ORCO PROPERTY GROUP | Q & A sauveguarde
Q & A sauveguarde
1 - What is the « Procédure de Sauvegarde » (Safeguard Court Protection)?
A Procédure de Sauvegarde is a French legal provision that enables a company to pursue operations while protecting its business from creditors’ claims for a limited period of time to allow it to complete its restructuring plan. This process is reserved for companies who can demonstrate they are solvent (no “cessation de paiement”). It does not affect the management’s authority. Thanks to European legislation n°1346/2000 of May 2000, this procedure is open under certain circumstances to companies with their registered seat outside of France.
With this protection, we will benefit from the conditions and the time necessary to accelerate the implementation of our strategic transformation and financial restructuring plan which has been underway for several months.
The Procédure de Sauvegarde will enable us to continue operating under usual conditions with respect to our employees, our suppliers, our customers and our other business partners.
2 - Why have you applied for the Procédure de Sauvegarde?
In the prevailing tough market and credit conditions, we are currently faced by a combination of the following:
- A slowdown in our divestment plan for certain property assets, due to the current market situation
- Difficulties in obtaining the repayment of shareholder loans granted to some of our subsidiaries
- Payments to banks to extend certain credits which mature during 2009
With this protection, we benefit from the conditions and the time necessary to accelerate the implementation of our strategic transformation and financial restructuring plan which has been underway for several months.
3 - Does it mean that you will go bankrupt?
No.
This process is reserved for companies who can demonstrate they are solvent (no “cessation de paiement”). It does not affect the management’s authority.
The Procédure de Sauvegarde will enable us to continue operating under usual conditions with respect to our employees, our suppliers, our customers and other business partners.
With this protection, we benefit from the conditions and the time necessary to accelerate the implementation of our strategic transformation and financial restructuring plan which has been underway for several months.
[A Procédure de Sauvegarde is a French legal provision that enables a company to pursue operations while protecting its business from creditors’ claims for a limited period of time to allow it to complete its restructuring plan. Thanks to European legislation n°1346/2000 of May 2000, this procedure is open under certain circumstances to companies with their registered seat outside of France.]
4 - Are OPCO’s subsidiaries covered by the Safeguard Court Protection? What will happen to them?
The “Procedure de Sauvegarde” applies to Orco Property Group SA, the Group’s parent company, and Vinohrady SARL, a French subsidiary, for a renewable six months period.
With this procedure, we will have the time and frame to work with our business partners in restructuring our debt.
Our subsidiaries will directly benefit from the acceleration of our restructuring plan and strategic transformation.
5 – Will you exit some on-going project or exit from certain of your activities or countries?
With this protection, we benefit from the conditions and the time necessary to accelerate the implementation of our strategic transformation and financial restructuring plan which has been underway for several months.
In strategic terms, we will refocus our Central European business on projects that will generate income in 2009 or in 2010
- Focus on strategic businesses (commercial rental properties and residential development) and exit from non strategic ones (logistics, hospitality etc.)
- Focus on our key cities of Prague, Berlin, Warsaw, Budapest, Bratislava. Exit from non strategic cities and countries.
- Orco Germany remains a strategic controlling interest for the Group. Orco Germany’s restructuring based on its GSG Berlin properties and its asset sale program largely comprising development projects, is being stepped up. Orco Germany is to continue to fund its own operations.
In operational terms, we plan to bolster and step up measures designed to improve its financial situation, specifically
- By amplifying our cost reduction program (operational expenditures and overheads costs)
- By refocusing our capital expenditure to key developments producing revenues over the next 24 months
- By completing the construction of pre-sold projects (724 apartments), so as to generate cash flow and profit from these transactions
- By gradually divesting the identified assets so as to avoid selling assets at distressed prices
We’ll communicate soon on the details of our plan.
6 - Have you already tried to negociate with your creditors? What will happen to them?
We have a permanent dialogue with the banks and creditors ; we already managed to refinance €100 million of the total €188 million of debt that falls due in 2009.
The Board of directors has mandated the management team led by Jean-François Ott to open discussions with our creditors and potential investors in order to improve its balance sheet.
With this procedure, we will have the frame and the time to work with our business partners on restructuring its debt. Meetings will be held in very short term with creditors and key suppliers.
7 – What will happen to your employees, supplier, customers and other business partners?
The Procédure de Sauvegarde will enable us to continue operating under usual conditions with respect to our employees, our suppliers, our customers and other business partners.
We are building a solid base for preserving and creating value on our portfolio and developments, which will benefit our employees, customers, suppliers and business partners.
Meetings will be held in very short term with our creditors and key suppliers.