(Govt corrects debt amount in para 4 to euros, instead of kuna)
By Igor Ilic
ZAGREB, March 24 (Reuters) - Croatia’s government is drawing up a law to protect the economy if a major company runs into trouble, Deputy Prime Minister Martina Dalic said on Friday.
She said the law could be used for debt-laden food business Agrokor, a major employer whose creditors include Russia’s Sberbank.
She denied the legislation was being drawn up becase of Agrokor’s problems.
“The law, which I expect to be ready very soon, will be relevant for companies with more than 8,000 employees and a debt of at least one billion euros ($1.1 billion) they cannot regularly service,” Dalic, who is also the Economy Minister, told reporters.
Agrokor, the largest food producer and retailer in the Balkans with revenues equivalent to 15 percent of Croatia’s gross domestic product, is under pressure from investors and the government to clear up its debts.
Dalic said the law would define a framework for stabilising an indebted company’s operations during its business, financial and ownership restructuring.
Prime Minister Andrej Plenkovic has already urged Agrokor owner, Croatian businessman Ivica Todoric, and the firm’s management to take “wise and useful” decisions.
Agrokor piled up debts to support its rapid expansion but relied on borrowing at high interest rates, analysts say.
Agrokor says it is servicing its obligations and stabilising the business, which extends across Slovenia, Serbia and Bosnia.
Croatian media said the company owes about 16 billion kuna to local suppliers and will meet them next week.
It has said repeatedly that it is working on a new business model to protect employees, suppliers and other partners, but has not provided details.
According to Agrokor figures released in September, it has about 45 billion kuna of debt, almost equal to its annual revenue of 50 billion kuna, and capital of about 7.5 billion kuna. About 500 million euros ($540 million) of the debt matures in early 2018.
Sberbank said this week it was doing everything possible to help Agrokor, without citing specific measures.
Croatian media reported that Sberbank and other top creditors were considering a liquidity injection worth 2.7 billion kuna and a restructuring plan.
Sberbank has not commented on these reports. ($1 = 6.8679 kuna) ($1 = 0.9263 euros) ($1 = 0.9258 euros) (Reporting by Igor Ilic; Editing by Ruth Pitchford)