Croatian Agrokor says largest subsidiaries owe at least €5.4bn

Croatian Agrokor says largest subsidiaries owe at least €5.4bn
By bne IntelliNews May 12, 2017

Total liabilities of struggling Croatian retailer Agrokor Group’s 19 largest subsidiaries, including Agrokor itself as well as Konzum, Tisak, Frikom and Ledo, amounted to HRK40.4bn (€5.44bn) as of end-March, the company announced on May 11.

The debt crisis at Agrokor was precipitated by the group’s aggressive, debt-financed expansion in recent years. As it became clear that Agrokor would be unable to make upcoming debt repayments, the Croatian government stepped in to appoint emergency management at the group, which is the country’s largest employer.  

Ante Ramljak, Agrokor’s emergency officer, has warned that the group may be split up and companies sold off in order to repay its outstanding debts.

The group’s 19 largest subsidiaries owed a total of HRK24.5bn to financial creditors as of end-March, while debts to the suppliers amounted to HRK6.24bn, according to the statement from the company. 

Agrokor’s largest unsecured lender was Russian Sberbank with a total debt holding of HRK8.17bn as of end-March.

The figures do not include the recent emergency loan worth of €80mn obtained last month.

The latest debt figures published by the emergency management at Agrokor are not audited and they do not include Agrokor’s other smaller units, the statement underlined. Agrokor’s rescue team also stressed that more irregularities were identified at the group company’s financial statements.

Agrokor’s total debts were previously estimated to stand at HRK45bn as of end-September.

Also on May 11, Ramljak confirmed that Agrokor is currently in talks with Sberbank over a fresh loan. Earlier this week, local media speculated that Agrokor urgently needed an additional €400mn cash injection to sustain its operations.

Ramljak has warned that the group may be split up and companies sold off in order to repay its outstanding debts. 

The Croatian People's Party (HNS) called on May 11 for Prime Minister Andrej Plenkovic to face reality of Agrokor’s possible collapse, according to Hina.

On April 27, Agrokor said in a statement that restructuring advisors have identified in preliminary investigations that there could be potential errors in the group’s accounts. Agrokor intends to appoint PricewaterhouseCoopers to perform an audit of its 2016 financials, and expects to issue a further announcement on financials by the end of May. Agrokor also called its subsidiaries to hold general assemblies within 15 days to appoint PwC to audit their 2016 financials.

On May 8, Standard & Poor’s lowered Agrokor’s corporate credit rating to Selective Default after Agrokor missed a coupon payment on its €300mn senior secured notes due 2019 on May 1. S&P thinks it is highly unlikely that Agrokor will resume payments within the 30-day grace period.

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