Prague’s Congress Center (still) drowning in debt

Back in July 2009, we noted that Prague’s Congress Center was up to its ears in debt. Incredibly enough, after it again started looking like bankruptcy in 2010 when KCP didn’t know how it would pay the coupon on its bonds, the wheels of change seemed to start churning: the rather rational decision was taken to hold a tender to find a strategic partner for the collosus. Of course, any time such pragmatic, sensible decisions are taken, you should expect to get slapped back into reality: the big, painful decisions are only taken once its too late to make the rational, less painful ones.

Still, it was easy to forget that rule when Penta and the Zatisi catering group won the tender, and it began to look as if things were finally moving forward.

They’re not. Finance Minister Miroslav Kalousek said back in November that something about the deal “stinks” and that he’d have to investigate it. (Kalousek himself knows a bit about such accusations…) No word since on if that’s happened, or what the outcome was.

Which brings us to the point, which is that real chaos appears to be breaking out: KCP has to pay that pesky €3m coupon on its bonds again (guaranteed by the Czech state) by April 9. Unfortunately it only has CZK 7m in its accounts.

KCP sent a letter to the city of Prague and to the Czech government suggesting they get cracking with those negotiations with Penta/Zatisi. At the same time (yesterday), KCP’s  chairman of the board Milan Richter, announced his resignation. Richter was brought on as a crisis manager, and now claims it’s “job done”.

Read into that what you will, but this does not sound like the stuff happy endings are spun from. No — these are the type of noises made before tax payers are asked to pay the bill. Let’s hope it’s a bluff.

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