Orco Property Group, the Luxembourg-based property company whose shares have sunk 80 percent this year, says it has no need to resort to the financial markets for liquidity. It also says a “massive” short selling of shares has helped force down the stock.
The statement, designed to reassure investors, came after shares in the Eastern Europe developer tumbled 17 percent yesterday, causing trading in the company to be temporarily suspended.
In response, Orco said it did not require fresh capital, and would not be using any of its step-up equity possibilities in the foreseeable future.
The firm added: “There has been no breach of covenant on any of our mortgage financing, nor is any foreseen. Our core historic shareholders did not sell any shares and we believe the drop is partly due to massive short selling.”
Orco, which manages the closed-ended Endurance Fund, still intends to sell €200 million ($288 million) of assets by the end of the year.
In June, the firm downgraded its growth forecast for the fund after feeling the effects of the credit crunch.
Orco is listed on the Paris, Prague, Warsaw and Budapest stock exchanges. It is currently concentrating on its “three pillars” of leasing prime properties that is has developed in capital cities in Central Europe, developing “middle class residencies” and managing investment funds.