ZAGREB (Reuters) - Croatia prepared on Friday to rush through new legislation to protect the economy from big corporate failures, as the country’s biggest private company Agrokor tried to secure a debt restructuring deal.
Some local media reported on Friday that Agrokor [AGROK.UL] had signed a deal with creditors overnight to restructure its debt, but the company declined comment and there was no confirmation from its creditors.
The food producer and retailer, the biggest employer in the Balkans, built up debts of about 45 billion kuna ($6.5 bln), or six times its equity, as it expanded rapidly.
The government has drawn up a new law which it hopes will prevent corporate financial problems from destabilising the wider economy and financial system.
“We’re finalising the details and the government will send the law today for parliamentary approval,” Prime Minister Andrej Plenkovic said on Friday. “The goal is to provide a framework that would guarantee the economic stability when the big firms find themselves in trouble.”
There were few details but local media said the law would enable the government to appoint a manager to stabilise the business in the event of financial problems at a major company, if there was a request from creditors and the company agreed.
Deputy Prime Minister Martina Dalic said last week that the law would apply to companies with more than 8,000 employees and debt above one billion euros ($1.1 bln). Russia’s VTB bank, one of Agrokor’s creditors, said on Wednesday that the government and a group of Agrokor creditors were set to sign a “standstill agreement” this week to freeze debt repayments as part of debt restructuring talks.
($1 = 0.9353 euros)
($1 = 6.9503 kuna)
Reporting by Igor Ilic; Editing by Susan Fenton