Listed property developer Orco declared it is willing to go to the highest levels of international law to settle an ongoing dispute with the Croatian Privatization Fund.
In a statement entitled “Orco will seek justice against the CPF” the developer accuses the Croatian Privatization Fund (CPF) of repeated breaches of contract and unsubstantiated attacks.
Five years ago, Orco entered into a shareholders’ agreement with the CPF regarding the formerly state owned company, Suncani Hvar dd. Since then, in accordance with this agreement, Orco has employed and trained hundreds of employees, invested €55 million of its own cash, and raised another €50 million mostly with bank debt for the Suncani Hvar, Orco said.
The developer claims that CPF repeatedly breached many of its contractual obligations, notably with respect to solving ownership issues that were inherited from the former communist regime, participating in supervisory board decisions, or simply meeting with Orco, which resulted in blocking the regular operations and the development of Suncani Hvar.
On July 12, 2010 Orco submitted a final letter to CPF listing more than 20 breaches of the shareholders’ agreement. The next day, which was also the expiration date of the agreement, CPF sent a formal letter improperly alleging that Orco breached the terms of the agreement and that as such, CPF was entitled to unilaterally terminate it.
A full-blown conflict between the two sides has been in the air for months. At the end of March, CPF found that in order to raise money for employee salaries, Orco started to sell its camp Viro and Piaca café bar, even though it had no right to do so without consultation with CPF. The fund was already threatening it would terminate the contract.
Orco said it will seek justice against CPF under the shareholders’ agreement and will not hesitate to bring claims against CPF at the international level. Orco is also requesting that CPF immediately authorize public publishing of the Shareholders’ Agreement and Orco’s past correspondence to the CPF. (BBJ)