On 15 February 2021 AS Tallinna Moekombinaat (TMK), the subsidiary of AS Pro Kapital Grupp, contested the ruling of Tallinn District Court not to satisfy the appeals of TMK and its three creditors against the ruling by which Harju County Court decided to terminate the reorganization proceedings of TMK.
Today the Supreme Court decided not to take the appeal into proceedings. Due to this, the court ruling terminating the reorganization proceedings came into force. Without the reorganisation proceedings AS Tallinna Moekombinaat is not capable of fulfilling its obligations and has become permanently insolvent. Because Lintgen Adjacent Investments S.a.r.l has previously filed a bankruptcy application regarding TMK, the proceedings should continue in bankruptcy proceeding and TMK will not be filing for bankruptcy separately.
TMK plans to continue with daily business until appointment of an interim trustee managing the company in an open manner for the court and the creditors to maintain the value of the company and its assets at the best possible way. After that, the continuation of the activities of T1 Mall of Tallinn will be decided by the trustee in bankruptcy and the creditors.
AS Pro Kapital Grupp continues to consolidate the financials of TMK into the group until the loss of control of the subsidiary occurs. Loss of control will take place with declaration of bankruptcy of the subsidiary and appointment of an interim trustee. As of today, AS Pro Kapital Eesti (mother company of TMK) will carry the maximum losses of 26.4 million euros including the loan of 22.2 million euros, interest amount of 3.7 million euros and receivables in amount of 0.5 million euros. Investment into subsidiary has been valued as 0 (equity method) already since the end of 2020.
The maximum negative effect to the consolidated reports of AS Pro Kapital Grupp today is 39.7 million euros (including initial investment into subsidiary). At the same time, not consolidating TMK, AS Pro Kapital Grupp will have a positive effect from not consolidating TMK’s negative equity. Negative equity of TMK is higher than the maximum negative effect described above. When consolidating the subsidiary into the group, the negative effect of TMK to AS Pro Kapital Grupp consolidated results is higher than in the case of loss of control. Final impact will occur at the moment of loss of control. Bankruptcy of TMK will not affect liquidity of the group nor the short-term cash flows. However, there will be influence to the long-term cash flows for the mother company of TMK, AS Pro Kapital Eesti, as loan and interest payments and other receivables will remain unpaid.
AS Pro Kapital Grupp continues its real estate development activities. No group company has guaranteed liabilities of TMK. Our real estate developments in Estonia, Latvia and Lithuania are carried out by separate subsidiaries and have been financed independently.