Several investors have shown interest in acquiring Russell Wasendorf Sr.’s minority stake stake in Romanian property venture Avrig 35, according to the receiver selling off Wasendorf’s assets, quoted by The Wall Street Journal. The American businessman, founder of Peregrine Financial Group, is currently serving a 50-year federal prison sentence for embezzlement.
Russell Wasendorf Sr. holds an 11 percent stake in the Romanian company, according to Avrig 35 sources. Two investors expressed their interest in acquiring his shares, according to Michael Eidelman, the receiver who liquidates the Peregrine Financial Group founder’s estate to raise funds for clients and creditors. However, the names of the potential investors were not unveiled.
Avrig 35 was among the many ventures Wasendorf funded with USD 215.5 million in money embezzled from customers of his futures brokerage, writes The Wall Street Journal. However, Peregrine collapsed last year in July after the American businessman attempted suicide and left a confession detailing his crime.
The officials appointed by the court estimated that Wasendorf’s customers and creditors have to recover USD 190 million.
Peregrine’s headquarters, Wasendorf’s house, his Italian restaurant and other properties have been sold by Eidelman over the past year, raising about USD 6.5 million. Avrig 35 is the last asset that could bring in some cash, said Michael Eidelman, quoted by the Wall Street Journal.
Russell Wasendorf Sr. is a US citizen from Iowa and although he never visited Romania, he was one of the original group of investors who started Avrig 35 back in 1999.
Avrig 35 was hugely successful during Romania’s property boom and was valued at around USD 1 billion in 2007. The firm is famous for constructing landmark Romanian buildings, such as Charles de Gaulle Plaza in Bucharest (in picture), which was sold to GLL Real Estate in 2006. IN Romania, Avrig 35 is more connected to the name of founder Alexander Hergan.
After the collapse of the Romanian real estate market, many of the investment vehicles in which Avrig held property defaulted on loans. In 2008, Avrig 35 was selling Iris Shopping center to DEGI for some EUR 147 million. According to founder Alexander Hergan, the company will survive. “We plan to pay down USD 50 million of our debts in the next two months. We have saved this company in the past year,” he told Reuters.
More recently, the real estate investor went to court against retailer Cora Romania, asking for EUR 11.5 million in damages. The core of the conflict is a planner shopping center in Sobozia, where Cora was supposed to be a tenant. In the fall of 2011, Cora signed a contract with Avrig 35, and the developer was supposed to deliver Cora’s hypermarket within 12 months.
Because of the bad weather in the beginning of 2012, the developer had to temporarily start work, but after it was re-started, and when the project was 60 percent completed, Cora asked for the work to stop again for some technical checking. Despite the good results of the assessment, Cora later sent a notification to terminate the collaboration, saying technical fault had been found, said Matthew Proskine, CEO of Avrig 35, quoted by Wall-street.ro. By then, the developer had invested EUR 7 million in the Slobozia construction.
Irina Popescu, [email protected]