The company will get new management and probably new owners.
While the government was voting on Friday afternoon on the so-called “Lex Agrokor”, a special law which should enable it to get involved in providing aid to systemically important companies, Agrokor’s banks and suppliers have agreed that they will themselves lead the process, reports Večernji List on April 1, 2017.
The so-called standstill arrangement was agreed, although not yet signed, on Friday afternoon. Just a few minutes later, the government unanimously adopted the law on the procedure of extraordinary administration in companies of systemic importance and sent it to Parliament for consideration.
Representatives of Agrokor’s largest suppliers spent the day at the headquarters of Erste Bank negotiating. They received information from banks’ representatives that funds will be provided for smooth operations of Agrokor. During the day, the state froze the accounts of most of Agrokor’s companies due to unpaid taxes, but the blockade should be removed by Tuesday. Although the fact that bank accounts had been frozen caused a panic throughout the day and fears of bankruptcy, the companies said that the blockade would be very short-lived, and that has been confirmed by bankers.
It is expected that the agreement between Agrokor, banks and suppliers includes changes to the company’s board of directors. The process will begin with the introduction of chief restructuring officer, who will be the key person for the implementation of the stabilization programme. Bankers say that discussions with potential candidates are still ongoing and that the person should be appointed within two to three days. However, unofficial sources say that the leading candidate is a US consultant from Alvarez&Marsal consultancy. The standstill deal has been agreed with Russian banks Sberbank and VTB Bank, and local banks Zagrebačka Banka, Erste Bank, Privredna Banka and Raiffeisenbank Austria.
“We have agreed several steps with the current owners – from changes in the management team to injection of money for employees and suppliers, especially small and medium ones. The management of the company will be in the hands of international experts in the field of retail, and there will be changes in financial management as well,” said Mario Henjak, CEO of Sberbank in Croatia, who did not want to answer a reporter’s question whether the Todorić family would remain in Agrokor. They are currently Agrokor’s majority owners.
The moratorium on payment of interest on loans applies to all banks which will sign the agreement, and that includes most of Agrokor’s banking debts. That would mean that the total value of the standstill agreement is more than 2.4 billion euros.
Suppliers were satisfied with the agreement. “We welcome the decision of banks to implement a moratorium and give additional loans to support the group. We are ready to join them and accept payment of debts in instalments”, said on behalf of fifteen suppliers Josip Budimir from Franck.
Bankers did not want to comment on the law adopted by the government, but only said that they share with the state the same goal, which is to stabilize the economy. The law, which will now probably not be implemented, was being changed until shortly before the government session began. The key change was that the legal action could not be launched without the permission of the company, or, in this case, Ivica Todorić. However, given that he has already agreed to the changes in ownership structure and management team with the bankers, that provision is now largely unimportant.
The law can be implemented for companies which are more than 7.5 billion kuna in debt and have over 5,000 employees. The proposed law will be debated in Parliament next week.
