ZAGREB, April 3 (Reuters) - Domestic suppliers owed some 16 billion kuna ($2.29 billion) by Croatia’s Agrokor have asked the government to facilitate the unfreezing of the indebted food producer and distributor’s accounts.
Agrokor is the biggest Croatian private firm and the largest employer in the Balkans with some 60,000 workers. It operates largely in Croatia, Bosnia, Slovenia and Serbia and during its rapid expansion it built up debts of about 45 billion kuna, or six times its equity.
A group of local suppliers owed funds by Agrokor’s retail chain met with Croatia’s prime minister on Monday. Accounts of some of the companies owned by Agrokor have been frozen due to unpaid obligations towards suppliers and the state, including taxes.
Agrokor and six banks on Sunday signed a repayment freeze agreement which is aimed at injecting fresh liquidity into the company and imposing new management whose task will be restructuring its debt and overall business.
“We support the standstill agreement, but to join it we’ve yet to define some details (with the banks). Still, we think we need a faster (institutional) framework to resolve Agrokor’s account freeze and guarantee future payments to suppliers,” said Josip Budimir from the coffee producer Franck on behalf of Agrokor’s suppliers.
The government has proposed a law to shield the economy from the failure of large companies which is expected to be approved by parliament later this week.
Budimir said he believed the law could help suppliers secure their financial demands.
“I do expect to see concrete moves after today’s meeting,” said Denis Matijevic of Agrofructus, one of Agrokor’s suppliers. “It is always good to have the state as mediator, but it should not interfere directly.”
Agrokor’s creditors include Russia’s Sberbank and VTB Bank as well as the Croatian units of Austria’s Erste Bank and Raiffeisenbank.
Other creditors include Privredna Banka Zagreb, owned by Italy’s Intesa Sanpaolo, and Zagrebacka banka, owned by Italy’s UniCredit.
The standstill deal signed between Agrokor management and creditors envisages appointment of a chief restructuring officer and independent experts to fill top management roles.
Analysts believe that Agrokor’s restructuring, which is expected to take months, is likely to lead eventually towards the sale of some assets.
“Also, some jobs may disappear, but what matters now is to keep confidence among all the stakeholders, without any individual or uncoordinated actions. Agrokor will not suffer because of lack of money, but may suffer because of lack of trust,” said business consultant Milan Racic.
$1 = 6.9787 kuna Reporting by Igor Ilic; editing by Ivana Sekularac and Jason Neely