Orco Property Group board presents safeguard plan to creditors

By Caroline Salls

Pittsburgh, March 31 - Orco Property Group SA's board has presented its safeguard plan as the company continues to refocus its business, according to a company news release.

Orco said the recovery plan includes an in-depth industrial restructuring aimed at refocusing the group's activities on its historic markets, improving cashflow and modernizing the group's corporate governance.

After numerous consultations with bondholders, the company said the board has submitted a 10-year rescheduling proposal to creditors.

According to the release, the diversity of expectations expressed by the various groups of bondholders made it impossible to reach a consensus on the conversion of bonds into shares in exchange for a partial reduction of the debt.

Under the proposal, the schedule of bond repayments, initially concentrated at more than 80% in 2013 and 2014, will be set back over the number of years estimated necessary for the execution of the group's projects.

The average maturity of the bonds will rise to less than eight years from three years, for an extension equivalent to a property development business cycle.

With an appropriate financial profile, Orco said it can return to growth in its key markets, and the board's restructuring of the debt will bear fruit over the next 10 years.

In order to concentrate entirely on the restructuring and development of the group, Orco said the board has proposed to repay 100% of declared claims over 10 years, subject to their acceptance as liabilities and following a schedule starting from the first anniversary of the court decision establishing the safeguard procedure.

The company said the plan integrates the burden the international crisis placed on the real estate sector.

Orco said the recovery procedure has limited it to selecting and classifying assets to be retained according to strict criteria and a profitability study, and not based on the group's cash needs. Orco said this has protected it from forced sell-offs at knock-down prices.

As a result, the group said it has decided to sell its non-strategic businesses over the next few years to concentrate on its core businesses, including commercial real estate, investing or reinvesting in underperforming and undervalued assets and residential and commercial property development.

The company said it has successfully renegotiated the group's bank debt in order to adapt it to the new conditions resulting from the economic crisis.

Orco Property Group is a Central European developer and asset management company based in Luxembourg.

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