RomReal borrowed EUR11.6 million from Alpha Bank and the loan matures on November 30, 2012.
“All interest on this loan up to maturity has been pre-paid in advance, but the principal payment will become due on the maturity date. The company does not have sufficient cash to make this payment, or any significant down-payment, as it has been very difficult to divest assets during the severe downturn in Romanian real-estate market,” said RomReal representatives.
The company’s management is currently in talks with Alpha Bank regarding loan restructuring and a decision has yet to be taken.
“The management therefore wants to inform that the company could enter in a default situation very soon if a solution with Alpha Bank is not found in time,” reads the statement.
If RomReal and Alpha Bank reach an agreement, the company might ask shareholders for a capital increase, possibly through a rights issue.
The loan was contracted in 2007 and Alpha Bank already extended the payment deadline by two years, until November 30, 2012.
RomReal is registered in Bermuda and was to develop real estate projects in Romania through Westhouse.
The company owns 14 plots of land in Bucharest, Constanta and Brasov, valued at EUR26 million. It developed only one housing project on the local market, in Constanta, and was involved in the development of two residential compounds in the same city.