In Romania, IIG was running the development of two industrial parks, at Satu Mare and at the outskirts of Bucharest, on Bucharest-Constanta expressway. The developer said in summer last year it had had nearly 40-hectares of land and it had estimated total investment of 100 million euros.
Sources in the market say, although this is the world’s first failure of a developer active in Romania, it will surely not be the last in the domestic market. IIG was initiating the construction works for the two projects announced, and the value of real estates under management in Romania was low.
“ In September 2008, IIG was hit by the liquidation of Belgravia Asset Management, an important, Jersey based financial partner to IIG. Together with IIG’s own funds and additional funds, Belgravia invested in IIG’s projects in Central and Eastern Europe, through project financing and the acquisition of completed projects. Belgravia’s liquidation had a significant impact on IIG’s cash flow position”, reads the press release remitted by the company.
When IIG turned to the financial market to address its liquidity requirements, it was faced with a heavy storm, as the bank crisis was at its worst. The global economic crisis led financial institutions to refuse project financing to IIG, despite the fact that IIG’s business model consists of strong company guarantees by IIG’s clients. As a consequence, IIG was forced to increase its own project financing share.
As early as October 2008, IIG started negotiations towards a significant capital increase and attracting new project financing sources. In the last quarter of 2008, IIG implemented a series of cost saving measures, including the departure of 16 staff members at headquarters. As negotiations with two potential investors were concluded unsuccessfully, IIG requested its banks to provide sufficient working capital to allow the company to comply with its obligations towards its staff and suppliers until the anticipated successful conclusion of the capital increase and project funding source negotiations.
“Unfortunately, the call was not heeded. Therefore, the board of directors and the extraordinary shareholders meeting had no option but to decide to file for bankruptcy today. This decision impacts directly on 74 employees and consultants at headquarters and indirectly on 137 employees abroad”, reads the press release of the developer.
Immo Industry Group was pan-European leader in of tailor-made industrial and logistic real estate. In last year’s fall, the company completed the construction of a steel manufacturing facility in Poland for Stalobrex, an ArcelorMittal daughter company. In April, 2008, IIG said it would establish the first industrial European unit for Lenovo, third largest PC giant, within a project in south-western Poland. In Central and Eastern Europe, including Russia, IIG was planning on constructing 18 industrial parks.
In Romania, the company was headed by Pavel Nedelcu since April 2008, and according to Ministry of Finance data, the company had outstanding debts of over 2.34 million euros. The representatives of the company could not be reached until the end of the edition.
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