Restricted default of Polish debt collector GetBack shocks market

Capitea SA

26/04/2018 15:34

* GetBack says it did not redeem $25 million in bonds
    * In response, Fitch downgrades GetBack to 'restricted
default'
    * All outstanding bonds have nominal value of $744 million
    * 178 institutions exposed, 9,064 retail bond investors
    * Regulator has asked prosecutor's office to investigate

    By Marcin Goettig
    WARSAW, April 26 (Reuters) - Polish debt collector GetBack
has so far failed to redeem bonds worth $25 million, it said on
Thursday, augmenting worries about the remaining $719 million
worth of bonds of a firm that only last year used to be a
darling of capital markets.
    The sudden crash of the bonds and shares of GetBack has
taken investors, analysts and regulators by surprise, weighing
on share prices of other listed firms. 
    The ratings agency Fitch cut its rating for GetBack's debt
to 'restricted default' on Thursday.
    "The downgrade reflects Fitch's view that the partial
non-payment on bonds (...) constitutes an uncured payment
default," 
the rating agency said.    
    Earlier this week, Poland's financial regulator KNF asked 
prosecutors to investigate GetBack, adding that nearly 200
institutions and over 9,000 retail investors held the firm's
bonds. 
    The company's shares have lost nearly 90 percent of their
value since October. GetBack debuted in the stock market in July
last year, attracting investors with its aggressive growth
strategy. 
    The firm bought up large portfolios of distressed debt at
much higher prices than its competitors at a time of robust
economic growth in Poland, coupled by record low unemployment
and quickly rising wages.
    Several respected brokerages had a 'buy' recommendation on
GetBack shares until late last year. 
    The mBank DM brokerage  MBK.WA , indirectly controlled by
Germany's Commerzbank, had recommended buying GetBack shares in
November last year, praising the company's "above average
effectiveness" and setting a target price of 33.4 zlotys. The
recommendation was suspended on Apr. 16.
    The shares of GetBack have since plunged to 3.75 zlotys and
trading was indefinitely suspended by the regulator last week. 
    In February this year, GetBack said that rating agency S&P
Global changed the outlook on the firm's B rating to 'positive',
citing the growth outlook. S&P has since cut the outlook to
negative and suspended the rating altogether.
    GetBack Chief Executive Konrad Kakolewski was dismissed
earlier this month.  urn:newsml:reuters.com:*:nL8N1RT0YU  urn:newsml:reuters.com:*:nFWN1RT035
    The troubles of GetBack, which is controlled by the private
equity funds led by Abris Capital Partners, have dragged down
shares of other listed firms, including investment fund Quercus
TFI  QRS.WA .
    GetBack had been planning share issues worth up to 70
percent of existing capital and said last week the new board was
aiming to restore investors' trust in the company.  urn:newsml:reuters.com:*:nL8N1RX2NM
($1 = 3.4898 zlotys)

 (Reporting by Marcin Goettig
Editing by Alexandra Hudson)
 ((marcin.goettig@thomsonreuters.com; +48226539720; Reuters
Messaging: marcin.goettig.reuters.com@thomsonreuters.net))