Plan to save race track from insolvency

By INÊS LOPES [email protected]

Debt-ridden Algarve race track owner Parkalgar has announced that a special revitalisation programme has been initiated to ensure the company’s future and the viability of its projects, under the current economic and financial crisis.

A statement sent to the press last week read that Parkalgar – Parques Tecnológicos e Desportivos S.A. had initiated a Special Revitalisation Procedure (Processo Especial de Revitalização de empresas, or PER), a legal tool created in January to enable the revitalisation of economically and financially viable companies but which are facing difficulties in the current economic climate.

Parkalgar said that initiation of the procedure was made viable by its two main creditors, Millennium BCP and Bemposta – Empreendimentos Turísticos do Algarve, SA.

“Parkalgar has begun negotiations with its creditors the ensure its revitalisation and, through this vehicle (the PER), aims to secure solid foundations for the financial stability of its overall project, which includes investments being made for the conclusion of tourist apartments and a hotel, vital projects set out in the initial strategy of the company,” said the statement.

In the short term, Parkalgar says it hopes to be in a position that allows the Algarve International Autodrome project to achieve its objectives and thus continue to promote the motor racing industry as well as contribute to the development of the national economy.

Paulo Pinheiro, CEO of Parkalgar, declined to comment on the financial difficulties of the company that led to this legal tool being utilised.

However, speaking to Lusa news agency in late May, he said that an agreement had been reached with a consortium that had requested the insolvency of Parkalgar for the lack of payment of a debt to the tune of €1.6 million.

“We reached an agreement over this last instalment owed to the consortium,” Paulo Pinheiro said, adding that the request for insolvency by the consortium, made up of companies Siemens, Ensul Meci and SPIE, was a way of “exerting pressure” on Parkalgar.

The three companies were responsible for the electrical infrastructures at the race track and adjacent land, where the Technology Park is sited.

In March, in an exclusive interview with the Algarve Resident, the CEO of Parkalgar said that since the circuit had opened in 2008, it was going from strength to strength and that despite the economic turmoil, they were fully booked for events until mid 2013. But keeping up appearances seems to be difficult when faced with the harsh realities of the economic crisis.

Success despite the crisis

The race track is just one part of the Algarve International Autodrome project, which also includes karting facilities, off-roading park, VIP suites for visitors and apartments and a hotel yet to be completed.

Last year the autodrome received the distinction of Superbike World Championship Organiser 2011 and previously Motorsport Facility of the Year in 2009 by the Professional Motorsport World Expo Awards.

Commenting on the latest news involving the race track, the region’s tourism chief António Pina told the Algarve Resident that he hoped the company would achieve “great success” with its projects.

“Since the race track opened, it has been an important promotional tool for the Algarve, helping to raise its reputation and visibility not only nationally but also internationally and presenting the region to a consumer segment of the highest level,” he said, adding that the PER was necessary to ensure the viability of one of the main tourist attractions in the Algarve.

PER explained

Law firm Neville de Rougemont explained to the Algarve Resident that the Special Revitalisation Procedure introduced by the Portuguese Government will only be applicable to companies in serious financial distress or in an imminent insolvency situation, and only where certain requirements are met and whenever the revitalisation of the business is still viable.

This procedure will enable debtors to reach out-of-court agreements with its creditors regarding payment of the existing debts. Any agreement reached is approved by a judge upon which it will bind the debtor and all its creditors.

As part of the recovery procedure, negotiations may not exceed three months and during this period all enforcement proceedings against the debtor will be suspended.

If during this period, the debtor and creditors do not reach an agreement, the debtor could be declared insolvent by the relevant court.