December 5, 2018 / 12:52 PM / 7 days ago

Russia's Sberbank sees interest from potential buyers of its Agrokor stake: Sberbank CEO aide

MOSCOW (Reuters) - Russia’s Sberbank (SBER.MM), a key stakeholder in Croatian food producer and retailer Agrokor, has started to receive proposals to sell its share in the firm which is emerging from a debt crisis, an aide to Sberbank’s CEO said.

FILE PHOTO: Participants cast their shadows on a board with the logo of Sberbank at the St. Petersburg International Economic Forum (SPIEF), Russia, June 1, 2017. REUTERS/Sergei Karpukhin/File Photo

Agrokor, the largest firm in the Balkans with over 50,000 staff, was put under state-run administration last year, crippled by debts built up during an ambitious expansion drive.

In October, a Croatian court approved a deal for the indebted Agrokor that includes a debt-for-equity swap. That means Agrokor’s biggest single creditor, Sberbank, is soon to become its largest shareholder with a 39.2 percent stake.

Maxim Poletayev, who is overseeing Agrokor’s restructuring, said that Sberbank has already started to get proposals to buy out the bank’s stake from different kinds of distressed funds spanning the United States and Canada to the UK.

“All will depend on the price, so far we are studying them (the proposals),” he said.

Poletayev said that Sberbank is also in talks with a number of investors who may take part in refinancing Agrokor’s super-senior debt.

The company has 1.1 billion euros ($1.25 billion) in the super-senior loan, with Knighthead, VTB (VTBR.MM), Russia’s second largest bank, and Italy’s UniCredit (CRDI.MI) among its debtors, he said.

Poletayev said that the super-senior debt would bear an annual rate of 10 percent starting from January.

“Replacing this loan with another one... is a task of the next couple of months. We are actively working on this and have received a couple of proposals,” he said.

Sberbank and VTB, having lent a total of 1.1 billion euros and 300 million euros to Agrokor in the past, respectively, won’t be taking part in any new loans for the company, he said.

Overall claims against Agrokor, from creditors including local banks, bondholders and suppliers, amounted to some 58 billion kuna ($8.9 billion) before the restructure.

Bondholders will own 25 percent of Agrokor after the debt to equity swap.

Poletayev said that Sberbank is in talks with both western and eastern funds and banks, including from China and Arab countries, who may take part in the refinancing process.

BUSINESS PLAN

In the meantime, as part of the restructuring plan, Sberbank wants Agrokor to focus on three areas: retail, food and agriculture, Poletayev said.

Agrokor, founded as a flower shop in 1976, expanded to a company with revenues amounting to 15 percent of Croatia’s economic output, becoming a major part of ongoing efforts to integrate regional economies scarred by the wars of the 1990s.

Davis Morris, an ex-executive with Britain’s biggest food retailer Tesco (TSCO.L), has joined Agrokor to oversee its retail business, Poletayev said.

Agrokor is facing an increasing competition in the region from the German rivals Lidl and Kaufland who have expanded during Agrokor’s recent troubles.

Fabris Perusko, a former McKinsey & Company consultant who was promoted to help with the restructuring from the board of Tisak, a chain of newsagents owned by Agrokor, is expected to be Agrokor’s CEO, Poletayev said.

Agrokor’s Mercator brand - which includes 985 stores spread across Slovenia, Serbia, Bosnia and Herzegovina and Montenegro - needs to reduce its debt, Poletayev said, putting it at 738 million euros in the January-September period.

Mercator will divest a number of non-core assets and sell real estate assets worth 116 million euros - a deal already approved by its board of directors, Poletayev said.

Poletayev also said that Agrokor’s chain in Bosnia was not profitable enough and he believed the best option would be to redirect investments to Serbia, Croatia and Slovenia.

Reporting by Tatiana Voronova; Writing by Katya Golubkova; Editing by Elaine Hardcastle

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