Agrokor’s Resilience in Face of Adversity Wins the Day

Lauren Simmonds

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Agrokor has made a dramatic and unexpected turnaround as bankruptcy and almost total collapse loomed. Having gone from being the most powerful company in the region, to having almost dragged the entire domestic economy to its knees, and then back to proper functioning in just two years, Agrokor’s story is a remarkable one, and one of resilience in the face of adversity.

As Poslovni Dnevnik writes on the 1st of December, 2018, Fabris Peruško, Agrokor’s extraordinary commissioner, speaks about Agrokor’s continued strength and resilience over an extremely difficult period of time.

“Out of the whole series of related, significant events [that took place] in 2018, three key issues are still being identified as breaking ones in terms of the future of the Agrokor Group – the creditors’ agreement on the settlement, the hearing at which that settlement was voted for, and, finally, the validity of the settlement with the High Court’s confirmation. A significant factor for the success of Agrokor’s extraordinary administration was the strength of Agrokor’s companies to continue to improve their business, especially their efficiency, in a very turbulent environment.

Their good results are the backdrop of the future and a powerful argument against the uncertainty and fear that followed the process. The importance of the fact that one of the largest restructuring processes in the world has been realised in such a short time and so successfully is still not being valued in the right way.

In just two years, the largest private company in Croatia and the region, without incurring upon one lipa at the taxpayers’ expense, has emerged from its pre-government regime, has undergone a demanding financial restructuring through the settlement of more than 5,700 creditors, and instead of crushing the entire economy of Croatia and the region, Agrokor functions well to this very day, provides employment, provides revenue to the state budget and in its relations with its business partners, and respects all of the agreed upon deadlines.

The implementation of the settlement – a process which will be operationally executed by the creditors’ settlement agreement – is ahead of us – a very complex business transfer to the new group. The start of that implementation is expected at the beginning of next year, and it should be fully concluded during the first half of 2019, and then we’ll get a company bearing a new name and a new corporate culture. The creditors agreed that the future group would be based on three main pillars: retail, food, and agriculture.

In each of them [the aforementioned three main pillars] there is room for improvement, especially in terms of efficiency, so the operational restructuring we’ve started is also directed at that. The focus is on areas where the value lies.

Synergic initiatives within the group have been intensified, key business indicators have been unified and business reporting and business segments have been drawn up. The function of the treasury as well as the function of human resources have been strengthened.

In terms of retail, we’re currently working on standardising the process in all components, there is great food export potential in which we have leaders throughout the region, and in some areas of agriculture, we can become European players. Although there are challenges through refinancing the oldest loan and long-term capital structure, Agrokor has perspective, and all the prerequisites to remain one of the largest companies in this part of Europe.”

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