The new board for the suspended Warsaw-listed debt collector Getback informed its creditors on Friday that it has received three offers to buy its assets, which would enable it to pay bond holders sooner. Seven former board members and senior staff were arrested on Wednesday morning.
Lawyers for former Altus TFI trust fund board members arrested last week promise to sue the Central Investigative Agency and the Prosecutor’s...see more
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The company’s current chairman Przemysław Dąbrowski said that they will soon be able to “make the details of the offers available to the creditors committee” and hopes to “complete on the sale of the assets by the end of 2018.”
The announcement comes in a week when the Getback issue was discussed in a parliamentary financial affairs committee calling for a parliamentary inquiry into the matter.
Getback’s bond creditors are due as much as EUR 600 bn as the company issued bonds to provide funds for the purchase of debt portfolios.
Currently, the creditors association are seeking 50 cents on the EUR of what they are owed. Meanwhile while the Company’s board are saying they could pay 31 percent, or 47 percent if its senior debtors, the commercial banks, who by right would automatically receive PLN 600 mln from the company’s remaining assets, also agreed to a cut.
From the king of the market to a pauper in one year
Getback obtained over PLN 740 mln (EUR 170 mln) from its 2017 IPO and had raised around PLN 2600 bn (EUR 600 mln) from bond issues, but is now insisting it can only return EUR 350 mln to its creditors. Worst affected are the company’s individual shareholders, whom the Getback board has offered less than one percent of the value of their shares.
The board of the troubled company announced on Friday that in the first half of 2018 it had made a loss of PLN 1.12 bn (EUR 480 mln). Its revenues for the first half were minus PLN 392 mln (EUR 90 mln). The company’s losses were due to a revaluation of its debt portfolio value, which had dropped by over PLN 500 mln (EUR 110 mln). In the comparative period of 2017, Getback’s revenues were PLN 338 mln (EUR 75 mln) in the black. Even so, the company went on to make a loss of PLN 1.35 bn (EUR 500 mln) for that year.
On Wednesday this week, seven people were detained in Warsaw and the surrounding area in connection with the collapse of the company, including the former deputy chairman and the head of its debt collecting section,. The arrests were allegedly in connection with causing the company losses of PLN 120 mln (EUR 28 mln) by signing unfavourable contracts. Additionally, these senior members of the management were allegedly picking out debtors for overly generous write-downs of debt,.
Getback, which was founded in 2012 and was launched on the Warsaw Stock Exchange in 2017, was suspended from trading in April 2018, after breaking rules on investor communications.
After that, allegations of financial malfeasance, fraud and overselling of bonds and failure to pay bondholders on their due dates led to a series of arrests, starting with the former chairman Krzysztof K. and his advisor Piotr B., now awaiting trial on various charges.
As well as employees of Getback itself, those arrested included over the past few months board members of two unit trust funds, detained for their alleged involvement in deals purportedly designed to defraud Getback, including the takeover of a competitor company at an inflated price.
The failure of Getback is being investigated by prosecutors, as well as the financial supervisory body KNF, and the National Audit Office.
source: Parkiet, Bankier, Poland In English
The scandal has affected the portfolios of Poland’s unit trust funds, known as TFIs. Altus TFI, which after the arrest of its chairman lost its account to manage the Polish portfolio of Norges Bank as well as others. At the end of September its assets were worth just under PLN 8 bn (EUR 1.8 bn), down from over PLN 14 bn (EUR 3.2 bn).
However, not only they are accused of gaining from Getback’s alleged malpractice. Withdrawals from TFIs have exceeded pay-ins for several months. The industry is hoping to be rejuvenated by taking part in the new employee capital plan retirement savings funds (PPKs), a scheme which will start next year and guarantee a flow of funds intended for investment.
The Warsaw Stock Exchange corporate bond market, Catalyst, however, does not seem to be showing any signs of ill health. Data that came out on Friday shows that only 2.1 percent of all of the monies due on bonds listed on the market were not paid. The total amount defaulted on was PLN 179 mln (EUR 36 mln), of which Getback defaulted on PLN 96 mln (EUR 21 mln). Much of Getback’s portfolio of debt was not on the market or has not yet fallen due. That suggests that the market is functioning well as a whole so far.