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Petr Kellner interested in ECM

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PPF Group, owned by Petr Kellner, one of the richest Czechs, is negotiating with Milan Janků’s development company ECM Group.

According to information available to E15, PPF wants to acquire a significant share in the Pankrác projects City Tower and City Empiria, the biggest project of ECM Real Estate Investments (ECM REI). This way the company could obtain the necessary capital, which is so difficult to get on the market these days. Through his company ECM Group, Milan Janků has a 30% share in ECM REI.

“PPF wants at least a 50% share in this project,” a source told E15.

Interested in the skyscraper

PPF is leasing several floors in two Pankrác buildings that are the focal point of ECM’s current activities. Raiffeisenbank, which is financing ECM REI, is also one of the key tenants. “PPF believes it is better to own such a building rather than rent it under the current conditions and pay high rent,” another source told E15.

The source says the cooperation between ECM Group and PPF could become more extensive. ECM group, which is Milan Janků’s private company, announced this week it wants to acquire control over ECM REI. Its stocks are traded on the Prague Sock Exchange, but they have fallen to one fifth of their value over the last year. According to information available to E15, the company might not have sufficient funds to buy the stocks. “Milan Janků probably wouldn’t have enough financial resources to buy the shares, especially if his offer were to be very successful,” said a source close to the company.

PPF is paying attention

PPF representatives are only willing to talk about their cooperation with ECM in China. “We are only considering cooperation with ECM on the Chinese market. We are aware of the steps Mr. Janků is taking. We understand the logic behind these steps, but they entail a significant risk. We will be paying close attention as to whether Mr. Janků is able to stabilise the situation in a sector that could be significantly harmed by the financial crisis,” PPF spokesman Jiří Hájek told E15.

Due to the financial crisis, ECM REI cannot obtain any bank loans and must cover all the expenses from its own funds. The company has not confirmed or denied negotiations with PPF. “ECM Real Estate Ivestments has been speaking with a number of investors about possible cooperation on its projects,” said ECM REI representative Jiří Kašek.

“With some projects we can envision a possible cooperation with other investors in terms of project equity and mezzanine financing,” said Kašek.

According to Česká spořitlelna analyst Petr Bártek, ECM told investors in a statement a while ago that it is negotiating with several potential investors about the project, and that the sale could take place by the end of this year. “The value of these projects is EUR 56.8 million (about CZK 1.5 billion). I believe that in these tense times, ECM would get less than that,” said Bártek. The Pankrác buildings make up 11% of the total value of ECM’s property. According to Bártek, the company is currently dealing with decreased cash flow. “As long as the markets remain tense, ECM will need some additional captial,” added Bártek.

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