Croatia: Saving Agrokor, Croatia's Biggest Food And Retail Concern

Last Updated: 26 June 2017
Article by Silvia Cancedda

Over the past few months, Croatia's economy focus is primarily set upon the status of its biggest food and retail group, Agrokor d.d. The company that employs around 60,000 people in Croatia, Slovenia, Serbia, Bosnia & Herzegovina and Hungary and the core business of which - Konzum supermarkets - engages over 2,500 suppliers, is facing bankruptcy. The accumulated debt of 3.5 billion EUR to its creditors and 2.2 billion EUR to suppliers had pushed Agrokor over the edge after the last financing deal failed through.

Facing the serious threat for the overall Croatian economy, in an urgent procedure, the Government passed the so called "Lex Agrokor", i.e. the Act on extraordinary administration of commercial companies of systemic importance for the Republic of Croatia, and took over the management of Agrokor. Mr. Ivica Todorić, the creator and owner of Agrokor concern, had to step down and pass the reins to the Government-appointed extraordinary administrator, Mr. Ante Ramljak. Since then, the Government has put all its efforts on avoiding bankruptcy and saving Agrokor through restructuring. The process is intensively underway with daily pressure from suppliers and banks who are trying to find a common ground.  The Agrokor crisis has led to a crisis in the Croatian government when the opposition insisted on no-confidence voting against the Ministry of Finance Mr Zdravko Marić, a former manager of Agrokor. The Croatian Prime Minister, Mr. Andrej Plenković, temporarily managed to avoid new parliamentary elections and released of duty opposing ministers from the ranks of the political party Most. The effects of Agrokor crisis can also be observed on the regional level even though  Mr Ramljak (the state appointed administrator of Agrokor) has reassured that Agrokor companies in Slovenia, Serbia and Bosnia & Hercegovina are stable and that additional efforts are taken to further strengthen their position. In Croatia, Agrokor has started selling non-necessary assets (luxury cars, yacht and a helicopter) while the analysts and consultants are still evaluating the opportunities for selling real estate properties and certain companies.

Croatia's biggest food and retail concern, Agrokor d.d., is facing bankruptcy caused by heavy indebtedness accumulated over the years. The Croatian Government, in its efforts to save Agrokor from such procedure which would negatively affect the entire Croatian economy, passed an urgent Act that gives the authority to the Government to intervene in systematic companies. The new administration is heavily involved in assessing the real status of the debt and of the assets and in the preparation of the restructuring plan.

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Silvia Cancedda
 
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