HELLENICREPUBLICASSETDEVELOPMENT FUND S.A.
Athens, 23 November2011
Responses to clarification questions submitted by potential candidates regarding the invitation to submit an Expression of Interest for the grant of an exclusive licence to produce, operate, circulate, promote and manage in general the Greek State Lotteries
S/A / Ref . / Question / Answer1 / 1.1.
(pg 2) / In connection with the currently existing (or inactive) lotteries, does the Fund intend to transfer any assets or liabilities associated with such lotteries to the SPV (other than the right to the exclusive production, operation, circulation, promotion and management of such lotteries)? If so, what assets and/or liabilities are anticipated to be transferred? / No assets or liabilities associated with the currently existing (or inactive) lotteries will be transferred to the SPV (other than the right to the exclusive production, operation, circulation, promotion and management of such lotteries).
2 / 1.1.
(pg 2) / Can the Fund provide the rationale for the apparent current exclusion of electronic lottery tickets from the scope of the License given the natural and logical connection between electronic lottery tickets and the traditional lottery products covered under the Licence and in light of the particular effectiveness of traditional and electronic lottery products when integrated together? / The Licence will not include electronic lotteries (online, mobile, etc.). Sale & purchase of physical tickets shall however be allowed to take place online (online shop).
3 / 1.1 / Given :
a. the provision in L. 4024/2011 (art.41 par 5) [“Instant Lottery is defined as the lottery whose result is predetermined upon issuance of the lottery and is revealed to the player- buyers, without a draw”] clearly includes electronic instant tickets
b. the fact that, in the majority of cases, in countries where the sale of lotteries through alternative channels (internet, mobile phones) is allowed, the same lottery operators sell both physical and electronic tickers (e.g. Finland, Denmark, UK, etc)
we assume that the phrase included in chapter 1.1 of the Invitation to submit an Expression of Interest, thus "The Licence shall not include any electronic (online, mobile, etc) lotteries" has been retained by mistake and reflects the initial phrasing of the law amendment that limited instant lottery to physical tickets.
Moreover, the non-inclusion of the electronic lotteries from the scope of the Licence undermines the exclusivity of the licence for the operation of all the existing state lotteries, as lottery operations through internet or mobile phones employ new distribution channels for the same product, having as a result third non-licenced parties being able to offer lotteries with a competitive advantage versus the Licence in an unfair competitive environment. Hence, the inclusion of the electronic form of the tickets in general in the scope of the Licence is necessary as it restores the competitive balance and the value of its content and the exclusivity right / The Licence will not include electronic lotteries (online, mobile, etc.). Sale & purchase of physical tickets shall however be allowed to take place online (online shop).
The Fund will not award to the Licensee or any third party the operation of electronic lotteries at least for the duration of the Licence. Further details will be provided in the Licence Agreement.
4 / 1.1 / Given that the Licence will be granted free from any obligations relating to the existing securitization of Hellenic Lotteries’ receivables, is it safe to assume that any other existing or other financial obligations will not burden the Licence and hence the Candidate ? / No assets or liabilities associated with the currently existing (or inactive) lotteries will be transferred to the SPV (other than the right to the exclusive production, operation, circulation, promotion and management of such lotteries).
5 / 1.1 / Please clarify :
1.1Whether the Hellenic Republic intends to maintain or change the “general legal and regulatory framework” currently in place for the Hellenic Lotteries
1.2 If the Winning Bidder will be required to product, operate and manage in general all of the Hellenic Lotteries at the commencement date of the Licence Agreement or will he be allowed to choose the timing to proceed with the above for each one of the Hellenic Lotteries and moreover whether he would allowed to keep some of the lotteries inactive?
1.3If it’s in the Fund’s intentions to launch at a future date a tender for the operation of electronic lotteries (via internet or mobile phones etc) given the fact that the provision of par.5, article 41 of L.4024/2011 does not limit the definition of the Instant Lottery to a physical ticket only (in contrast to the initial wording of the law amendment initially submitted) / 1.1.The new state lotteries regulation shall be provided during the Second Phase and will be ratified by the Hellenic Parliament.
