Trading in Agrokor Group companies suspended

Trading in Agrokor Group companies suspended
By bne IntelliNews February 21, 2018

Ante Ramljak, the extraordinary manager of troubled Croatian food and retail group Agrokor, has resigned. After the news was announced on February 21 the Zagreb Stock Exchange suspended trade in all listed Agrokor companies — Zvijezda, Leda, Jamnica, Zitnjak, PIK Vinkovci and Vupik — until a solution is found.

Ramljak was appointed by the Croatian government to manage Agrokor in April 2017 after a debt crisis prompted a run on its bonds, bringing the group close to collapse. In November, Agrokor accepted creditor claims worth HRK41.2bn (€5.4bn) but disputed other claims worth a total of HRK16.5bn. 

Since April, Ramljak has spearheaded work to stabilise the company, take out new emergency loans, and had been seeking a restructuring deal with its creditors before his resignation. 

Croatian Prime Minister Andrej Plenkovic sought to allay fears of a collapse of the country’s largest employer, saying that Ramljak would stay until a replacement is found, and that the situation within the company is stable.

"In this moment, a key message I want to send to all employees within Agrokor, its vendors and creditors, is that the process of extraordinary management goes on, the settlement process goes on, that Agrokor and all its companies work normally and that the government at this moment is conducting consultations in order to propose to the Commercial Court the appointment of an extraordinary administration. In the meantime Ramljak will continue his work as it has been so far," Plenkovic said at an extraordinary press conference called on February 21 after Ramljak's resignation, regional broadcaster N1 reported.

Just six days ago, Ramljak gave an account of developments at Agrokor to a parliamentary commission, asking at the same time for an extension to the deadline for reaching a settlement with creditors until July. 

However, his position had become increasingly controversial, with accusations against the extraordinary manager — ranging from the circumstances under which he was appointed to his decision to select his former firm Texo management to work with — reaching a crescendo in local media. 

On February 21 Agrokor published a statement saying Ramljak had submitted his “irrevocable resignation” to Croatian President Kolinda Grabar-Kitarović. 

“Unfortunately, the uncertainty that was created in connection with my stay at the position of an extraordinary commissioner is strongly against this process,” Ramljak said in the statement on Agrokor’s website. 

“I give the irrevocable resignation to the position of the extraordinary trustee so that I do not personally become an obstacle to reaching a settlement. Agrokor's creditors and employees, who are the only ones involved and because of which there is an extraordinary administration procedure, thank you for your trust and support.”

Ramljak had sought to defend himself to the parliament committee, outlining the situation the group was in when he took over, highlighting the lack of funds to cover employees’ salaries, and severe shortages at several group companies. 

At the same time, he sought to address criticisms of his decision to engage Texo as a local consultant to Agrokor, saying the decision was made because he was under intense time pressure and chose to work with people he knew and trusted.

Agrokor founder Ivica Todoric continues to claim his company was illegally taken from him, and has criticised both Ramljak and the Croatian government over the process. In January he wrote on his blog that he had filed a lawsuit against against Croatia with the European Commission over the adoption of the so-called Lex Agrokor.

At the press conference on February 21, Plenkovic did not reveal the name of any new potential extraordinary manager of Agrokor but hinted that more than one new appointment might be made. 

Media throughout the region are already speculating about names. N1 reported that four people could be in the game: former Podravka head Zvonimir Mrsic, Fabris Peruško from the management board of Tisza, Vladimir Bosnjak, a member of the extraordinary finance department, as well as Zeljko Peric, the founder and executive partner of consultancy Caper.

The latest developments within Agrokor have shaken the entire region not only Croatia since the company is present in neighbouring countries as well. Agrokor employs 60,000 people in Croatia, Slovenia, Serbia, Bosnia & Herzegovina and Hungary.

Reacting to the resignation, Slovenian Minister of Economy Zdravko Pocivalsek told Bloomberg that the Slovenian government still supports any possibility for solving the issues local retail chain Mercator, part of the Agrokor group, has been facing and that there are several investors who might be ready to acquire Mercator from Agrokor's creditors. He didn’t comment on the names of potential investors, but added that there would be benefits to the Slovenian government buying back Mercator.

Mercator Group is one of the largest corporate groups in Slovenia and in the Southeast Europe region, employing 20,122 people.

Serbia's Minister of Trade, Telecommunication and Tourism Rasim Ljajic also commented on the latest twist in the Agrokor saga, saying that he doesn’t anticipate a negative impact from Ramljak's resignation on the operations of Mercator S or other Agrokor companies in Serbia, including major food producers Frikom and Dijamant.

"All these companies operate without any problems, thus Ramljak's resignation is not going to cause any turbulance," Ljajic told Belgrade based news agency Beta.