The Croatian Financial Supervisory Agency (HANFA) decided on May 2 to suspend all eight of struggling Agrokor’s subsidiaries listed on the Zagreb Stock Exchange (ZSE) from trading until May 15.
On April 27, Agrokor said in a press release 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 within next 30 days. Agrokor also called its subsidiaries to hold general assemblies within 15 days to appoint PwC to audit their 2016 financials.
The ZSE suspended trading in Agrokor’s subsidiaries on April 27, until they publish their audited financials. Two of the eight subsidiaries, namely tobacco retail chain Tisak and agricultural producer Vupik, have already called general assembly meetings to be held on May 15 to appoint PwC as the new auditor, according to Vecernji List.
The other temporarily suspended companies are frozen foods producer Ledo, agricultural producers Belje and PIK Vinkovci, edible oils company Zvijezda, retail and wholesale company Zitnjak and water bottler Jamnica.
Agrokor’s impact on the Croatian economy is currently seen by analysts as limited. Raiffeisenbank analysts said on April 27 in a research note they expect the Croatian economy to grow by 3.3% this year despite the on-going concerns over the crisis at Agrokor.
Addiko Bank analysts also think that it is too early to quantify Agrokor related risks.
However, despite optimism from analysts, Agrokor related problems have already started to show their impact on the Croatian economy. On April 28, Croatian Postal Bank announced that its net profit declined by 89% y/y to HRK4.9mn in Q1 due to provisions for exposure to Agrokor Group.
The situation has also affected neighbouring countries. The government of Bosnia & Herzegovina will discuss on May 4 whether to draft a bill similar to Slovenia’s Lex Mercator, designed to prevent the diversion of funds from systemically important companies. The law was adopted amid speculation that Agrokor could be diverting funds from Mercator.
Croatia’s largest employer, Agrokor has accumulated debts of HRK16bn (€2.2bn) to its suppliers in addition to loans of around €2.5bn used to finance its expansion. The government stepped in earlier this year as the heavily-indebted company was struggling to stay afloat and has appointed interim management led by emergency officer Ante Ramljak.
Of the total of HRK16bn owed to suppliers, €127mn is owed to suppliers in Bosnia & Herzegovina, and €102mn is owed to Serbian suppliers.
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