Troubled Agrokor secures €480mn financing

Troubled Agrokor secures €480mn financing
By Akin Nazli in Belgrade June 8, 2017

Croatia’s struggling retail and food giant Agrokor has secured €480mn worth of fresh financing from bondholders led by Knighthead Capital Management and domestic banks, the company announced in a written statement on June 8.

Agrokor is one of the largest employers and suppliers in the SEE region, but was engulfed by a debt crisis earlier this year. The company’s bank debt payments are currently frozen due to a standstill agreement signed in April with its main lenders.

The €480mn worth of new loan also includes €80mn worth of emergency financing obtained by Agrokor’s emergency management in April. The new loan has a maturity of 15 months with an extension option to 24 months. The annual cost of the loan is 4%.

Agrokor also agreed a loan in delivered goods from suppliers worth up to €50mn.

The new loan is under a roll-up arrangement and Agrokor is required to repay €1.06bn, including matured debts to its creditors. The roll-up option allows new creditors to claim superiority to their previous debt to Agrokor.

“This is the last credit for Agrokor under extraordinary administration, with which we will create preconditions for successful restructuring of the company,” Ante Ramljak, chief emergency officer of Agrokor, said also on June 8.

Earlier on June 8, Russian lender Sberbank announced that it has filed a lawsuit with a Zagreb court to prevent Croatia’s struggling Agrokor from obtaining new loans at a roll-up option, according to Reuters. However, later in the day, the Russian lender reportedly announced that the Zagreb court rejected its application. Sberbank has not yet responded to bne IntelliNews’ request for confirmation. 

Sberbank is Agrokor’s largest unsecured creditor, with a total debt holding of HRK8.17bn (€1.1bn) as of end-March. Another Russian lender, VTB, is also among Agrokor’s top creditors, with a debt of around €300mn.

On June 2, Moody's Investors Service downgraded Agrokor's rating to Ca, one notch above default, from Caa2 with negative outlook.

Agrokor is estimated to owe a total of HRK16bn to its suppliers while total liabilities of Agrokor Group’s 19 largest subsidiaries, including Agrokor itself as well as Konzum, Tisak, Frikom and Ledo, amounted to HRK40.4bn as of end-March.