Ljubljana, Agrokor face off over Mercator retail chain

Ljubljana, Agrokor face off over Mercator retail chain
By bne IntelliNews July 18, 2017

As restructuring at debt-ridden Croatian giant Agrokor gets underway, the Slovenian government is seeking to reassert control over Mercator, the local retail chain taken over by Agrokor in 2014. 

The takeover was unpopular in Slovenia at the time, and since the Agrokor debt crisis erupted earlier this year, Ljubljana has been increasingly vocal in ensuring that Mercator is protected from the fallout. 

Slovenian Minister of Economy Zdravko Pocivalsek claimed on July 18 that Mercator is not led by Agrokor’s crisis manager, but by its own management, Slovenian Press Agency (STA) reported.

Pocivalsek’s statement was in response to a July 16 report by Siol.net that the Ljubljana District Court had confirmed the Agrokor insolvency procedure as the chief procedure governing Agrokor and its subsidiaries (which include Mercator), in the request of Agrokor's crisis manager Ante Ramljak. 

This meant Mercator was falling under the provisions of Lex Agrokor — an emergency law adopted in Croatia amid the Agrokor debt crisis on assistance to systemically important companies that cannot pay their debts — and gave Ramljak full control over Mercator's operations, according to the portal. 

The Slovenian government adopted its own legislation, "Lex Mercator", in April amid unconfirmed speculation that Agrokor had been diverting funds from its Slovenian subsidiary. The law is intended to prevent the diversion of funds from companies defined as strategically important. 

However, Mercator has denied the report suggesting the court decision had effectively made it subject to "Lex Agrokor", STA reported on July 17. Agrokor appeared to confirm this, with a spokesperson telling STA that Mercator remains an independent and stable company and the court decision does not change that in any way. The company added that the court decision would in no way change corporate management in Mercator, and that it did not confer new powers on Ramljak.

However, Pocivalsek has already indicated the government may challenge the court’s ruling. "We are in particular looking at the public interest of Slovenia, which we already expressed with Lex Mercator. We will decide on a potential appeal within 15 days," Pocivalsek said on July 18, adding that the government would carefully examine the relevant court decision and possibly appeal against it.

"We will continue to keep watch over the operations of Mercator… Let us stop talking about Mercator's receivership — this is a functioning company that is operating responsibly," he said.

Pocivalsek said that Mercator is better protected from the Agrokor debt crisis as a result of Agrokor's creditor Sberbank recently buying a 18.53% stake in the Slovenian company, according to STA. This led to Agrokor no longer holding a 75% majority in Slovenia's biggest employer.

"Also, this court measure is in a way a safeguard against unilateral moves by individual banks," Pocivalsek said, while adding the issue of the remaining creditors and banks still needed to be examined.

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