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Hungary’s E-Star Alternatív financing difficulties, shares dropped

E-Star Alternatív Nyrt (ESTAR), a Hungarian energy company, fell after saying that payment demands from suppliers ahead of a bond maturity this month is threatening its operations.

The shares dropped 5.8% to HUF 420 by 10:43 a.m. in Budapest, extending their decline this year to 90%.

E-Star is facing operational difficulties “on a daily basis” as some suppliers seeking payment have asked to liquidate the company, according to an E-Star statement to the Budapest Stock Exchange filed late Monday.

“The firm’s liquidity and financing situation seems more than challenging,” Péter Szentirmai, a Budapest-based analyst at KBC Groep NV (KBC)’s broker unit, wrote in a research report today.

Earlier this month, the company announced a plan to terminate contracts with municipalities after an audit by Deloitte had shown that the bulk of receivables from municipalities led to mounting liquidity problems.

For further analysis on E-star's struggle click here