Orco Property Group, the listed Central European developer, has asked its shareholders to make sure the shares they hold are not used to short sell the company. Trading in Orco's shares was stopped in Prague last Thursday after they slumped more than 20% from opening levels. Orco shares fell to an historical time low of EUR 14.11 on Thursday morning. The stocks shortly resumed trading and closed the day with a drop of almost 15%. Orco shares have lost about 40% of its value in a week.
Orco Property Group, the listed Central European developer, has asked its shareholders to make sure the shares they hold are not used to short sell the company. Trading in Orco's shares was stopped in Prague last Thursday after they slumped more than 20% from opening levels. Orco shares fell to an historical time low of EUR 14.11 on Thursday morning. The stocks shortly resumed trading and closed the day with a drop of almost 15%. Orco shares have lost about 40% of its value in a week.
Orco is listed on Euronext in Paris and on the Prague, Warsaw and Budapest Stock Exchange.
In an attempt to reassure investors, the Prague-based developer said that the group did not 'need to resort to the financial markets' and confirmed its EUR 200 mln asset sales target for this year. The developer, whose stocks have lost 80% since the beginning of 2008, has a current market capitalisation of EUR 154 mln. 'Confronted with the drop in its share price, the group reiterates that it does not intend to use any of the available step up equity possibilities in the foreseeable future. The disposal program is on schedule,' the company said in a statement.
Orco followed up a day later by sending a message directly to shareholders to draw their attention to the phenomenon of short selling and asking for their help to tackle the problem. 'During the past six months, our stock has been shorted but this phenomenon has dramatically increased this week. We would therefore like to draw your attention to the fact that your shares may be the subject of short selling without your knowledge. The depositary banks where your shares are held may be lending your shares to speculators without keeping you informed,' the company said.
'Accordingly, we respectfully request that you formally inform your depositary banks not to lend your shares.' The statement continued: 'By doing this, we should all be able to reduce the short selling that has impacted our share price in massive volumes. We have always respected that the share price is an accurate predictor of corporate value. However, we are currently experiencing a unique disconnect between our share price and corporate value because the stock has been shorted for speculative gains.'
Orco said its management was focused on achieving its disposal program targets. 'Our tenants are paying their rents, our residential sales are in line with expectations and we maintain our turnover target of EUR 343 mln.
