Short-term car rental firm Elmo Rent has applied for reorganization proceedings following lower than projected revenues this year.
Elmo Rent has submitted its application for reorganization with the first-tier Harju County Court, in the hope of overcoming cash-flow difficulties.
To date, the company says it has terminated unprofitable car contracts, cut down on overheads, while shareholders have taken on some of the loan liabilities that have become due.
Elmo is looking or a partner or buyer, with several negotiations taking place in parallel, the company says, but the selection of a suitable partner likely to take a period of months.
As a result, the company has in the meantime applied for the initiation of reorganization proceedings, to protect the rights and interests of current shareholders, employees, creditors and partners.
Elmo has reported reduced consumption compared with its projections this year, and as a result lower revenue rises than expected, with a knock-on effect on profitability at a time when car fleet operations, IT and other costs have been rising.
Last month, Nasdaq Tallinn, the Tallinn Stock Exchange, applied "observation status" to Elmo Rent's shares after it failed to publish its biannual financial report by the required deadline.
Elmo was at the time also named "debtor of the week" by debt collection agency Juliianus Inkasso.
The restructuring only applies to Elmo Rent and not to other companies in the same group, namely Elmo Rent Autojagamine, Elmo Remote and Elmo Rent Eesti.
The company is preparing a reorganization plan, which will need to be approved by a vote of creditors. The final decision regarding the approval of the plan is made by the court.
Editor: Andrew Whyte, Barbara Oja