Creditors of Croatia’s Agrokor approve debt settlement deal

Creditors of Croatia’s Agrokor approve debt settlement deal
By Carmen Simion in Bucharest June 20, 2018

The temporary creditors’ council of Croatia’s highly indebted food and retail giant Agrokor has unanimously approved the draft debt-for-equity settlement deal, the company said on June 19.

Croatia’s largest company, which employs around 60,000 people in the region, is undergoing restructuring after a debt crisis pushed it to the brink of collapse last year. An audit report has shown that the Agrokor Group’s net loss in 2016 amounted to HRK11bn (€1.46bn), while the company’s liabilities amounted to HRK56.3bn.

The biggest shareholder in the new Agrokor will be Russia’s Sberbank with a 39.2% stake. Agrokor owes the Russian bank around €1.1bn. Bond holders will have a 24.9% stake. Another Russian bank, VTB, will hold 7.5% in the new company, while local bank Zagrebacka Bank will have a 2.3% stake, the extraordinary administrator Fabris Perusko said, according to N1 Zagreb.

In terms of groups of creditors, suppliers and bondholders have on average less write offs than financial institutions, Agrokor said. Small and micro enterprises have the highest percentage of claim recovery, at 100%. Agrokor’s suppliers will get on average 60% of their claims.

The document will now be sent to the Commercial Court in Zagreb for approval, Agrokor said in a statement. A final vote on the deal should be held by creditors before July 10. The implementation process is planned to last between three and four months.

The restructuring of Agrokor has become highly politicised, and is a burning issue in Croatia given its importance to the economy. Former deputy prime minister and economy minister Martina Dalic resigned on May 14, following the leaking of her email correspondence showing an alleged conflict of interest in the restructuring of Agrokor. This followed the resignation of the group's original emergency manager Ante Ramljak, also over accusations of conflict of interest. 

On June 18, Croatia's Office for Suppression of Corruption and Organised Crime (USKOK) dismissed criminal charges against Dalic, Ramljak, Prime Minister Andrej Plenkovic and Finance Minister Zdravko Maric in connection to Agrokor.