March 15, 2017 / 3:35 PM / 6 months ago

Croatia wants to shield economy from Agrokor's problems

ZAGREB, March 15 (Reuters) - Croatia’s Prime Minister Andrej Plenkovic said on Wednesday that his government would make sure that debt problems faced by food company Agrokor did not destabilise the country’s economy and financial system.

Zagreb-based Agrokor is the biggest food producer and retailer in the Balkans, employing almost 60,000 people across the region with an annual revenue of some 50 billion kuna ($7 billion). It is not listed, but shares in some of the companies it owns fell on the Zagreb bourse on Wednesday on worries about the parent company’s debt problems.

“Agrokor is a big company the responsibility for which primarily lies on its owner and management,” Plenkovic said. “We are interested that issues related to Agrokor do not have repercussions on the economy and financial system and will do everything to preserve stability,” he told reporters.

Agrokor has repeatedly said it will keep servicing its financial obligations regularly as before. But yields on its bonds, listed abroad, have jumped in recent weeks from around eight percent to around 30 percent. A major portion of its debt matures in early 2018.

The company said on Wednesday: “Agrokor is analysing all the possible options for stabilising business ... we have a support among investors that are actively involved in the process and we will timely inform the public about the results.”

At the end of September last year, Agrokor had debt of about 45 billion kuna ($6.44 billion) against capital of around 7.5 billion kuna. Agrokor’s consolidated 2016 results are expected in late March or early April.

Analysts have said one option for Agrokor could be the sale of some of its profitable assets or a change in ownership structure. Currently the company is controlled by local businessman Ivica Todoric.

Russian banks, such as Sberbank, are among Agrokor’s major creditors. Local media have reported this week that Agrokor is again in talks with Sberbank on further financing, but Agrokor has not confirmed it. ($1 = 6.9900 kuna) (Reporting by Igor Ilic. Editing by Jan Merriman)

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