(Adds statements from bankers)
By Igor Ilic
ZAGREB, March 31 Croatia's heavily indebted food
and retail group Agrokor and a board of creditors
have agreed "in principle" on the main elements of a standstill
agreement which they expect to sign later on Friday, Erste Bank
said in a statement.
Agrokor, the largest private firm in Croatia and the biggest
employer in the Balkans with around 60,000 workers, built up
debts of about 45 billion kuna ($6.5 bln), or six times its
equity, as it expanded rapidly.
The creditors include Russia's Sberbank and VTB
Bank and the Croatian units of Austria's Erste Bank
and Raiffeisenbank as well as Privredna
Banka Zagreb, owned by Italy's Intesa Sanpaolo, and
Zagrebacka banka, owned by Italy's UniCredit.
"The standstill agreement should ease Agrokor's efforts to
resolve its liquidity problems, secure continuation of its
business, protect the value of the concern and lay the
foundation for sustainable restructuring," the statement said.
Christoph Schoefboeck from Erste Bank said the goal was
primarily to enable Agrokor to meet its obligations towards
suppliers and maintain its operations.
The company will get a chief restructuring officer and
independent experts to fill top management roles, to make the
process "transparent and sustainable," the statement said.
The head of Croatia's Sberbank unit Mario Henjak said the
freeze on Agrokor's debt repayments to banks would begin
"Standstill starts from today... There will be a new
management heading the restructuring process, but we don't know
the names yet," state news agency Hina quoted Henjak as saying.
He said that fresh funds would be injected in Agrokor, but
declined to specify the amount.
On Friday the Croatian government also proposed a law aimed
at shielding the economy and the financial system from big
corporate failures. The law, yet to be approved by the
parliament, will apply to firms with more than 5,000 employees
and debts of at least 1 billion euros.
Prime Minister Andrej Plenkovic told a cabinet session the
law would be activated only at the request of the company or its
(Reporting by Igor Ilic; Editing by Ruth Pitchford)