Creditors of the Požega based confectioner are in agreement on continuing production.
The Zvečevo food industry, interesting to some by owing more to Agrokor than demanding from it, was hit by a strong reduction of income due to the absence of its products from the shelves of Konzum – income was cut by 50% in the second half of 2016, including the sudden halt of production of brand products for Konzum. The same trend continued in the first quarter of 2017 with losses amounting to 20 million kuna, but now they have secured their return to Konzum stores, Poslovni Dnevnik reported on June 7, 2017.
Renewed cooperation with Agrokor was agreed recently by Zvečevo Management President Zdravko Alvir (the majority owner of the company) with special Commissioner Ante Ramljak. Owing to this, Zvečevo products will soon have their place in the Konzum chain. “We are returning to Konzum’s shelves from which we were absent for the past seven months. We were pushed aside, but Commissioner Ramljak gave us the possibility to return to where our products deserve to be, and in accordance with their market position,” says Alvir.
Alvir expects a speedy resumption of production at full capacity, which is especially important in the light of the fact that they submitted a proposal to begin the pre-bankruptcy procedure last week.
As the procedure is expected soon, considering the short legal deadlines, this means the company can be certain that they will attain the portion of capital needed to finance full production. The Požega businessman is thus not only at a crossroads in setting up a sustainable production model with all of his 400 employees. Alvir stated that with the continuation of production, all jobs are expected to be retained, and business cooperation with existing suppliers continued, but also with new employment, and growth based on plans which include a strategic partner.
Pre-bankruptcy in the case of Zvečevo currently shows that the only way to save the company and achieve liquidity is to continue production. This is the key to returning Zvečevo to the market, as Alvir said: “in the form and size which we had before finding trouble.” Production is now ongoing in a smaller capacity due to a lack of capital, and with the opening of the procedure it will restart in full capacity, grace to several positive factors: the support of creditors and workers, and of course, the interest of the local community.
“All of them want to save and stabilise Zvečevo, and we honestly thank everyone for showing great understanding of our situation. Zvečevo also had claims towards companies in pre-bankruptcy and showed understanding for their difficulties, so now we are getting the same treatment. All talks held so far with creditors yielded a positive result. Certainly, no one likes to give up part of their money, but their interest was identical to our own for Zvečevo to continue its operations,” says the entrepreneur who claims that Zvečevo was in a greater crisis when he took over in 2001.
We have learned that around 65% of unsecured creditors, claiming 150 million kunas, have given their preliminary consent. The plan is still open for additional corrections, including other creditors who want to support it. Banks have insurance for around 70 million kunas of claims, and from the first talks, Alvir concludes that continued production is also in the interest of banks which have supported the company for a long time. Negotiations with creditors have proven they are more inclined to solutions through pre-bankruptcy restructuring and deal, so the result is the pre-bankruptcy proposal.
“With the strategic partner we have, an international partner who will bring a new market and deals, we will need significantly more workers. In accordance with that, we are predicting the need for 20% more workers. Speaking of the strategic partner, I still cannot produce a name, except they are in the same industry and are from Western Europe,” says Alvir.
All political structures of the Požega area, the Mayor and the Prefect, have placed themselves at the disposal to aid Zvečevo as much as they legally can. A good atmosphere has been created, and the general rating is broad support due to the importance of the company for the area. Several measures have been planned through which Zvečevo can exit the crisis in which the lack of liquidity at the end of March amounted to 200 million kunas, half of it overdue.
The plan also includes the sale of non-operational assets, but also the dairy at a price of 7.8 million kunas. A significant role is found in the strengthening of the export division, where more intense cooperation is expected with buyers from Great Britain, a link to the American market, Israel, France and Belgium. Income from the export of private chocolate brands is in a significant rise as a result of contracts with new partners. This means the distribution of special products with a Badatz Kosher certificate, and private brands for large confectionery distributors, with a strong sales growth in the Tesco retail chain. In the end, to save the Požega company, the foreign partner will take partial ownership of the company. Alvir confirmed he would release part of his ownership to the new partner, which will enable Zvečevo to do business more easily, and to conquer new markets.