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Interview: „Orco have to reduce debt by at least 1 to be able to survive, invest and grow,“ said Mattei, representing investors want to replace CEO Ott and Board

Interview: „Orco have to reduce debt by at least 1 to be able to survive, invest and grow,“ said Mattei, representing investors want to replace CEO Ott and Board

25.3.2010 17:43
Autor: Josef Němeček, Patria Finance

Investors owning more than 10 percent of voting rights want to replace Ott and the board to speed up debt restructuring, Jean-Pierre Mattei, who represents the shareholders. He is one of six candidates for the board of directors listed in the statement. “We have lost confidence in the chairman and CEO,” Mattei said. “After a full year under French ‘safeguard’ court protection, he has failed to cut down the debt burden that has been paralyzing the company and ruins any hope of a rebound.” Mr. Mattei answered few question for Patria Online.

Patria.cz: Could you please specify more the share of the voting rights in Orco Property Group which the group of shareholders You represent has available?

We stated that we represent 10% since this is the threshold for calling a General Assembly. We won’t go into further details than this but can tell you that we represent a combination of longtime shareholders and some newer investors (family offices, investors etc) that share similar concerns over the need for the company to address its debt issues. Addressing the debt issue is clearly all shareholder s' interest.

Patria.cz: Is Millenius Investments, which reportedly holds 7.74% in Orco, among the participants in Your association?

Yes, Millenius is one of a number of shareholders seeking the appointment of a new Board.

Patria.cz: If the current management of the company stays, what is at stake for Orco?

So far the CEO has failed to address the debt issue and what is really at stake is Orco’s debt reduction and therefore its capacity to survive. The final objective of our initiative is to create value for all the shareholders.

Patria.cz: Is Your criticism aimed at the whole management, or at the company´s CEO, Mr Ott, in particular? Do You think that there is somebody in the current management whose performance could be positively highlighted?

We are asking for the removal of the Board of directors, including its chairman (who is also CEO ), but we are naturally not seeking to remove the whole management! We are confident that, internally, there are some very good managers that are a real asset for the company.

Patria.cz: What is Your formula for the solution to the current problems concerning Orco´s indebtedness or other problems you find crucial. What ways of lowering the leverage would you choose?

As said before, Orco’s biggest challenge is to reduce its debt burden (1 . 6 bn euros) with an adjusted Ebitda of 65 ml euros. It would be just common sense to reduce the debt by at least 1 to be able to survive, invest and grow.

Patria.cz: Do You see the agreement between the warrant holders and debt holders as a real possibility, given the fact that according to the available information the bulk of the warrant and debt holders are funds with no motivation for exchanging bonds for shares?

Clearly there will have to be a negotiation with the bondholders to reduce the debt but we can’t right now speak about specific solutions before even starting the discussions with all parties involved.

Patria.cz: What should be in Your opinion the company´s strategy concerning real estate portfolio (last news coming from the recent management indicate focus on large urban centres and departure from less densely populated areas)?

The priority at this stage is the debt issue but a new Board of directors with some real estate and Central Europe specialists would be expected to take decisions in the best interests of the company . Once the debt issue is resolved, a clear audit of all the portfolios will be undertaken so that any strategical decision will reflect Orco’s actual financial capacity. But it’s really premature to speak about specific projects or portfolios before a clear assessment of the company's finances .

Patria.cz: Should Orco leave someone of its existing projects? Is there, on the other hand, a business line in the real estate sector that Orco should enter?

We’ll speak on the specific projects when the financial assessement has been completed.

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