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News 03 Apr 17

Alvarez Likely to Head Restructuring of Croatia's Agrokor

Media reports have revealed that Antonio Alvarez III of Alvarez and Marsal will be in charge of restructuring Croatia's troubled economic giant Agrokor.

Sven Milekic
BIRN
Zagreb
Antonio Alvarez III. Photo: alvarezandmarsal.com

Antonio Alvarez III, from the global consulting agency Alvarez & Marsal, will most likely be the new chief restructuring officer for Croatia's biggest private company Agrokor, the daily Vecernji list reported on Sunday.

Alvarez is executive director of restructuring in Alvarez & Marsal, which was co-founded by his father, Tony, and is present in at least 22 countries.

Russia's state-owned bank Sberbank, which is one of the biggest creditors of Agrokor, hired the agency for the task according to reports.

The company has become increasingly insolvent due to mounting debts, resulting last Friday in blocked accounts.

Creditor banks including Sberbank and another Russian state-owned bank, VTB, signed a so-called standstill agreement with Agrokor on Sunday, which, it was announced afterwards, would “stabilise the company's operations and ensure the settlement of trade payables towards suppliers”, as well as “ensure liquidity”.

Besides putting the company's debts on "standby", the agreement included introducing a new post of chief restructuring officer, which Alvarez will hold, to guide the whole process.

A number of “independent experts” will be placed in top managerial positions during the restructuring. Parts of Agrokor may be sold off to repay debts, or creditors and suppliers may see their debts transformed into part-ownership.

Alvarez has 25 years of experience in the restructuring process, including in the retail sector. He was on the executive board during the restructuring of South African retailer Edcon, Spain's Abengoa and the French Ayming Group.

This is seen as relevant in respect to Agrokor’s own retail arm, Konzum, the biggest retailer in Croatia and the second biggest in neighbouring Bosnia and Herzegovina.

Alvarez will be assisted by experts from McKinsey and Deloitte consultant agencies.

As concern about the company grew last week, Croatia's government last Friday drafted a law on Procedures for Extraordinary Management, a special law giving the state a role in the crisis management of so-called “systematic companies” - deemed vital for the overall wellbeing of the economy.

Prime Minister Andrej Plenkovic, Economy Minister Martina Dalic and Agriculture Minister Tomislav Tolusic meanwhile met Agrokor’s biggest suppliers on Monday to convince them that all the company's debts will eventually be repaid.

Agrokor owes a total of over 1.3 billion euros to Sberbank and VTB Bank, prompting fears that the banks might seize ownership and take over the management.

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 Agrokor bought in 2014 – employ around 70,000 people in Slovenia as well.

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