Arca Investments’ Creditors Decide for Reorganization

The current situation at Arca Investments (AI) will be dealt with through a restructuring, the company’s creditors decided at their first meeting. More than 99% of creditors voted in favour of the proposal. Arca Investments and its economic and legal advisers, PwC and BADOKH respectively, will now develop a restructuring plan that will assure creditors receive at least 50% compensation for their claims over five years.

 “At today’s meeting, we presented creditors and their representatives with the current situation at Arca Investments and the way we want to resolve it. We’re very happy that creditors supported the proposal we presented and allowed us to develop a reorganization plan,” Arca Investments’ representative responsible for restructuring Peter Janiga said of the key result at the creditors’ first meeting, adding: “The restructuring will allow us to deal with the complex situation at Arca Investments legally, economically, and in terms of taxes. This will allow us to assure creditors at least 50% compensation for their claims in a horizon of 3-5 years.”

Arca Investments must now produce a restructuring plan as soon as possible. This proposal will be based on the previously presented summary of reorganization conditions that was produced by Arca Investments in cooperation with the interim creditor committee and its economic and legal advisers PwC and BADOKH.

The points of this summary are:

• AI offers creditors at least 50% compensation for their claims over a 3-5-year period. The alternative, bankruptcy, would mean dozens of percentage points less in compensation over 5-10 years.
  • The disadvantages of bankruptcy are based on a decline in the value of the AI’s assets if they are not further developed and their value is not increased and, instead, they are sold at an economically inappropriate time. The value of the assets reaches CZK 7.5-11.4 billion in the case of reorganization, but only CZK 4 billion in bankruptcy.
  • AI’s shareholders will not receive any compensation.
• A new Czech-based company will be created to which the vast majority of the assets will be transferred of AI’s assets, which will be gradually split into four groups: finance, industrial services, hospitality, and real estate.
  • The assets will be managed to increase in value and eventually, sold in a way to maximize the satisfaction of creditors.
  • The company will have a new management under the supervision of creditors. The selection of two out of the three professional managers will be the responsibility of creditors and the current statutory representatives of Arca Investments will not participate in this new management.

Creditors also elected members of the Creditors’ Committee, which is made up of J&T Banka, a.s. and Caleson Debt Solution a.s. for guaranteed creditors and IMOS Invest s.r.o., Traficon inkasní s.r.o., Real Controls s.r.o., and Spojené kartáčovny a.s. for non-guaranteed creditors.