ZAGREB, June 20, 2018 – Agrokor’s Temporary Creditors’ Council on Tuesday unanimously adopted a draft settlement plan for the ailing food and retail group whereby the largest individual shareholder in Agrokor will be the Russian bank Sberbank, with a 39.2% interest, and whereby the suppliers of the group can expect the repayment of up to 60% of their claims and other financial institutions and creditors up to 20%.
Emergency Administrator Fabris Peruško, who outlined the settlement deal to the council, was also authorised to make sure that the fine-tuned draft settlement plan was provided to creditors via the Zagreb Commercial Court, according to a press release issued by Agrokor.
The settlement plan consists of two parts, one of which is preparatory and the other about the implementation, and consists of 32 chapters.
The document elaborates in detail the corporate structure within Agrokor, the treatment and forms for paying the creditors’ claims which were from the period before the emergency administration was set up, and other elements for the execution of the settlement.
According to the press release, the creditors confirmed the Entity Priority Model (EPM) as the best model for the repayment of the claims, having in mind the number of companies within the group and the complexity of the financial restructuring. The press release also notes that this model is used in large-scale international proceedings of company restructuring. Suppliers can count on up to 60% recovery rate for their claims and financial institutions up to 20%.
Under the EPM model, the highest share in the ownership in the new Agrokor Group will be given to financial creditors, and among them the biggest individual shareholder will be Sberbank (39.2%). Bond-holders will have an interest of 24.9%, Russia’s VTB bank 7.5% and Croatian financial institutions 15.3%.
The stake held by suppliers in the new group will stand at 4.7%, and Adris will have the largest portion, 1.4%, while Franck follows with 1.3% interest.
Small and micro enterprises have the highest percentage of claim recovery, 100% and their receivables have been fully paid.
The recovery rate for bond-holders is between 40% and 80%.
Broken down by type of creditors, suppliers and bond-holders have lower write-offs on average than financial institutions.
With suppliers, agreement was reached on the payment of the border debt, the debt incurred prior to 10 April 2017, when the emergency administration procedure began, but which was due after that date, under certain terms. The highest amount of this debt which can be paid until 2021 totals 70 million euro.
The terms of the payment of the border debt are tied to Konzum’s business results, with the minimum EBITDA amounting to 38.8 million euro in a calendar year.
The separate agreement with Sberbank envisages that until 2021 this Russian bank will have the annual conditional/potential right to receipt of payments, provided that a group of 17 materially essential companies generates the agreed threshold of operational profit. The EBITDA threshold in 2018 is 245 million euro, gradually increasing to 288 million euro in 2021.
The total amount of the four payments to Sberbank cannot exceed 60 million euro and the obligation to pay ceases after four years, regardless of the amount that will be paid eventually.
The creditors of the agreement on the longest debt, a rollup of 1.06 billion euro, and Sberbank have agreed all the terms and conditions for the extension of the agreement. The extension is planned by mid-2019 at the latest and refinancing is possible before that deadline.
An EURIBOR interest rate has been agreed, increased by 8% (6% in cash and 2% in payment in kind) until 10 January 2019. From then until 10 February 2019, the interest will be EURIBOR increased by 10%, rising by 0.5% in payment in kind every month.
In July 2018, 2% of the compensation will be paid, another 1% in January and another 1% in April 2019.
The settlement and its annexes, totalling some 7,300 pages, will be sent to Zagreb’s Commercial Court on Wednesday. The Court will publish it during the week, after which it will schedule a hearing for a vote on the settlement which must take place in five to 15 days. Claims total 34.4 billion kuna (4.6 billion euro).
After the hearing and the adoption of a decision that the settlement is final, the plan is to implement the settlement within three to four months.
