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Foundry Daily News

20. January 2009

Poland - Odlewnie falls on bankruptcy filing

Polish foundry maker Odlewnie Polskie ODPL.WA said on Friday it was filing for bankruptcy, becoming the first Warsaw-listed company to face bankruptcy because of currency options. In a statement Odlewnie said the filing was due to: “banking valuations resulting from the currency option deals which caused the value of our liabilities… to top the value of the company’s assets”.

Last summer the Polish currency soared to a record high against the euro and many Polish companies took out hedging contracts, effectively betting on further zloty appreciation. As the currency weakened many of them found themselves with losses which some analysts said could be huge. “The state of insolvency arose due to extraordinary circumstances caused by a rapid and unpredictable strengthening of the euro versus the zloty and by the speculative character of the currency options agreements offered by banks,” the statement said. “In theory, those agreements were supposed to secure the company from changes of the zloty versus other currencies and in fact they exposed the company to a big risk,” it said.

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