Croatia's Agrokor strikes deal with creditors

Croatia's Agrokor strikes deal with creditors
By Carmen Simion in Bucharest April 10, 2018

Representatives of the interim creditors council of Croatia’s heavily indebted food and retail giant Agrokor, the suppliers’ association and Russian lender VTB have signed an agreement in principle on the key elements of the debt settlement deal, Agrokor said on April 10.

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. An audit report has shown that the Agrokor Group’s net loss in 2016 amounted to HRK11bn (€1.46bn), while the company’s liabilities amounted to HRK56.3bn.

The agreement represents a framework upon which the actual text of the settlement will be drafted, based on filed claims and their legal status, the retail giant added.

According to Prime Minister Andrej Plenkovic, Croatia has achieved the main objective of preventing an economic and financial crisis, which would have affected not only Agrokor, but the entire Croatian economy, suppliers, jobs and the state budget, a government statement said.

“All that was prevented with a quality and structured process, thanks to the law on the emergency procedure administration and thanks to the good will and responsibility of all stakeholders in the process,” the prime minister said.

Agrokor’s emergency administrator has proposed to the Zagreb commercial court to prolong the extraordinary administration procedure for another three months, since creditors requite additional time to complete the text of the settlement.

“We are proud that we came to the last phase of this very demanding and difficult process, involving almost 6,000 creditors, with over HRK57bn of claims. At the same time, the Agrokor system is stabilised, all operating companies are doing well and their operating profit increased, salaries are paid to all employees as well as current expenditures,” said Irena Weber, the deputy emergency administrator.

Also on April 10, Agrokor founder Ivica Todoric appeared at a London court for a hearing on Croatia’s extradition request. The court is expected to announce a decision in 10 days time. 

Todoric has harshly criticised the legislation on the special administration at Agrokor — the so-called Lex Agrokor — and accused government officials of destroying the company he had built up. Lex Agrokor, which came into force in April 2017, was an emergency law on assistance to systemically important companies that cannot pay their debts, applying to companies with liabilities of more than €1bn that employ over 5,000 people. Todoric has claimed that by adopting this law, Croatia violated several provisions and fundamental principles of EU law.