Bulgarian property company Orchid Developments is facing a cash flow crisis following the collapsed sale of an asset.
In a stock market update issued this morning, the AIM-listed developer said it was no longer sure of the “full support of its creditors”.
The update said the company’s cash position was now “more uncertain than forecast” in previous updates when it acknowledged the large gap between market capitalisation and net asset value.
Orchid had said on 3 July it would continue to operate within its current levels of funding but said the margin of available cash remained small.
But in the update this morning it said: “The directors believe that the group is likely not to be able to operate as planned, unless additional capital is raised. Consequently, the board is considering the best manner in which to address its immediate working capital needs.”
Orchid chief executive Guy Meyohas said the board was now focused on resolving the situation.
“Additional capital will not only strengthen the group’s balance sheet but also will undoubtedly strengthen the position of the group in negotiating the disposal of its assets in order to deliver shareholder value,” he added.
The company’s shares crashed 50% in early trading and are now down almost 90% in the last year.
jack.sidders@estatesgazette.com
