The majority of creditors of Croatia’s troubled food and retail giant Agrokor have reached an agreement on the debt settlement, the extraordinary commissioner of the company, Fabris Perusko, said.

Croatia’s largest company, which employs around 60,000 people in the region, is undergoing restructuring after a debt crisis pushed it to the brink of collapse last year. 

According to the settlement plan published by the company on May 25, Agrokor will be taken over by a new Dutch-based company, owned by creditors, that would offer a debt-to-equity swap or convertible bonds to creditors. A settlement with creditors and suppliers should be reached by July 10.

“Ahead of us now is the work on transferring these agreements into legally binding and feasible solutions. The extraordinary administration and advisors are now working on the final text of the settlement in order to submit it for approval to the Temporary Creditors’ Council as soon as possible,” Perusko said.

“This outcome is positive from a sovereign perspective. Firstly, risks of a disorderly restructuring (associated with higher output losses) are minimised. Secondly, a smooth restructuring shall help to limit the degree of political volatility and shall support the current government. The latter is definitely sovereign credit positive as the current government is pursuing a rather ambitious fiscal consolidation strategy,” RBI's head of CEE research in Vienna, Gunter Deuber, commented. 

Perusko said that Sberbank, Agrokor’s biggest creditor, whom the Croatian company owes around, €1.1bn,  will have an option to get shares in new Agrokor in exchange for their 18% share of Slovenia’s Mercator.

Sberbank acquired its 18.53% stake in Mercator at the asking price of €40.58mn at an auction in July last year. Agrokor took over Mercator in 2014 and holds a 69.57% stake.

The restructuring of Agrokor has become highly politicised, and is a burning issue in Croatia given its importance to the economy. Former deputy prime minister and economy minister Martina Dalic resigned on May 14, following the leaking of her email correspondence showing an alleged conflict of interest in the restructuring of Agrokor. This followed the resignation of the group's original emergency manager Ante Ramljak, also over accusations of conflict of interest.