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Orco Tumbles Most on Record as Bank Calls for Loan Repayment

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April 2 (Bloomberg) -- Orco Property Group SA slumped the most on record as a creditor demanded a loan repayment from the unprofitable developer of real estate in central Europe.

The stock fell 24 percent to 0.71 euro in Paris, the steepest drop and the lowest price since Orco began trading in 1991, valuing the company at 81.3 million euros ($112 million). Turnover was almost 11 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 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.

“I believe Orco is heading for liquidation,” Miroslav Frayer, an analyst at Komercni Banka AS in Prague, said by e-mail today. “A delisting will probably happen fairly soon.”

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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