Imtech Stock Drops on Possible Polish Project Writedowns

Royal Imtech NV, the Dutch provider of infrastructure for stadiums at the 2012 London Olympics, dropped the most in more than 23 years after predicting writedowns exceeding 100 million euros ($136 million) in Poland.

Imtech fell as much as 50 percent to 9.83 euros, the biggest intraday decline since at least October 1989, and was trading down 47 percent at 2:42 p.m. in Amsterdam, valuing the company at 992 million euros.

“Imtech has been severely harmed by lack of financing of its largest customer in Poland, and possible irregularities in respect of Imtech projects” in the country, the Gouda-based company said in a statement. “Imtech has ordered a forensic investigation into the situation.”

The projects in the probe include a 680 million-euro contract that Imtech said in July was its largest order ever. The project involved final completion of Adventure World Warsaw, a 240-hectare (575-acre) theme park and resort to include hotels, restaurants and 25 attractions.

“This is totally unexpected, both in terms of timing and size of the problem,” Andre Mulder, an Amsterdam-based analyst at Kepler Capital Markets, said in a note to investors. Mulder put his buy recommendation under review.

Covenants Breached

The company, which today said it suspended local Polish management and will probably scrap its 2012 dividend, also started talks with lenders because of the possible writedown is likely to cause Imtech to breach debt covenants. Earnings before interest, taxes, amortization and excluding the writedown were higher in 2012 than a year earlier, it said.

Imtech suspended publication of its annual results, initially scheduled for tomorrow, and its April 3 annual shareholders’ meeting.

“This is very bad news,” Edwin de Jong, an Amsterdam-based analyst at SNS Securities, wrote in a note to investors. “We get serious doubts on the control Imtech has on its units,” said De Jong, who lowered his recommendation on Imtech to sell from buy.

The writedown also relates to a project involving energy-generating bio-power stations in Warsaw.

“Imtech has established that the advanced payments for four Polish projects don’t comply with the agreements made with the customer regarding the availability of the payments to” the company, it said. “This is because the customer has not secured its financing.”

Park ‘Confident’

Adventure World Warsaw is confident that long-term financing will be secured in the second quarter at the latest, the park’s management board said in a statement. “We’re saddened by the recent information on the internal problems” at Imtech and offer any assistance needed with the investigation, the board said.

Robert Nowak, a spokesman for Imtech’s Polish business, didn’t immediately respond to a message seeking comment that was left with colleagues.

Imtech provided heating, air conditioning, energy supply and other electrical-engineering work for the Polish stadiums in Warsaw, Gdansk and Wroclaw during last year’s European soccer championship.

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