International Property News

ECM plans to raise CZK 102m from new share issue

15th Sept2008

Developer company ECM wants to raise up to EUR4.19m (more than Kc102m) through a new issue of 250,000 shares, the firm said in a press release Friday.

ECM will issue the new ordinary shares worth a nominal EUR1.7 (around Kc41.5) per share as of September 15.

ECM wants to use the money to boost its capital position. In the first half of this year, the company posted a loss worth almost EUR20m (around Kc490.5m).

The market's response to the news about the new share issue can be negative as it will dilute current shareholders, said Atlantik FT analyst Patrick Vyroubal.

According to Vyroubal's calculations, net asset value (NAV) will drop to EUR52.9 (around Kc1,293) per share owing to the share issue. In the first half of the year, NAV was EUR55.1 (around Kc1,346).

ECM shares have been falling on the Prague Stock Exchange (BCPP) in the long term. The stock has lost around 75 percent of its value since October last year.

ECM's rival Orco Property Group has been decreasing at a similarly fast pace on the Prague bourse in recent months. However, shares of both companies grew slightly Friday, with ECM trading at around Kc396.

ECM, based in Luxembourg, was established in 1991 by Milan Janku who is also its majority owner. Janku owns the company through a Dutch fund.

Apart from the Czech Republic, ECM also operates in Russia, Poland and China. At end-August, the company's portfolio consisted of 13 developer and nine investment projects covering an area of more than 518,000 square metres in total.

Source: Prague Monitor