E-Star’s share price dropped as much as 9 percent and closed 1.4 percent lower at 440 forint in Budapest, extending this year’s slump to 90 percent. The company said today it’s struggling to collect payment from Hungarian municipalities for providing heating services.
The company is suffering “daily” difficulties as suppliers seek to enforce claims before E-Star is due to repay a bond on Oct. 24, E-Star said in a statement to the Budapest Stock Exchange. The company is receiving orders to pay suppliers “on a daily basis or requests for starting insolvency process in some cases,” it said.
“The firm’s liquidity and financing situation seems more than challenging,” Peter Szentirmai, a Budapest-based analyst at KBC Groep NV (KBC)’s broker unit, wrote in a research report today.
Gabor Vilhelm, a spokesman for E-Star in Budapest, didn’t have any immediate comment when contacted by phone and e-mail by Bloomberg today.
OTP is holding on to E-Star’s bonds on the expectation in the event of liquidation the company’s assets will cover 30 to 40 percent of the amount owed to bondholders, said Csaba Szalma, who manages 21 billion forint ($96 million) in OTP’s Supra Derivative Fund at OTP Alapkezelo Zrt.
“From a bond holder point of view the situation looks rather hopeless,” said Szalma, who also oversees other bond funds. OTP doesn’t own any of the bonds due this month, he said.
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