikon. Some days ago, as Data Journalists are in a position to know, there was government intervention.
Senior ministers and top government officials, whose office is in the Maximou Mansion, called an emergency meeting with the bankers.
The meeting, held in a tense atmosphere, was about the financing terms of the big project that is in danger – as Data Journalists have revealed – of falling apart.
The project’s financing terms are worse than those originally agreed between the banks and the investors – GEK TERNA and Hard Rock. According to reports, the Banks have asked the investors – Hard Rock and GEK TERNA – to put in an additional EUR 120 million on top of the EUR 250 million originally agreed.
The investors, according to reports, have said that if no solution is found, they will withdraw from the project, something that the government does not want to happen.
From this investment, the Greek State expects revenues of more than 6 billion EUR over 30 years. In particular, the fiscal benefit is estimated to exceed EUR 200 million per year for the next 30 years. EUR 3 billion is estimated to come from the taxation of the Casino’s gross revenues, EUR 1.1 billion from social security contributions, EUR 800 million from income tax, EUR 500 million from VAT, and EUR 600 million in municipal fees. Lamda Development, as the concessionaire of the land, also expects high revenues.
Data Journalists have published an extensive report on the problems with the banks since July 21. According to the reports, the Banks, primarily Ethniki and secondarily Alpha, are asking for additional collateral and greater investor involvement, which for some in the market translates into not believing the project. On the other hand, Piraeus Bank seems to believe in the project and is currently acting as a mediator in order to move the project forward so that it does not fall apart.
“This is a complex project. Nothing similar has ever been done in Greece and it requires significant capital,” bank officials say, admitting that investors have asked for more money and that there is no timetable for the final agreement.
There is also the alternative of covering part of the investment with €350-450 million from the Recovery Fund. The Recovery Fund was mentioned during the regular general meeting of GEK Terna by its CEO Mr. G. Peristeris, who, without mentioning the investment in the Casino in Hellinikon, had said that “the group will 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.
The fateful role of Michael Karloutsos – Dissatisfaction from government, banks, and investors
Another aspect that has not been clarified is the role of the businessman (?) – “lobbyist” Michael Karloutsos. The son of the Greek Orthodox priest Alex Karloutsos allegedly acted as an intermediary between Hard Rock and the Greek side for the creation of the project.
For many, Mr. Karloutsos’ role is crucial to the situation the whole project is currently in. Sources tell Data Journalists that M. Karloutsos has displeased both sides, as he has acted as a “broken” phone between the investors and the banks.
Michael Karloutsos is the son of the well-known Greek-American expatriate, “Fr Alex” Karloutsos, who served for many years as an active member of the Archdiocese of America, having excellent ties with the Ecumenical Patriarchate and over time with the administrations in the White House. However, he is best known for his friendship with the family of current US President Joe Biden.
Despite the high connections bequeathed to him by his father, Michael Karloutsos took a position as deputy director of protocol in Donald Trump’s administration for a few months and then remained out of the market for some time.
Until Hard Rock commissioned him to carry out the “Casino in Hellinikon” project with the results we know today. For the government of K. Mitsotakis, Michael Karloutsos, due to his close relations with the SYRIZA government, is considered a “red flag”.
It should be noted that we have already attempted to contact M. Karloutsos since our previous investigation on the matter, but he did not return our calls nor did he reply to the messages we left him.
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 for a wide range of activities in the Metropolitan Areas of Hellinikon – Agios Kosmas, with an initial deadline for submission of bids on April 22, 2019, there have been several serious issues.
In the end, the tender was held and on October 13, 2020, by decision of the EEEP, “INSPIRE ATHENS” consisting of “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 EUR 150 million. This is well above the minimum price set by the tender documents at EUR 30 million.
In the “INSPIRE Athens” consortium, which was identified by the EEEP 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 of 120,000 sqm with 3,500 beds, a 24,000 sqm conference and exhibition center, a 10,000-seat sports and entertainment arena, and a 15,000 sqm casino area. Mohegan CEO Ray Pineault, speaking at the Delphi Economic Forum, said that the IRC investment would be completed between 2025 and 2026.
Hard Rock 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 CoE in its decisions No 1819 and 1820/2020 held 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’s miracle lasted “three days” after throwing in the white towel shortly after the signing of the agreement. But the white towel that Mohegan Gaming & Entertainment finally threw in, by backing out as leader of the consortium to walk away from the whole project altogether, paved the way for Hard Rock to take on the role of “white knight”. The American group 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 S.A. to Hard Rock International were completed last May. The cooperation between Hard Rock International (51%) and GEK TERNA Group (49%) concerns the 30-year concession for the construction and operation of the Integrated Tourist Complex with Casino in Hellinikon. All construction works will be carried out by TERNA S.A., a 100% subsidiary of GEK TERNA Group.
It is noted that the concession contract between the Greek State, and the Athens IRC (MGGR LLC, MGE HELLINIKON B.V. and GEK TERNA S.A. Holdings, Real Estate, Construction), for the license for the operation of a Casino Enterprise (EKAZ) of a wide range of activities in the Metropolitan Areas of Hellinikon – Agios Kosmas and the construction of a hotel, a conference and exhibition center and a public gathering place for sports or cultural events, was signed in June 2022.
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