Tycoon Said on Brink of Losing Control of Balkan RetailerBy , , and
Agrokor’s creditors said to seek control for rescue loans
Sberbank is in talks to lend up to 300 million euros
Ivica Todoric is on the brink of losing control of the Croatian retailer he founded as a condition of Agrokor d.d.’s rescue, according to people familiar with the matter.
Sberbank PJSC wants Todoric to cede control to creditors during restructuring negotiations, said the people, who asked not to be identified because the talks are private. The Russian bank, Agrokor’s largest creditor, is leading discussions with other debt holders to overhaul the company’s management in exchange for refinancing and securing continued operations, the people said. Talks are ongoing and the ownership structure hasn’t been finalized.
Moscow-based Sberbank, which agreed to lend Agrokor 100 million euros ($108 million) this month and is in talks about lending another 200 million euros, is discussing restructuring plans with other stakeholders and the Croatian government, the people said. Agrokor is the biggest company in the former Yugoslavia and the largest private employer in Croatia, representing about 15 percent of the Balkan nation’s gross-domestic product.
Officials at Agrokor and Sberbank didn’t comment on the restructuring talks.
Todoric, who founded Agrokor as a family flower business in 1976 and grew it into a food and retail conglomerate spanning the former Yugoslavia, owns 95 percent of the company and manages it with the help of his three adult children. The retailer faced greater competition when Croatia entered the European Union in 2013.
Agrokor needs to repay more than 500 million euros of payment-in-kind loans maturing in June 2018. It issued the PIK loans to help finance the 2014 acquisition of Slovenian retailer Mercator in the largest takeover in the Balkans, crowning its period of expansion. Agrokor Investments BV moved 10 percent of Mercator Poslovni Sistem’s shares to the main operating company, Mercator said in a statement on Friday.
Agrokor also owes more than 2 billion euros to suppliers and is using some of the money it borrowed from Sberbank in the past month to repay them, according to a report on the website of N1, a regional TV broadcaster.
Agrokor’s PIK loans fell 1 cent on the euro to 23.5 cents at 1 p.m. in London, according to data compiled by Bloomberg. Its 300 million euros of bonds due May 2019 rose to a more than three-week high of 75 cents on the euro before falling to 65 cents.
Sberbank has already lent Agrokor about 1 billion euros and together with VTB Bank PJSC, Russian lenders hold more than one third of Agrokor’s debt.
Croatia, a European Union and NATO member, has rejected offers from Russia in the past to buy national refiner INA Industrija Nafte d.d., according to Anvar Azimov, a Russian official in Zagreb. Russian investment in Croatia includes a Lukoil OAO retail network and several hotels on the country’s Adriatic sea coast.