Espebepe looks to restructure amid bankruptcy fears
Market watchers have known for a long time that the company faced financial troubles, but fears of bankruptcy grew after Wielkopolski Bank Kredytowy (WBK) recently announced that it was demanding immediate repayment of its DM 1.4 million ($930,000) credit agreement with the company. "Espebepe didn't fulfill all the points of the credit agreement" with WBK, said Marek Szczepanski, WBK spokesman. Szczepanski declined to specify the exact loan agreement.
Espebepe was already reeling from a sharp turnaround in its 1995 financials when an audited version of the company's accounts showed in April that the company had suffered losses of $7 million, ten times worse than had previously been announced. The company is facing legal action from the Warsaw Stock Exchange and the Securities Commission because of the change.
The company had a debt-to-equity ratio of 3.3 and reserves came to zl. 11.8 million ($4.5 million) at the end of 1995.
Espebepe's ratios are so bad that the company is going to have extreme difficulties paying its debts, said Piotr Marczewski, broker at AmerBrokers. The only way out would be if a new investor came to hand. If an investor for the company is not found, "it will be the end of the company," Marczewski said.
WBK probably wanted to make sure that it would get its money back in case the company goes bankrupt, said Anna Ksieýopolska, analyst at Raiffeisen Capital & Investment Polska.
A saving hand could come from shareholders, the Polish-American Enterprise Fund (PAEF), which has a 19% stake in Espebepe, and BIG Bank and Bank Gdanski, together with a 21% stake. The three are planning to put together a joint project to restructure the company at the general shareholders meeting on May 30. But that could be in jeopardy after the president of the supervisory board, Dariusz Pronczuk (also a PAEF representative), resigned from his position last week. Wladyslaw Bagielowski, Espebepe's finance director also resigned from his position from the management board at the same time.
The resignations were due to differing opinions as to how the company should restructure its debts, said Adam Busz, Espebepe's commercial director. The company is currently negotiating debt restructuring with its creditors, he said.
Previous restructuring programs haven't met with much success. WBK's revoking of its credit agreement with Espebepe "indicates (that WBK) is not completely enthused" with the project, said Jacek Siwicki, vice-president of Enterprise Investors, which runs the PAEF.
Analysts blame poor management and an inability to benefit from the growing opportunities in the construction sector as the company's main woes. Company management is using an old style accounting system making it difficult for management to follow its accounts, said Raiffeisen's Ksieýopolska. The company covers a wide span of activities but doesn't know what contracts it can fulfill and which it cannot, she added.
If the company does go bankrupt, that could negatively impact market, said AmerBrokers' Marczewski.
Espebepe was already reeling from a sharp turnaround in its 1995 financials when an audited version of the company's accounts showed in April that the company had suffered losses of $7 million, ten times worse than had previously been announced. The company is facing legal action from the Warsaw Stock Exchange and the Securities Commission because of the change.
The company had a debt-to-equity ratio of 3.3 and reserves came to zl. 11.8 million ($4.5 million) at the end of 1995.
Espebepe's ratios are so bad that the company is going to have extreme difficulties paying its debts, said Piotr Marczewski, broker at AmerBrokers. The only way out would be if a new investor came to hand. If an investor for the company is not found, "it will be the end of the company," Marczewski said.
WBK probably wanted to make sure that it would get its money back in case the company goes bankrupt, said Anna Ksieýopolska, analyst at Raiffeisen Capital & Investment Polska.
A saving hand could come from shareholders, the Polish-American Enterprise Fund (PAEF), which has a 19% stake in Espebepe, and BIG Bank and Bank Gdanski, together with a 21% stake. The three are planning to put together a joint project to restructure the company at the general shareholders meeting on May 30. But that could be in jeopardy after the president of the supervisory board, Dariusz Pronczuk (also a PAEF representative), resigned from his position last week. Wladyslaw Bagielowski, Espebepe's finance director also resigned from his position from the management board at the same time.
The resignations were due to differing opinions as to how the company should restructure its debts, said Adam Busz, Espebepe's commercial director. The company is currently negotiating debt restructuring with its creditors, he said.
Previous restructuring programs haven't met with much success. WBK's revoking of its credit agreement with Espebepe "indicates (that WBK) is not completely enthused" with the project, said Jacek Siwicki, vice-president of Enterprise Investors, which runs the PAEF.
Analysts blame poor management and an inability to benefit from the growing opportunities in the construction sector as the company's main woes. Company management is using an old style accounting system making it difficult for management to follow its accounts, said Raiffeisen's Ksieýopolska. The company covers a wide span of activities but doesn't know what contracts it can fulfill and which it cannot, she added.
If the company does go bankrupt, that could negatively impact market, said AmerBrokers' Marczewski.
