Croatia's indebted food group Agrokor hands control to state | Progresiv

Croatia's indebted food and retail group Agrokor, the Balkan nation's biggest private firm, said on Friday it was handing control to the state under an emergency law introduced this week to deal with big companies facing financial trouble.

Agrokor, the biggest employer in the Balkan region with some 60,000 people, piled up debts worth some 45 billion kuna ($6.42 billion), or six times its equity, during rapid expansion of its business, notably in Croatia, Slovenia, Bosnia and Serbia.

The firm secured a deal with banks at the weekend to help restructure its finances but suppliers, who were worried about delayed payments, did not sign up. Earlier on Friday, the suppliers said they would halt deliveries of goods to the firm.
Without broad agreement of all the stakeholders, Agrokor was left little choice but to seek the state's assistance. The emergency law envisages any restructuring taking 15 months.

"Today, I put everything I had built in the charge of the Croatian state," Agrokor's owner Ivica Todoric said in a statement calling for the emergency law to be activated. "I believe it is a decision taken in best interest of every employee, partner, supplier and all other stakeholders," he said.
Under the law, passed during an urgent procedure on Thursday, the state must appoint an executive to steer the restructuring process, with the approval of a commercial court.

Agrokor struck a deal last Sunday with six lenders, led by Russia's Sberbank and VTB, to freeze debt repayments and to secure an unspecified cash injection before restructuring the company's business.
But suppliers, including big producers and small family farms, did not join that agreement as they feared their demands for payment could be adversely affected by the restructuring.

Agrokor's retail chain Konzum controls around 30 percent of the local market. (www.reuters.com)