1.2.The successful bidder will be expected to operate the National, Popular and Xysto lotteries and assume management of the New Year’s lottery upon expiration of the transition period. Further details will be provided in the Draft Licence Agreement.
1.3.The Fund will not award to the Licensee or any third party the operation of electronic lotteries at least for the duration of the Licence. Further details will be provided in the Licence Agreement.
6 / 1.2.
(pg 4) / Does the Fund have a current (non-binding) estimate of when the Fund will
(1) notify a Candidate whether it is qualified to participate in the Second Phase and
(2) make Second Phase materials (including the draft License Agreement) available to Qualified Tender Participants? / (1) It is estimated that Candidates will be notified within two weeks from submission date but this is subject to change.
(2) Second Phase materials are expected to be made available to the Qualified Tender Participants shortly after the notification.
7 / 1.2.
(pg 4) / Does the Fund have a current (non-binding) estimate of the duration of the Second Phase (i.e., from the notification of a Candidate as to whether it is qualified to participate in the Second Phase to the award of the Licence to a Qualified Tender Participant)? / To be provided in the Invitation to Bid.
8. / 1.2
(pg 5) / The second-to-last paragraph of section 1.2 provides that “Qualified Tender Participants will be required to submit in writing a binding final offer…” Can the Fund confirm our understanding that Qualified Tender Participants are not required to submit a binding final offer if they ultimately choose to not pursue the Licence for whatever reason? We assume this must be the case given that, upon entry into the Confidentiality Agreement, a Qualified Tender Participant will not have reviewed Second Phase materials (including the terms of the Licence Agreement and the Transition Agreement) or commenced due diligence. / Qualified Tender Participants will not be required to submit a binding final offer if they ultimately choose not to pursue the Licence for whatever reason.
9 / 1.2 & 3.1 / Please clarify the meaning of the phrase "Brief description of the Candidate’s strategic rationale for this investment " as requested in section 3.1 / The basic parameters of the Candidate’s objectives and related strategy with regard to Hellenic Lotteries.
10 / 1.2 / Given that, according to section 1.1, the Licence will be granted free from any obligations, please clarify the reason of providing the right to Qualified Tender Participants to perform due diligence on the existing operation of the Hellenic Lotteries, according to section 1.2, as we understand that the Invitation for Expression of Interest does not refer to purchase of the shares of a SPV, nor does the Licence comprises of purchase of assets (incl. fixed assets) and/or liabilities (e.g. obligations to third party/agents, obligation to retain current personnel) / This data will be available for general information purposes
11 / 2.1 / According to par. 2.1 of the Invitation:
"Offshore companies which are residents of, have their registered or actual seat in, or have an establishment in Non-Cooperative Countries and Territories, as those are defined by article 51A of the Greek Income Taxation Code (Law 2238/1994 as amended by Law 3842/2010) and are listed in Greek Ministerial Decision ΔΟΣ Α 1150236 ΕΞ2010, dated 9 November 2010, of the Minister of Finance (Government Gazette Bulletin B’ 1805/2010), do not qualify for individual participation in the Tender Procedure. Furthermore, offshore companies, as defined in this paragraph, cannot participate in the Tender Procedure either as members of a consortium or as partners or shareholders of a legal entity that is a Candidate or member of a consortium.
The above paragraph does not apply in so far as the offshore company is a shareholder, including a controlling shareholder, or a consortium member of a Candidate which is a company established in accordance with the law of a Member State of the EU, other than Greece, or of the EEA and has its registered office, central and administrative or principal place of business within the EU or the EEA."
