Orco's financing talks with Colony Capital fall through

Troubled Central European developer Orco Property Group said that discussions with Colony Capital about a EUR 80 mln equity injection have terminated as Orco failed to secure a refinancing agreement with its banks. Orco started negotiating with the American investment company last April.

'Given the lack of debt restructuring to date, the investment conditions have not been met and Colony Capital's option has expired accordingly,' the Paris-based developer said in a statement late on Monday. The restructuring of Orco's EUR 411 mln of debt was a condition for Colony Capital to go ahead with the capital injection.

The developer, which has been under creditor protection since March, is seeking to sell a number of projects across CEE including Stein, a 88,000 m² mixed-use development in Bratislava, Slovakia; Bubenska, a 26,500 m² office and retail scheme in Prague's Holesovice district and the 37,000 m² Cumberland Haus redevelopment in Berlin.

'It is Orco's strategy to proceed with an orderly strategic asset disposal programme over 2009 and 2010, and benefit from the Procédure de Sauvegarde to avoid sale of assets at distressed prices,' the company said last week.

Net losses for the first nine months of 2009 rose almost tenfold to EUR 259 mln from EUR 26 mln in the same period a year before. The bulk of the losses were reported in the second quarter of the year (EUR 200 mln) with the third-quarter loss totalling just EUR 2 mln.