The investment fund European Convergence Development Company plc (ECDC), which manages several shopping mall projects in Bulgaria, has announced that it lacks bank financing for the completion of two of its projects.
ECDC has announced that it has not been able to secure bank financing for its projects in Bourgas and Sliven, which represent around 16% of the fund’s net assets towards June 30, 2008. Its strategy envisages that the projects be completed with the fund’s own capital to a certain stage after which the company hopes that it would be able “to secure bank loans on the basis of the improving market conditions.”
ECDC has sufficient capital in order to obtain a construction permit for Trade Centre Sliven and to complete the design and obtain a construction permit for Bourgas Retail Park. The fund is currently in negotiations with potential key tenants (supermarkets, electronic chains, and do-it-yourself store chains) regarding the two retail centers.
The fund believes that after signing in the key tenants and obtaining the construction permits, which are expected in the second half of 2009, it would be able to more easily secure bank financing.
In addition to the two above mentioned projects, the fund is currently developing shopping centers in Plovdiv and Rousse as well as three retail projects in Romania for which it has secured bank financing. Nevertheless, the financing for some of the projects will have to be re-negotiated because it is very short-term (less than a year).
Presently the fund owns seven projects and has cash reserves of 30 million Euro. Due to the change in the market environment, the fund has delayed its negotiations regarding the investment of the available capital. “The company can think of starting new negotiations when the (appropriate) opportunities arise or when market conditions improve,” the fund management said.
ECDC is listed on London Stock Exchange and is being managed by the British company Charlemagne Capital, which also owns another fund, European Convergence Property Company PLC (ECPC). This fund owned several retail centers in Romania and the Veliko Tarnovo shopping mall. However, last year it sold all its projects in Romania and is currently looking for a buyer for its Veliko Tarnovo mall.
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