Share price of JSE-listed property group falls after arrest of non-exec director

Update 17:55 - EPP said in a shareholder update that Przemyslaw Krych has "in the best interests of the company" resigned as a non-executive director of the company with immediate effect.

Konig told Fin24 on Thursday that at this point in time the company is confident that the levels of corporate governance in EPP are sound and Redefine has no reason to believe any EPP transactions have transgressed the law.

He emphasised that EPP note to shareholders on Wednesday might have created some confusion when its mention of an independent investigation is read in isolation as this could be interpreted as suggesting potential untoward activities in EPP.

"We disagree with that and think that confusion could have caused the market to react the way it it. We say the opposite," said Konig.

He added that he cannot comment on allegations, but at this stage details are limited in terms of Polish law. It is his understanding, however, that the investigation by authorities relates to Krych in his personal capacity and not as a non-executive director of EPP.

"Krych was not directly involved in EPP on a day-to-day basis and resigned late last night as Redefine requested," said Konig.

"We are confident that the company will get through this patch."

Cape Town - The share price of JSE-listed property company Echo Polska Properties (EPP) fell by 20% on Wednesday, after news broke that one of its non-executive directors had been "detained" in Poland. 

In a shareholder update on Wednesday morning, EPP [JSE:EPP] said Przemyslaw Krych had been detained at the order of the regional prosecutor's office in the southern Polish city of Katowice.

EPP said it did not know on what grounds Krych had been detained “as it is a matter being heard behind closed doors”. 

It added it could not say whether the matter is related to EPP. 

“If it is established that these charges relate to activities involving the company's business, the company will conduct an independent investigation and take any other actions as it deems necessary to ensure the protection of the interests of the company and its shareholders,” it said. 

Fin24 could not independently determine on what grounds he had been detained. 

The property group added it had received a message from Krych's attorneys, in which he denied that he had committed any crimes, and said he would "prove my innocence in a manner resulting from the law". 

Share price fall 

EPP shares, which were trading at R16.66 at 10:55 fell 20% on news of Krych's arrest. By 16:00 they were changing hands at R13.50. 

EPP is a Polish-focused property group that is dual listed on the JSE and the Luxembourg Stock Exchange. It listed on the local bourse in September 2016.

JSE-listed real estate investment trust (Reit) Redefine Properties [JSE:RDF] has a large stake in EPP. 

Redefine shares were trading about 4.5% lower on Wednesday afternoon. 

Krych is listed as a non-executive director of EPP on its website. 

“Przemyslaw is chief executive officer and a founder of Griffin Real Estate, a managing partner at Cornerstone Partners as well as a member of the supervisory board of Echo Investment and a chair of the Council of Directors at Griffin Premium RE,” states his short bio.

Redefine Properties, in a separate investor update on Wednesday afternoon, said that in the interests of “good corporate governance” it wanted Krych to step down. 

It added that in terms of Polish law, details of the allegations against him were limited.

“But we are given to understand that the investigation relates to Krych in his personal capacity and not as a non-executive director of EPP.”

It said that Krych was not involved in any of the day-to-day activities of EPP.

It noted that Redefine’s Andrew Konig and Marc Wainer were also non-executive directors of EPP, and are “confident with the levels of corporate governance that are applied within EPP and have no reason to believe that there are any transactions to which EPP is a party, that have in any manner transgressed the law”.

*Update - Wednesday December 20 at 18:55: this article has been updated to reflect the response from Krych's attorneys. 

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