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First settlement proposal for Agrokor creditors expected in November
September 20, 2017 / 12:04 PM / in 2 months

First settlement proposal for Agrokor creditors expected in November

ZAGREB, Sept 20 (Reuters) - The first draft of a settlement proposal with creditors for indebted Croatian food company Agrokor is expected in November, a source familiar with the company’s restructuring process said on Wednesday.

“I expect the first proposal for the final settlement to be ready in November. By that time we should have the permanent council of creditors in place and ready to discuss the settlement,” the source said.

Agrokor, the Balkan region’s biggest private employer, was put under state management in April after building up debts of at least 40.4 billion kuna ($6.5 billion) by the end of March.

Within weeks, Agrokor is expected to make public the final amount of overall claims against the company and consolidated 2016 group results for which the company has hired PricewaterhouseCoopers to carry out an audit.

A final settlement can be reached with the support of creditors holding at least 66 percent of claims.

Last week, Agrokor said legal action had been initiated in several countries in the Balkans and in the United Kingdom, most notably by Russia’s Sberbank, aimed at securing repayment of debts from Agrokor’s property abroad.

As the biggest Croatian private firm with about 60,000 employees in the Balkans, Agrokor’s problems posed risks to the broader Croatian economy, prompting the government to step in.

The crisis management team at Agrokor is expected to remain in place for up to 15 months during which time the firm is expected to reach the settlement with creditors.

Croatia has selected New York-based AlixPartners to advise on Agrokor restructuring.

“I believe that 15 months will be enough time to reach the final settlement and complete the (restructuring) process,” the source said.

The firm racked up debts during a rapid expansion, notably in Croatia, Slovenia, Bosnia and Serbia.

Agrokor’s business stabilised after it secured a 480 million euro ($576 million) loan from banks and other financial institutions in June.

Analysts expect restructuring to lead to the sale of Agrokor’s food production and retail operations, and expect creditors to take writedowns on some debt.

$1 = 6.2331 kuna Reporting by Igor Ilic; Editing by Mark Potter

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