October 12, 2017 / 11:01 AM / a year ago

Moody's sees Agrokor's debt recovery at low end of 35-65 pct range

ZAGREB, Oct 12 (Reuters) - Moody’s rating agency said on Wednesday it saw average recovery prospects for creditors of Croatia’s highly indebted food group Agrokor to be at between 35 and 65 percent, but closer to the lower end of the range.

Agrokor, the biggest employer in the Balkans region with around 60,000 staff, plunged early this year into a liquidity and debt crisis that threatened to destabilise the Croatian economy and prompted the government to intervene, appointing a crisis management team..

“In our view, average recovery prospects for Agrokor’s creditors are likely to be at the low end of the 35 to 65 percent range commensurate with the (company’s) current Ca rating,” Moody’s said in a comment.

This week an audit revealed Agrokor made a net loss of 11 billion kuna ($1.74 billion) last year.

Agrokor has yet to make public the overall amount of claims against it which is expected this month. After that the crisis management team will intensify work on making a settlement proposal to the creditors, which include local and foreign banks led by Russsia’s Sberbank, bondholders and suppliers.

“Since many creditors have already filed lawsuits against Agrokor in several countries, negotiating such a settlement may take time,” Moody’s also said, setting the recovery prospects for the senior unsecured notes at less than 35 percent in line with their C rating.

Agrokor acknowledged a number of lawsuits outside Croatia, mostly filed by Sberbank.

The state-appointed crisis management team is due to stay at Agrokor until mid-July at the latest, during which time creditors are expected to reach a settlement over their claims as an alternative would be a bankruptcy for the food group.

Analysts say a settlement will lead to the sale of Agrokor’s food production and retail operations and that creditors will have to take writedowns on some debt. Swapping debt for equity is seen as a less likely option.

Local suppliers said they would not write off more than 15 percent of their claims, a stance which may also complicate the negotiations as Agrokor’s Konzum retail chain depends on goods supplied by local food producers. ($1 = 6.3340 kuna) (Reporting by Igor Ilic; Editing by Greg Mahlich)

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