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By Igor Ilic
ZAGREB, April 7 Croatia's indebted food and
retail group Agrokor, the Balkan nation's biggest
private firm, said on Friday it was handing control to the state
under an emergency law introduced this week to deal with big
companies facing financial trouble.
Agrokor, the biggest employer in the Balkan region with some
60,000 people, piled up debts worth some 45 billion kuna ($6.42
billion), or six times its equity, during rapid expansion of its
business, notably in Croatia, Slovenia, Bosnia and Serbia.
The firm secured a deal with banks at the weekend to help
restructure its finances but suppliers, who were worried about
delayed payments, did not sign up. Earlier on Friday, the
suppliers said they would halt deliveries of goods to the firm.
Without broad agreement of all the stakeholders, Agrokor was
left little choice but to seek the state's assistance. The
emergency law envisages any restructuring taking 15 months.
"Today, I put everything I had built in the charge of the
Croatian state," Agrokor's owner Ivica Todoric said in a
statement calling for the emergency law to be activated.
"I believe it is a decision taken in best interest of every
employee, partner, supplier and all other stakeholders," he
Under the law, passed during an urgent procedure on
Thursday, the state must appoint an executive to steer the
restructuring process, with the approval of a commercial court.
Agrokor struck a deal last Sunday with six lenders, led by
Russia's Sberbank and VTB, to freeze debt
repayments and to secure an unspecified cash injection before
restructuring the company's business.
But suppliers, including big producers and small family
farms, did not join that agreement as they feared their demands
for payment could be adversely affected by the restructuring.
Agrokor's retail chain Konzum controls around 30 percent of
the local market.
(Reporting by Igor Ilic; Editing by Edmund Blair)