* Orco CEO determined to hang on to real estate assets
* Aims to increase stake in company, not buying yet
* Has no intention of resigning
(Adds quotes, background, shares)
By Jan Korselt
PRAGUE, April 27 (Reuters) - Troubled real estate developer
Orco Property Group <ORCO.PA> <> will focus on debt
restructuring while under protection from creditors and aims to
avoid a fire sale of assets, its chief executive said.
Under pressure from some minority shareholders,
Jean-Francois Ott also said he had no intention of resigning.
Orco, the first large-scale victim of the global financial
crisis among real-estate firms operating in recession-hit
central and eastern Europe, was granted six months of creditor
protection by a French court in March, extendable to 18 months.
"Due to the 'sauvegarde' (creditor protection) procedure, we
have obtained time as a partner, instead of having time as an
enemy," Ott told Reuters in a telephone interview.
"Clearly, we do not want to sell (assets) now. It is the
worst time in history."
Orco said in April, after several delays in its 2008 results
announcement, it had booked a net loss of 390 million euros last
year, including 404 million in impairment and asset revaluation.
The Luxembourg-registered developer said it needed to
refinance 310 million euros of debt maturing over the next 12
months, which analysts said may lead to massive share dilution.
Ex-communist new EU member states Czech Republic, Poland and
Hungary saw a steep growth in the real-estate prices this
decade, fuelled by booming economies and speculative investments
from the richer West.
But now, Prague, Warsaw and Budapest are flooded with empty
high-end newly built offices and apartments, after the crisis
cut lending to developers and prospective investors -- resulting
in the first drop in the market's value in 10 years.
Ott said he saw a small revival in confidence among banks in
the past few weeks, but any visible recovery was not in sight.
"We do not know if it is six months, 12 months, 18 months,
nobody knows, the market is still going to be difficult for some
time," he said.
The main goal for Orco is to keep the existing projects
running, and the firm has secured the 200 million euros spending
budget needed this year, Ott said.
Orco also plans to divest non-core businesses, such as
hospitality, property and logistics.
UNDER FIRE
Ott's stake in Orco fell to 1.6 percent from over 10 percent
last year after he was forced to sell part of the stake due to a
margin call.
Ott, who founded Orco 18 years ago, said he would push to
increase his stake in the coming weeks but gave no details. He
said he was not buying into Orco at the moment.
Orco's management faces protests from some retail
shareholders after the stock price fell by 94 percent over the
past two years, leaving its market capitalisation at $91 million
on Monday.
Czech group SOS Orco has been gathering retail investors to
secure votes to influence decision-making in the firm, and
possibly to vote Ott down later this year.
"Jean-Francois seriously underestimated the impacts of the
current crisis," said Lubos Smrcka, an SOS Orco representative.
"I could not imagine that Mr. Ott would stay, as he is now
the main obstacle for the firm to survive," he told Reuters.
Smrcka said he had a preliminary agreement from shareholders
representing around 15 percent, though he did not have enough
power to influence an April 30 annual general meeting.
Ott rebuffed the complaints, saying he saw support among the
majority of shareholders for the management's latest steps.
"(Leaving Orco) never crossed my mind," he said. "I do not
want to let the company down in the middle of the storm."
On Monday, Orco shares jumped 19.9 percent in Paris, its
home market, to 7.56 euros by 1420 GMT, extending its gains to
49 percent over the past week, and analysts said some investors
may have pushed to increase their stakes before the AGM.
(Reporting by Jan Korselt; Editing by John Stonestreet and Jon
Loades-Carter)
