The Prague Congress Centre, a complex of buildings, land and services worth over CZK 3 billion, plans to sell roughly CZK 1.9 billion of its assets to raise money to settle its huge debts.
The project could start at the end of this year or at the beginning of next year. “It is fundamental for us to preserve the main building for congress tourism. We can get rid of everything else that is not connected with this business,” said Prague city councillor Milan Richter, chairman of the board of directors at the joint-stock company Prague Congress Centre (KCP).
The company’s CEO Michal Kárník said that the properties for sale include the struggling hotel Holiday Inn, the adjacent business centre, offices, commercial space and vacant land at Pankrácká pláň. They should be sold as a whole, not in parts. The radical solution came as a result of a tight financial situation at the Centre, which borrowed more than CZK 3 billion to host the International Monetary Fund and World Bank meeting in 2000. Since 2003 when the city of Prague stopped providing the firm with special subsidies, the debt service has swallowed a third of KCP’s sales revenues.
Auditors found out that the company might be unable to pay installments already in April of next year owing to a decline in tourism and to the economic crisis. The asset sale is the most likely solution out of three options that the city council was proposed. The council also asked the government for help with the debt settlement. “We have sent letters to the Finance Ministry and to the Government Office,” councilor Richter confirmed to E15. However, it is rather a formality given the condition of the state coffers. The third solution is insolvency, which KCP and Prague do not want to resort to.
Richter will present the city council with information about the final method of KCP restructuring in the middle of September. “Expert assessments of the assets are being worked out,” said Richter. A relevant public order and procedures connected with it will probably take the whole autumn to complete. KCP, opened in 1981, comprised the then Palace of Culture building in the beginning. “There are congress halls, lounges and other things in it. We can seat 9,500 people at the same time,” CEO Michal Kárník said. Between the years 1998 and 2000, an office building was attached to the centre for the needs of the IMF and the World Bank.
“The building then turned into a hotel that is part of the Holiday Inn chain. There is a franchisee operating it for us. In the second part of this building is the business centre Vyšehrad, which has some 10,000 metres of office commercial space. There is an underground parking facility there with a thousand places for passenger cars and buses,” Kárník added. In line with a 2006 expert assessment, the properties are worth roughly CZK 3.1 billion. The planned sales proceeds, as many as CZK 1.9 billion, should cover debts that KCP is paying until 2014.