Greece's MIG to propose 10 pct buyback because market price below NAV

Greece's MIG to propose 10 pct buyback because market price below NAV

ATHENS (Thomson Financial) - Greek investment holding company Marfin Investment Group (MIG) said that at its EGM in April it will propose an up to 10 pct share buyback because its net asset value (NAV) at the end of the first quarter is between 6.5 to 6.9 eur per share while its market price is significantly lower at about 4.5 eur.

The vice chairman of MIG, Andreas Vgenopoulos, said on an analyst conference call that company shares were 'a serious bargain' and that this was another means, in addition to a generous dividend policy which he expects will continue in 2008, to reward long-term investors.

Vgenopoulos explained it was not appropriate to see MIG as a private equity fund or slavishly look at NAV because it is an industrial group that is pursuing aggressive organic expansion, strategic growth through mergers and acquisitions financed by its units' strong balance sheets, as well as trying to exploit synergies.

He added that 'in acquisitions there has been careful sector selection, particularly in defensive industries like food, as well as geographic targeting under a strategic plan where subsidiaries have tremendous synergies'.

Vgenopoulos noted that a top priority in selecting companies was 'their strong cash flow generation'. He said MIG has put off deciding whether they will de-list companies because it could be useful in some transaction settings for subsidiaries to use their stock as 'currency for acquisitions, or give them the ability to raise further funds,' such as through private placements, to proceed with large takeovers.

In light of difficult credit markets, MIG decided to 'forego highly leveraging up'. Recent market volatility will not mean lower returns, he said. Because current investments are outperforming, they will be spending less on new investments, and while they dont want to take big risks 'there are real bargains out there,' he said.

On the issue of the sale of its just less than 20 pct stake in Hellenic Telecom (OTE) to Deutsche Telekom (nyse: DT - news - people ), the vice chairman said that he expects that the transaction will be 'eventually approved and successfully completed in April'.

Vgenopoulos said MIG has made total investments amounting to 5.6 bln eur and currently has liquidity of about 1.5 bln eur. After it receives the money from the sale of its OTE stake, the group will have no debt and still have 1.5 bln eur in cash.

'The cash we receive back (about 2.5 bln eur) has a much bigger value today than when we originally invested in OTE,' Vgenopoulos noted.

When asked about Dubai Financials 9.9 pct stake in MIG, making it the largest shareholder, the top executive explained that on Monday Dubai will be acquiring another about 6.5 pct stake in MIG at 7 eur per share, taking its holding to roughly 15 pct, and in due course it proposes to raise its stake to 20 pct.

On the criticism that MIG has overpaid for food conglomerate Vivartia, CEO Dennis Malamatinas explained that it had paid 14 times EBITDA at the time and that this reflects its strong growth potential. Meanwhile, he said, the business is meeting the aggressive business targets set for it and making acquisitions that are a great strategic fit on the strength of its own balance sheet.

Malamatinas added: 'And we still have ambitious plans, even though with Everest, Goody and Flocafe, in addition to Vivartia, we dominate the local food market'.

In conclusion, Vgenopoulos underlined that during the presentation of its first quarter results MIG will possess more visibility and will provide guidance for a long period of time.

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