Orco Tumbles Most in Five Years as Bank Calls for Loan Repayment

Orco Property Group SA (ORC) tumbled the most in five years as a creditor demanded a loan repayment within a fixed timeframe from the unprofitable developer of real estate in central Europe.

The stock slumped 22 percent to 0.73 euro by 5:10 p.m. in Paris, the steepest intraday drop since March 2009 and the lowest since Orco began trading in 1991, valuing the company at 83.6 million euros ($115 million). More than 4.7 million shares traded, or almost 10 times the three-month daily average.

A financing bank terminated a facility for Orco’s Zlota residential project in Warsaw and demanded loan repayments of $83 million be made within 30 days, Luxembourg-registered Orco said in a statement late yesterday. The company will sell “liquid assets” to help honor the obligation, it said.

“There is no chance they could sell even the most liquid real-estate asset in just 30 days, and if they did it would be at a huge discount,” Tomas Mencik, an analyst at Cyrrus AS brokerage in Brno, Czech Republic, said by phone today.

Orco’s net loss rose to 227 million euros, almost triple its current market value, from 42 million euros in 2012 as the company booked 193 million euros of writedowns, according to a March 28 earnings statement. Asset sales and a business revamp are needed to stem “critical liquidity risks” while a loss of majority control in its profitable Orco Germany SA unit earlier in March will weigh on future earnings, the developer said.

The company’s secondary listing in Prague slid 21 percent to 19.9 koruna at the close today.

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Ash Kumar, Chris Kirkham

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