Qualis postpones the return of a 2.1 million euro bond issue

The real estate developer Qualis Properties from Braşov postpones the payment of the last coupon and the return of the principal of a bond issue worth almost 2.1 million euros, listed on the Multilateral Trading System of the Bucharest Stock Exchange (BVB), according to a published company report, on Friday on the website of our capital market operator.

The company claims that the real estate market in our country is facing a major crisis due to the increase in the prices of construction materials and the increase in VAT on housing, so that the companies in the field have important difficulties in terms of maintaining financial balance and are making it increasingly difficult towards debt service.

"Against the background of the deterioration of the economic situation, starting from 2023, Qualis Properties, at the initiative of the company's management, tried to conserve the technical and human resources at its disposal and take a series of measures. The measures aimed at the liquidation of non-moving assets, the completion of work on previously started objectives, the preparation of new projects, the rescheduling of the company's debts by adapting them to the receipts from the operational activity, the renegotiation of contractual clauses with customers, suppliers or credit institutions, etc., it is mentioned in document. According to the company, although the applied restructuring measures had visible effects, they did not manage to compensate for the obvious commercial crisis in the profile market. "Attempts to adapt to the market and start new real estate developments require time, which the company cannot finance", the report states.

Qualis tried to open a preventive composition procedure, which was rejected by the court. "In this context, we focused our attention on the staggering of debts to suppliers in order to gradually liquidate the accumulated debts and to avoid the need to run any forced execution or insolvency procedures that would irreparably damage the interests of Qualis Properties, preventing financial recovery. as well as the interests of clients and investors," the document states.

Under these conditions, the company will not be able to pay the coupon and return the principal until January 21, when the bonds mature. "We express our firm intention to pay voluntarily and as quickly as possible both the main and the last coupon.

In this sense, we will continue to make efforts to liquidate part of the non-core assets and to restructure the activity in order to consolidate the economic situation", the report states.

According to BVB information, the bonds issued by Qualis Properties are suspended from trading, the last exchange being registered on January 10, 2024, at a price of only 34% of the nominal value. The securities, which were listed on the BVB in January 2021, have a maturity of three years, a nominal unit value of 100 euros and a fixed interest rate of 9% per year, payable quarterly.

For the half of last year, Qualis Properties reported operating income of 24.7 million lei, 57% below that of the first six months of 2022, as well as a small loss, compared to a profit of 2.3 million lei , between January and June 2022. According to reporting done at the end of September, the loss was a temporary situation and the company was taking steps to correct it. The causes were related to bureaucratic delays in completing some projects or the unprecedented increase in the prices of materials used to build ongoing projects.

On June 30, 2023, the company had three residential projects underway, namely Qualis 1, Qualis 2 and Civiq, as well as the extension of the Modulis project consisting of industrial halls.

Cătălin Dumitru Mândru is the owner of the company, holding in his own name 95% of the shares, and through Kron Build SRL the difference of 5%.