Please clarify :
2.1 If the exclusion of the participation of offshore companies as shareholders of the Candidate or member of a consortium, also applies to Candidates or members of a consortium, whose shares are listed in a stock exchange, given that since the shares of these companies are traded freely, it is not feasible for the companies to check whether offshore companies are included in their shareholders base
2.2If the exception mentioned for an offshore company being a shareholder, or a consortium member of a Candidate which is a company established in accordance with the law of a Member State of the EU, other than Greece, holds true given the next phrase that mentions that the Candidate or a consortium member (shareholder of which is an off-shore company) should have registered office, central and administrative or principal place of business within the EU or the EEA, which does not exclude Greece. / 2.1. Candidates or members of consortia that are listed in EU, EEA or OECD countries are excluded from the prohibition of offshore companies being shareholders of Candidates or bidding consortia.
2.2 The exception for EU and EEA companies does not apply to Greece, as in Greece there are no offshore companies.
12 / 2.1
(pg 6) / Given that the provision in the first paragraph of page 6 which excludes from the Tender Procedure offshore companies, as shareholders of the Candidate or member of consortium, cannot apply for listed companies, whose shares are traded daily, please confirm that the exception of the second paragraph of page 6 includes offshore companies that are shareholders of listed companies that are candidates or members of consortia and/or have registered their registered office in Greece or within the EU or the EEA.
Otherwise, please inform us of the maximum participation of offshore companies in the share capital of listed companies that have been established and/or have their registered offices in Greece or within EU or the EEA, such participation should be of a level that would deter malevolent actions that could affect the participation of listed companies in the Tender Procedure, given the low current market capitalization of the shares of listed companies. / Candidates or members of consortia that are listed in EU, EEA or OECD countries are excluded from the prohibition of offshore companies being shareholders of Candidates or bidding consortia.
13 / The following paragraph is in page 5 of the tender document.
"Offshore companies which are residents of, have their registered or actual seat in, or have an establishment in Non-Cooperative Countries and Territories, as those are defined by article 51A of the Greek Income Taxation Code (Law 2238/1994 as amended by Law 3842/2010) and are listed in Greek Ministerial Decision ΔΟΣΑ1150236 ΕΞ2010, dated 9 November 2010, of the Minister of Finance (Government Gazette Bulletin B' 1805/2010), do not qualify for individual participation in the Tender Procedure.
Furthermore, offshore companies, as defined in this paragraph, cannot participate in the Tender Procedure either as members of a consortium or as partners or shareholders of a legal entity that is a Candidate or member of a consortium."
Does that exclude non EU companies? / This excludes offshore companies which are residents of, have their registered or actual seat in, or have an establishment in any of the countries or territories that are listed as Non-Cooperative Countries and Territories, in Greek Ministerial Decision ΔΟΣ Α1150236 ΕΞ2010, dated 9 November 2010, of the Minister of Finance (Government Gazette Bulletin B' 1805/2010).
You can find the relevant Government Gazette on the site of the National Printing House (
14 / 2.2.
(pg 7) / The second-to-last paragraph of section 2.2. provides that “[f]or the purposes of this section, in the case of private equity firms the criteria under 2.2.1., 2.2.2. and 2.2.3 will be based on all companies being managed or advised by the same private equity firm or group of private equity firms.” For purposes of these criteria, can a private equity firm rely on the financial capacity of a company that is being managed or advised by such private equity firm in circumstances where such company is not controlled by such private equity firm? We note in this regard that a parent company that is not a private equity firm may only rely on the financial capacity of its subsidiaries and not of any other third party (such as companies that it may merely advise but not control). / Private equity firms may only rely on the financial capacity of companies that they manage or advise, on the basis that the term “advise” is used to indicate “effective control” when referring to private equity firms.
Effective control exists when an entity has legal or contractual rights to control the majority of the entity’s voting power or the Board of Directors.
15 / 2.2 / According to the second to last paragraph of section 2.2: "For the purposes of this section, in the case of private equity firms the criteria under 2.2.1., 2.2.2. and 2.2.3. will be based on all companies being managed or advised by the same private equity firm or group of private equity firms."
Please clarify if the particular term applies also in the case where the Candidate is itself a private equity firm or it has a private equity firm as a shareholder. / This applies only in cases where a private equity firm is itself a member of a bidding consortium.
