Australian investment fund APN/UKA, which owns the City Mall shopping center in Bucharest, has asked for the insolvency of the Romanian company which runs the shopping mall, Victoria Holding.

The fund was supposed to repay a EUR 40 million loan to UniCredit bank this month. The company has been negotiating with the bank, as it had breached the required interest ratio covenant when the shopping mall was valued at EUR 35.4 million in June this year.

“Although discussions are continuing, the Facility Agent (the bank, e.n.) has notified the borrower that the loan is now due for repayment in full. As a result of this notice, the relevant subsidiary is no longer in a position to meet its debts and it is expected that it will therefore file for the equivalent of voluntary administration under the Romanian bankruptcy regime,” according to the fund.

This loan is a limited recourse loan and has no ongoing financial impact to the AEZ group, with the exception of a corporate guarantee which secures the payment of any interest or amortization shortfall under this loan to 30 November 2010. This amount is expected to be less than EUR1 million, the fund said in an official statement.

editor@romania-insider.com