Croatia Seeks Talks With Agrokor's International Creditors

Updated on
  • Government wants to mitigate impact on Croatia’s economy
  • Sberbank wants to gain control in return for financial rescue

Croatia’s government wants to hold talks with Agrokor’s international creditors as it seeks to help obtain financing without hurting the country’s economy, to which Agrokor is a main contributor, Prime Minister Andrej Plenkovic said.

Sberbank PJSC, Russia’s biggest bank and Agrokor’s largest lender, wants founder Ivica Todoric to give creditors control over its retail and other business in return for a rescue, the Moscow-based lender’s First Deputy Chief Executive Officer Maxim Poletaev said in an interview last week. Agrokor said Sunday it’s working with key investors on a new business model and that the survival of the company with annual sales of about 6.5 billion euros ($7 billion) is “not in question.”

“After talks we’ve had with a number of Agrokor creditors and after the economy minister speaks to suppliers, we want to talk to Agrokor’s international creditors,” Plenkovic said in Zagreb Monday, according to Jutarnji List newspaper. “We are looking for a solution and we hope and wish that such a solution won’t have a negative impact on Croatia’s economy and its financial system.”

Agrokor, the biggest company in the former Yugoslavia and Croatia’s largest private employer, accounts for about 15 percent of the Balkan nation’s gross domestic product. Sberbank is the company’s largest creditor after lending about 1 billion euros in previous years and 100 million euros this month. The retailer needs to repay more than 500 million euros of payment-in-kind loans maturing in June 2018 and owes more than 2 billion euros to suppliers.

Russian Influence

Agrokor’s 300 million euros of bonds due May 2019 gained 1 cent on the euro to 66 cents on Monday, up 5 cents from last week’s record low, according to data compiled by Bloomberg. The company’s payment-in-kind loans due June 2018 are indicated at about 20 cents on the euro, the data show. 

Canada Pension Plan Investment Board and Invesco Ltd. are among the largest investors in the company’s PIK loans, according to people familiar with the matter, who asked not to be identified because it’s private. Officials at the funds declined to comment on their holdings.

Creditors led by Sberbank are working on a three-month liquidity plan, which should be approved by Tuesday. Poletaev said that they can’t yet estimate the amount of extra funding needed. People familiar with the plan say it could be an additional 200 million euros. After the most urgent liquidity issue is resolved, Sberbank will be ready to consider a possible long-term restructuring of Agrokor group’s debt, Poletaev said.

Asked by reporters in Zagreb about the possible expansion of Russian influence, Plenkovic said he can’t choose where a private company gets its loans from, but “the government is taking into account the interests of the Croatian state."

(Updates with payment-in-kind lenders in sixth paragraph.)
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