Developer ECM has billion-dollar debts and is in insolvency proceedings

CITY Project at Pankrácká Plain

Prague - The development company ECM Real Estate Investments (ECM) had total long-term liabilities of 165.9 million euros, or about 4.1 billion crowns, at the end of March. Most of this consisted of bonds. This follows from the insolvency petition that the company filed against itself. The petition appeared today in the insolvency register. ECM wants to address its high indebtedness through reorganization.
      Total assets of ECM amounted to 140.1 million euros (approximately 3.4 billion crowns) at the end of March. Liabilities were higher, reaching 154.3 million euros (about 3.8 billion crowns) by the end of March.
      "The company's board believes that in the current situation this step, which allows for the restructuring of the company's debts, is the best solution considering the interests of all stakeholders of the company (entities that have a material interest in the functioning of the company). This step should also enable a faster realization of some planned transactions and better coordination of negotiations with ECM's creditors," the company stated on Tuesday.
      ECM submitted its insolvency proposal shortly after other companies joined the insolvency petition filed by Česká spořitelna and Volksbank CZ against ECM. Claims from Glancus Investments and companies from the Conseq group newly appeared in the insolvency register on Tuesday.
      In response to the insolvency petition, ECM's shares on the Prague Stock Exchange fell by up to 12 percent this morning. What happens to the developer's shares on the exchange will depend on the court's further proceedings. "The Prague Stock Exchange must wait for the court's decision and will consider further steps accordingly. In the event of bankruptcy declaration, we will follow the rules that speak of trading suspension or exclusion of the company from trading," said Jiří Kovařík, a spokesperson for the exchange, to ČTK today.
      In the past year, ECM has raised cash by selling key buildings and projects in Prague at Pankrák. Some time ago, it also disposed of a developing multifunctional center in Russia and a subsidiary managing real estate.
      The main project of the company at present is primarily the residential high-rise City Epoque in Prague at Pankrák. In the same location, new office buildings City Deco and City Element are also set to be built. According to media reports, ECM has been trying in recent months to sell both of these projects to the CPI group of billionaire Radovan Vitek.
      In 2010, ECM deepened its loss to 94.5 million euros, or about 2.3 billion crowns. A year earlier, the developer had a loss of 62.2 million euros. The results for the first quarter of 2011 will be published by the company this afternoon after trading ends on the Prague stock exchange.
      ECM was founded in 1991 by entrepreneur Milan Janků. Currently, according to available information, he is the main shareholder of the company and also serves as the company's CEO. He controls the company with shares on the Prague stock exchange through ECM Group.