Serious allegations against the embattled Croatian company.
“Agrokor’s debt has not been completely shown in financial reports”, said in Moscow Yuri Soloviev, vice president of VTB Bank from Russia. According to Russian media, he directly accused Agrokor majority owner Todorić and company management of irregularities in financial statements, reports Index.hr on March 29, 2017.
He said the Croatian government and group of creditors should this week sign a so-called standstill arrangement. The agreement would postpone Agrokor’s financial obligations. “Standstill would be relatively short at the beginning, maybe a week or a month. Changes in ownership structure are also possible (after debt restructuring)”, said Soloviev. Agrokor would get a delay in debt repayment, there would be changes in management, and in turn it would obtain liquidity, which means a new loan.
Rating agencies have also warned about the lack of transparency in Agrokor’s financial statements, but this is the first time that someone has publicly said that the data on debt were inaccurate. Even worse, the Russian media report that the influential Russian banker said that the financial reports had been irregular for a long time.
According to RNS, a Russian business media outlet, the vice president of VTB Bank openly demanded the dismissal of current management, which brought Agrokor to its present state. “The company needs to strengthen management, and it is very likely that the board of directors will include representatives of the state and of creditors. For the new management team, we are seeking professionals with a global reputation, specialists in solving problems”, said Solovyov. His VTB Bank has borrowed to Agrokor 300 million euros.
He stressed that the problem with financial stability had grown due to irregularities with financial reports. “Unfortunately, the owner and the management have submitted irregular financial statements for some time. This led to the fact that the company fell into debt which was not shown. At certain point, the issue of short-term liquidity has arisen and that is why the company is in the current situation”, he said.
It is necessary to ensure liquidity, which is why the banks are also talking with the government. They point out that Agrokor is Croatia’s largest privately-owned company, bringing in 15 percent of GDP.
Among the options being discussing are state guarantees, guarantees of the Croatian Bank for Reconstruction and Development for suppliers, or a combination of these measures which would mean funding from existing creditors and also perhaps from the government.
“We must all calm down. They have parts of business that can be immediately sold, and there are buyers, but in these circumstances they offer a discount price. First, we must rescue the company so that it can function normally. In the second phase, we must ensure debt restructuring to distribute cash flow fairly among all stakeholders. Finally, there is the possibility of a strategic sale of part of the business, but only when the price balances”, he concluded.
