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MCA ordered to repay loan

Owner says sum is not a standard loan but a future investment

By Markéta Hulpachová
Staff Writer, The Prague Post
July 25th, 2007 issue

The progress of one of Prague’s largest-scale development projects has come to a screeching halt.
Miloš Červenka, owner of the large Prague development firm MCA, received a seizure order from the Prague 1 District Court July 20 for his loan from PPF Investments (PPFI), an investment company co-owned by Czech billionaire Petr Kellner.
The 100 million Kč ($4.9 million) sum was a loan for the construction of Trojmezí, a residential development set to occupy over 2.5 million square meters (27 million square feet) on the outskirts of Jižní Město in Prague 4.
The court gave Červenka until July 22 to pay back the loan, a timeframe he called “physically unfeasible.” However, Červenka still has until Aug. 4 to appeal the court order, which was filed by PPFI’s debt collection firm AB-Credit July 19 — just one day before the court ruling.
“The law gives us a 15-day deadline to appeal the execution order,” Červenka told the daily newspaper Hospodářské noviny (HN). “It would be nice if the court met our requests just as fast as it responded to AB-Credit’s motion.”
PPFI’s actions caught Červenka off guard.
“Up until the execution order, neither AB-Credit nor its legal representatives had ever asked us to return the sum,” he said.
Based on his prior agreements with PPFI, Červenka considered the 100 million Kč he received an investment rather than a loan.
“The sum was not a standard loan, but an investment for future joint ventures,” he said. Upon the project’s completion, MCA would pay PPFI 50 percent of the profits from Trojmezí’s sale in return for its investment.
Although he is prepared to comply with AB-Credit’s request, Červenka said the seizure order was a tactic to strengthen PPFI’s negotiating power in the multibillion-crown deal.
“If talks with PPFI really do come to an end, we will return the full sum,” he said.
Both PPFI and MCA declined to comment on the seizure order.
“We feel it is inappropriate to comment the matter at this time,” said PPFI spokesman Jan Piskáček.
Other companies have previously expressed interest in Červenka’s projects. Until January, his loans were financed through Appian Group, a Czech-Dutch investment and consulting firm. When Červenka chose to refinance his projects through PPFI and PPF banka a.s., another company from Kellner’s group, Appian was still open to working with MCA, “but not at all costs,” Appian Group spokesman Jiří Diviš told HN last December.
Since March, Červenka has also owned a majority stake in the parliamentary news channel ČT24, which he bought from the state using loans from PPF.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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