Dutch-based M&E firm Imtech has initiated talks with its banks after being forced to write-off €100m on projects in Poland
In a trading update this morning the firm, which is targeting a major expansion in the UK, said it had been forced to make a “substantial write-off of at least” €100m on major projects in Poland, which meant it would “no longer fulfil its covenants with lenders”.
The firms said it had launched a “forensic investigation into the situation that has arisen” and that pending the findings of that investigation the local Polish management had been suspended.
The firms said the write-off” relates to three projects for Adventure World Warsaw and one project involving energy-generating bio power stations, also in Warsaw. These projects have a combined value of €757m, the firm said.
The firm said: “Imtech has established that the advanced payments for the four Polish projects do not comply with the agreements made with the customer regarding the availability of the payments to Imtech. This is because the customer has not secured its financing.
“After an initial investigation, and partly based on the annual audit by KPMG, the board of management has decided that a forensic investigation of the circumstances under which the projects concerned were accepted and executed should be carried out.
“Irregularities in these or other Imtech projects in Poland cannot be ruled out. Pending the findings of this investigation the local management in Poland has been suspended.
“The board of management has also determined that a promissory note and pledged accounts related to the Adventure World Warsaw project - amounting to around 200 million euro - that had been recognised in the half-yearly 2012 financial statements under cash and cash equivalents must, according to IFRS, be reclassified under current financial assets.
“Most of this amount was recognised as an advance payment under work in progress for the four projects concerned. This advance payment was considerably higher than the incurred costs. As stated above, the advance payments have not become available to Imtech. The effect of this is incorporated in the expected write-off of at least €100m.”