Orco Shares Sink Most in 15 Months as Writedowns Trigger Loss

Orco Property Group SA fell the most in 15 months as asset writedowns worth more than half the central European developer’s market value sparked the deepest loss since the company got protection from creditors in 2009.

The shares dropped 12 percent to 1.83 euros by 3:33 p.m. in Paris, its steepest intraday decline since September 2012 and the lowest level since October 2012, valuing the company at 210 million euros ($284 million). Orco slid 11 percent in Prague.

The net loss attributable to shareholders from January to September was 116.7 million euros as the developer took 146 million euros of impairments and asset revaluations in the third quarter, Luxembourg-registered Orco said in a Nov. 30 statement. That compares with a restated loss of 34.3 million euros for the same nine-month period of 2012.

“A huge deepening of the loss and growing financial risks mean the overall earnings are negative for Orco shares,” Miroslav Frayer, an analyst at Komercni Banka AS in Prague, wrote in e-mailed comments yesterday.

The results, which are the worst since the full-year loss of 250.6 million euros in 2009 when Orco won court protection from creditors, create a setback in the company’s efforts to revamp its business through asset sales and a debt-to-equity conversion. The stock is down 26 percent year-to-date in Paris, extending its retreat over the past six years to 98 percent.

Additional Risks

The writedowns reflect additional risks to construction and financing costs related to Orco’s flagship residential tower Zlota 44 in Warsaw, designed by Daniel Libeskind. Risks also include the Suncani Hvar seaside hotel group in Croatia, according to the earnings statement.

Nine-month revenue rose 3.6 percent to 107.8 million euros from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization increased 3.1 percent to 30.9 million euros, Orco said.

“The improved operational performance is undermined by risks accumulating on major projects and assets,” the company said in the statement. “The board of directors decided to recognize 146 million euros of additional impairments.”

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