Back on the way up

"After five difficult months I've finally started to collect my wages," jokes Michał Kubicki, Vice-President of Korporacja Budowlana Inwestycje, created in place of the Kielce developer, PIA Piasecki Inwestycje, and living proof that even in times of deep crisis it is worth fighting for your company

This story has yet to end, but it seems that the decision made by PIA Piasecki Inwestycje in July 2002 provided that momentous twist and we are most likely to witness a very happy ending. For the time being, the company has disengaged itself from the PIA Piasecki SA holding company and is currently paying off its debts and completing unfinished projects.
PIA Piasecki Inwestycje was founded in 1998 with the aim of carrying out development and investment, particularly in housing. During its most prosperous times the company employed 25 people and carried out five major undertakings simultaneously. In an interview published in Eurobuild Poland in December 2000 we asked Tadeusz Barański, the then President of the company, about PIA Piasecki Investycje's successes and failures, to which he replied: "we haven't tasted failure yet and let's hope this will happen as late as possible or never. So far we haven't lost any major tender or lost on any investment yet but we haven't had a chance to make serious mistakes".

PIA Piasecki Inwestycje & PIA Piasecki SA
In July 2002, when the media were making a lot of noise about the mother company, PIA Piasecki SA's financial difficulties, and when the housing market was going through its worst months, these words no longer held.
"Unfortunately many people perceived PIA Piasecki Inwestycje and PIA Piasecki SA as one and the same company," says Michał Kubicki. "This led to our sales plunging by as much as 90 per cent and effectively made it impossible for the company to meet its financial obligations. In these circumstances we decided to leave the holding structure and look for an investor. What made a great difference was that Andrzej Piasecki, PIA Piasecki S.A.'s main shareholder, was conscious of the company's position and agreed to this solution."
The other company to leave the holding as well as PIA Piasecki Inwestycje was Białostockie Przedsiębiorstwo Budownictwa Przemysłowego Przemysłówka SA.

Four months, no cash
July, August, September and the first part of October 2002 was a period defined by a search for an investor, continuous news about petitions for PIA Piasecki SA bankruptcy being submitted all over Poland and increasingly frequent phone calls from concerned clients and creditors. It proved to be the toughest time in the history of PIA Piasecki Inwestycje.
"When you're in trouble creditors jump at your throat. Now and again we even had to deal with this sort of attitude coming from our partners. We were left with no other choice but to negotiate with them, explain and ask for their patience. It was tough but we managed to find those we could come to an understanding with."
Barma, who were building the PIA Piasecki Inwestycje estate in Katowice, agreed to take over the unsold apartments, while in Kielce, Unimax bought one of the housing schemes along with all the mortgage claims. The construction of Kasa Rolniczego Ubezpieczenia Społecznego in Kielce was continued, as Mr. Kubicki put it, "thanks to the trust our partners placed in us." The management of PIA Piasecki Inwestycje found themselves more at a loose end, however, with the property in ul. Niemcewicza in Warsaw.
"TUiR Cigna STU who insured of the construction credit from LG Petro Bank came to get us," said Mr. Kubicki "The bank gave us notice to terminate the contact and, as we hadn't paid any instalments from July to August, Cigna began to collect its dues."
Finally, after the company was taken over by the new investor, an understanding was reached with the insurer. Prior to that, PIA Piasecki Inwestycje entered the property in ul. Niemcewicza, along with all the mortgage claims, onto the land and mortgage register.

When in trouble call an investor
At the end of September last year, following three months of negotiations, Kredyt Serwis of Kredyt Bank signed a contract with PIA Piasecki Investycje and the owner of 60 per cent of its shares; the remaining 40 per cent went to BPBP Przemyslówka.
"I won't deny that we had debts with Kredyt Bank but it didn't greatly affect our choice of investor," says Kubicki and adds that PIA Piasecki Inwestycje was taken over together with PLN 26 mln worth of liabilities, which included PLN 6 mln of interest. PIA Piasecki Inwestycje has been conducting negotiations with creditors since the beginning of September, reducing the debt to PLN 18.5 mln as a result. TUiR Cigna STU is among the creditors with whom PIA Piasecki SA has reached an agreement.
"We've paid off our debts, so after four months, the management have also started to pay themselves a salary," jokes Mr. Kubicki. PIA Piasecki Inwestycje's situation since 25th November, on construction sites has also changed. The loan granted by Kredyt Bank will enable completion of the delayed project on ul. Niemcewicza in Warsaw, while the Katowice project was to be finished at the end of January and the Kielce headquarters of KRUS at the end of this month.

Developer with a 'record'
Michał Kubicki is certain of the bright future ahead of his KG Inwestycje and believes that the hardest months are already behind it. The company has a new investor, a new name and a financial shot in the arm, but above all, its first clients, who have bought flats and are interested in cooperating with a "developer with a 'record". Nonetheless, the company will have to exert all its powers in order to return to its former glory, and continue to enjoy it (i.e. settle the case of KBP 1 and sell the rest of its flats in Katowice and Warszawa), since the situation in the housing market is still not very stable.