Orco Property Group has filed for court protection from creditors as it struggles to unload assets and get back loans from some of its units, the real estate developer said on Thursday.
Orco, which is based in France but operates in central and eastern Europe, said the market conditions are making it difficult to sell property assets and it was having a difficult time getting back loans from some of its subsidiaries. It also faces payments to banks to extend credits maturing in 2009, the group said.
“Backed by (the protection), the management of OPG will have the time needed to restore the group’s financial health and to advance the discussions we have already started with our financial partners,” Jean-Francois Ott, Orco’s chairman and CEO, said in a statement.
“We are convinced that within the framework of this procedure, the full range of measures we are taking and the expected positive impact of our many projects underway, the group will be well placed to emerge from the economic crisis,” he said. The French protection procedure is for a renewable six-month period, Orco said.
Central Europe’s property markets have come under strain in the global slowdown and banks have tightened lending conditions, hurting developers who had aggressively invested in the region in recent years.
Orco has been facing problems since last autumn. The Luxembourg-registered company, focuses on office and residential development the Czech Republic, Slovakia, Hungary, Poland, Germany and Croatia.
The group reported full-year revenues of €299 million ($405.9 million) in 2008, up 10%, and said it expected revenue of at least €277 million this year. It sold assets worth €186 million last year, it said in the statement, and refinanced €100 million of the €188 million of debt that is due in 2009.
Orco shares have shed 89.4% of their value in the last 12 months, much worse than a 45.8% drop in Prague’s main index. The Prague bourse said it suspended Orco shares on Thursday. The stock fell as much as 11.5% in Warsaw and was down 7.5% at 0909 GMT. (Reuters)