Ivica Todorić has returned to Croatia after more than a year in London, having landed on the territory of a country in which he is no longer the owner of the largest regional company. Exactly one year after handing himself in in the British capital, living under the watchful eye of the Metropolitan police and after an agonisingly long court battle, Agrokor’s former untouchable main man returned to his homeland utterly powerless. A far cry from the not so distant reality Todorić once enjoyed, having once owned his own private island, Smokvica.
As Jutarnji/Vanja Nezirovic writes on the 9th of November, 2018, unlike back on the 10th of April 2017, when he signed Lex Agrokor, which activated the law to allow the Croatian Government to step in and rescue Agrokor, and unlike in the autumn of the same year when he temporarily “emigrated” to London, Agrokor’s largest single owner is now Russia’s Sberbank with a 39.2 percent stake. The settlement was a long and painfully complex process, however, in order to execute such a settlement, creditors, primarily financial lenders, had to write off a large part of their claims, around 60 percent.
Namely, the exact amount and percentage of the final write-off of the creditor’s claims will be known at the time when Agrokor is sold. To recall, on April the 10th, 2017, Agrokor had 7.7 billion euro in debt, of which about 1.5 billion euro was debt within the group, which means that the debt to third parties actually amounted to about 6.2 billion euro.
If we know that the framework calculations of Agrokor’s value are projected at about 2.3 billion euro, this would mean that the creditors, primarily financially (based on this nominal projection), were forced to give up an enormous total of about 4 billion euro. This was the price of the survival of Agrokor, which for now, following these write-offs, has a debt of 1.06 billion euro in so-called roll up loans.
Agrokor’s medium and large suppliers have so far averaged 60 percent of their claims for goods and services, were paid 500 million euro in cach for old debts, with 46 percent of them having a return of between 80 and 100 percent. When the rest of the debt is paid out over four years, and when part of Agrokor’s property is converted, their return will amount to about 80 percent. The bonds’ return rate ranges between 40 percent and 80 percent, while the largest number of domestic and foreign financial institutions and other creditors will have an average return on demand of up to 20 percent.
At the time of signing Lex Agrokor, Todorić’s Agrokor Group was blocked in the amount of 3 billion kuna, and it was naturally expected that this dire situation could lead to Croatia into a short-term recession. The possibility of Agrokor’s bankcruptcy could have, according to CNB/HNB (Croatian National Bank) projections, lead to several smaller banks entering into a very dangerous situation indeed, yet while the banking system luckily remained stable, the losses bigger banks suffered were felt almost immediately.
Even with the implementation of a specially regulated bankruptcy proceeding through Lex Agrokor, several contract suppliers ended up in bankruptcy or having to undertake pre-bankruptcy proceedings, some stabilised the recapitalisation of third parties, some are still awaiting ownership and business restructuring, but a stronger economic and social shock was thankfully avoided.
Today, Agrokor’s debt has been reduced to levels that should be viable, things are generally much more stable and the company is expected to return to normal function in 2019. The results of companies like Jamnica and Ledo, are once again very good, Konzum seems to be more than just recovering, but some other companies from within the large Agrokor umbrella, like Velpro and Konzum BiH (Bosnia and Herzegovina) are still very vulnerable.
It’s also clear that agricultural companies such as Vupik will need some more time to recover properly, but the overall picture of the company today is much more healthy than it was a year ago, thanks to the current extraordinary commissioner, Fabris Peruško.
That means that the Croatian economy, a much more than significant part of which is made up by Agrokor, has gone from being under grave threat, to being more stable, more safe, and more competitive.
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