Category Archives: distress

Crestyl to lead reorganization of ECM REI

ImageThe credit committee of ECM Real Estate Investments has chosen to entrust the reorganization of the company to the development group Crestyl.

The reorganization of ECM REI was accepted back in March as the outcome by the courts of an insolvency process that had taken a year. Crestyl’s goal will be to minimize the impact of insolvency on ECM’s position and its properties.
Crestyl’s director Omar Koleilat said “This is a very interesting experience and I believe we’ll be able to complete the assignment successfully. We intend to work very closely with the credit committee and with the whole management of ECM.”

The option before the committee, and which was reportedly preferred by some, would have been to simply liquidate all the property of the company. The implication would seem to be that with a professional property company running the show, considered decisions on how best to proceed with ECM’s assets will be taken, meaning some properties may yet be developed in order to produce a greater level of return. Part of the deal is that ECM REI’s management structure will be changed, including the appointment of Koleilat as board member. ECM’s various companies will then be moved to Crestyl’s offices “in order to maximize the synergies of both teams.”

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PPF objects to management changes at ECM

PPF has filed an injunction against potential changes to the board of directors at the failed developer ECM. A Prague court was due to decide whether to accept a proposal under which top board members in ECM would be replaced by three people from the Prague developer Crestyl. There’s a great deal at stake, with interests as diverse as the creditors of EMC themselves, so that someone has filed an official complaint should come as little surprise.

Crestyl to lead ECM out of bankruptcy?

The Czech developer ECM is reported to have been taken out bankruptcy and placed in a temporary legal limbo zone as a Prague court decides whether to accept a re-organization arrangement suggested by the company. The idea apparently is for ECM to relinquish board positions to representatives of the Prague-based developer Crestyl. Its director Omar Koleilat would become chairman of the board. One of the other options that had been in play earlier this week reportedly envisioned Anton Hopfgartner (Property Solutions) filling that role.

The liquidator in charge of ECM until now, Ivo Hala believes a re-organization isn’t feasible, as it would require an influx of new money to the company. “Bankruptcy proceedings seem to be more advantageous because they offer greater satisfaction for the creditors in a shorter time horizon,” he wrote, according to court materials cited by CTK.

However, some of ECM’s creditors seem to be leaning the other way, including Astin Capital Management, which is representing bond holders with CZK 3.1bn. The decision on re-organization now lies with the courts. (As ever, public comments or private emails on the issue are more than welcome)

DTZ shares drop

DTZ is all over the news today, thanks to a rapid fall in its share price. It’s not surprising, given a statement it made this morning which doesn’t exactly paint an optimistic picture: “Based on the valuation of DTZ derived from proposals received to date, however, and, given the level of debt within DTZ, there is minimal value, if any, that may be attributed to the ordinary shares of DTZ, although the exact value is uncertain.” Its share price had plunged 76% before 9 a.m.

A previously announced takeover deal for DTZ by BNP Paribas and DTZ’s main shareholder fell through, reportedly due to worsening access to finance.

Court throws out permit for ECM Pankrac scheme

Chalk one up for the activist groups. A court in Prague has stripped ECM’s scheme City Epoque of its urban planning permit thanks to a suit brought by local residents. The ruling is unlikely to please creditors of the company, whose huge debts forced it into bankruptcy. The V-shaped building was supposed to house 126 apartments, along with some penthouses that would have their own swimming pools. Like every single other project that’s ever been built in Pankrac, it’s been dogged by persistent local activists.

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HN on the break-up of PPF and ECM

A very interesting story in yesterday’s Hospodarske noviny, which details some of the gory details in the collapse of Czech developer ECM. Its primary claim is the slide into bankruptcy began when the relationship between PPF and ECM deteriorated. Peter Kellner’s PPF had taken a 75% stake in their joint company called PPF ECM Holding, with ECM founder Milan Janku holding the remainder.

Janku’s own company ECM Real Estate Investments “never belonged to the joint company, but its method of financing was unacceptable for Kellner,” writes HN. It specifies a pair of bonds issued by ECM REI in 2006 an 2007 that brought in €54.8m but which had resulted in liabilities of €125.7m. PPF eventually refused to take part in the restructuring of these liabilities, and HN says the joint company eventually broke up over the issue. Continue reading

Curious times at ECM

Milan Janku of the failed developer ECM has said he wants to sell 8 projects and complete five others. Those are worthy goals for most developers, but a bit difficult to pull off for companies that declare themselves insolvent.

It’s also a bit eyebrow-raising that the company’s share price jumped 20 percent yesterday. Raised the eyebrows of Prague’s stock exchange enough for it to halt trading the company’s securities for a bit. Somebody knows something we don’t (for now).