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News 15 Mar 17

Croatia Govt Admits Secret Meetings With Agrokor

The Croatian government has admitted holding secret meetings with the owner of the biggest private company in the country, Agrokor, over its worsening financial troubles.

Sven Milekic
BIRN
Zagreb
Supply trucks of the Agrokor-owned Konzum - biggest retailer in the region. Photo: Agrokor media kit

N1 media on Wednesday claimed that Croatian government officials met on Tuesday with representatives of the Russian state-owned Sberbank to discuss large loans it gave to Croatia's biggest privately-owned company, Agrokor.

The owner of the biggest retail store in the region, Konzum, faces financial troubles, caused in part by lowered credit ratings by different agencies, which have caused unease about its future.

Sberbank supplied Agrokor with two loans in 2014 and 2016 worth 950 million euros, while another Russian state-owned bank, VTB, has also lent the company hundreds of millions of euros.

Neither the government nor Sberbank have confirmed the meeting.

“Sberbank is in direct communication with Agrokor. However, we cannot comment in detail on the relationship with our clients," Sberbank told BIRN, when asked about media reports of meetings with government officials.

However, on Tuesday, N1 carried news of another secret meeting of government officials on Agrokor.

According to N1, Prime Minister Andrej Plenkovic, chair of parliament Bozo Petrov, Economy Minister Martina Dalic and Finance Minister Zdravko Maric met with Agrokor’s owner, Ivica Todoric, on March 5, allegedly to discuss ways to help the company, including proposals that the state buy a certain portion of the company. The idea was reportedly rejected due to the immense cost.

Under pressure from the media, the government has admitted holding meetings with the troubled company.

“We are familiar with the lowering of the credit ratings of Agrokor and ... in this context, there was a meeting of representatives of the government, the Croatian parliament and Agrokor,”  the government said in a statement.

It added that the two main partners in government, the centre-right Croatian Democratic Union, HDZ, and the Bridge of the Independent Lists, MOST, “recognised the importance of Agrokor for the Croatian economy”, promising to further monitor the situation.

Besides big debts towards private creditors, a report by the specialist website Debtwire from late February said Agrokor owed 800 million euros in VAT to the state.

The company's role in the economy of Croatia is massive, with revenues of 6.5 billion euros in 2015 – almost 16 per cent of Croatia's total GDP – and around 40,000 employees.

Agrokor employs another 20,000 people in neighbouring Bosnia and Serbia while it is believed that suppliers and companies for the Slovenian retailer Mercator – which it bought in 2014 – employ around 70,000 people in Slovenia as well.

The company's main problem is its accumulated debts. Borrowings at the end of 2016 stood at 3.4 billion euros while its total debt was estimated at some 6 billion euros, almost six or even seven times higher than its estimated total capital, which is put at slightly over 1 billion euros.

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