16 / 2.2 / According to par. 2.2 of the Invitation :
"For the purposes of this section, in the case of private equity firms the criteria under 2.2.1., 2.2.2. and 2.2.3. will be based on all companies being managed or advised by the same private equity firm or group of private equity firms."
Please clarify the way to demonstrate the management and advise of the same company or the same group of private equity funds. / The private equity firm should provide a binding letter from the entity it shall rely on for the satisfaction of the criteria, that confirms the latter’s commitment
17 / 2.3 (pg 8) / Since as provisioned in the third paragraph of page 6, the criteria of par. 2.3 should be fulfilled at least by the Lead member, please confirm that the information requested in paragraphs 2.3.1 and 2.3.2 should be submitted for the Lead Member and voluntarily for the other members of the consortium. / Confirmed.
18 / 2.3.2 / In paragraph 2.3.2 of the Invitation, it’s mentioned: "A Candidate will not be able to rely on the experience of any other third party or subcontractor to demonstrate fulfillment of the technical criteria."
Please clarify that in the case of a consortium, a "third party" is considered a party that does not participate in the consortium and that for the technical criteria, the three last sub-paragraphs of par. 2.1 apply. / Third party means any party not participating in the consortium. An affiliate of a consortium member is not considered a third party and the consortium member may rely on such affiliate in order to meet the technical criteria only under the conditions in paragraph 2.1 of the Invitation.
19 / 2.5 / Please confirm that a consortium or a joint venture can participate as a member of a consortium that participates in the Tender Procedure, under the assumption that the consortium or the joint venture will meet all the requirements set out in the Invitation and will submit the relevant documentation for each member of the consortium and/or the joint venture. / A consortium cannot be a member of a bidding consortium.
20 / 2.5 / Please clarify if two (or more) legal entities that participate as members to a consortium along with a third legal entity in the First Phase, can form, after the end of the First Phase and under the assumption that they qualify for participation in the Second Phase of the Tender Procedure, form a common legal entity that will participate as part of the consortium along with the third legal entity. / Members of a consortium may not form a company to substitute themselves as a consortium member.
21 / 2.5 / According to section 2.5 of the Invitation: "For the purposes of participation in the Tender Procedure and the subsequent execution of any contractual agreements, Candidates may form a bidding consortium."
Please clarify which form of cooperation does the term consortium refers to (consortium, joint venture or an alternative form?) and the required documentation per case. For instance, in the case of joint venture for the submission of Expression of Interest is the submission of the agreement between consortium members required or a declaration of their participation suffice? / Consortium means a union of persons, including joint ventures. In the First Phase of the Tender Procedure, members of the consortium must declare that they participate in the tender through the specific consortium and they must also mention the respective percentages of participation in the consortium as described in paragraph 3 of the Invitation.
Further, the Invitation to Bid will provide for specific requirements for the consortium agreement.
22 / 2.5.2 / The requirement regarding control of operational matters that relate to the organisation and operations of the SPV and the appointment of the key management team (e.g. CMO, CEO, COO) by the Lead Member is not clear given that this is an issue that should be settled among the consortium members especially since non-lead members of the consortium could be companies with expertise in the sector. Moreover, given that the Lead Member’s participation cannot fall under 33.34%, another member could have a higher participation in the consortium (even the absolute majority).
In any case, the provision of control rights of operational matters and appointment of the key management team could be only provided to the Lead Member that holds at least 50.01% of the consortium and/or the SPV and for as long as he retains this stake. / The Lead Member should control the operational matters that relate to the organisation and the operation of the SPV, by appointing the key managerial team (e.g. CEO, COO, CMO).
23 / 2.5.2 / According to section 2.5.2 :" In the event that an Expression of Interest is submitted by a consortium, the consortium must designate one of its members as the leader ….. The Lead Member, as it is represented in the Tender Procedure, is required to be duly authorised by the other consortium members to represent the consortium before the Fund."