Emergency Deal Announced to Keep Croatia's Agrokor Solvent

Austria's Erste Bank on Friday announced that Croatia's biggest private company Agrokor - currently embroiled in a deep financial crisis - and its creditors had reached a deal on a "standstill agreement" whereby the company will remain financially liquid while its debts are placed on "standby".

Agrokor's debts have piled up. It owes over 1.3 billion euros to the Russian state-owned banks Sberbank and VTB Bank, prompting fears that the banks might seize ownership and take over the management.

News of the agreement came amidst the situation in which Agrokor's account, as well as the accounts of its most prominent subsidiaries - Konzum, Jamnica, Ledo - have been blocked due to debts.

"Goal of the agreement are to facilitate efforts to stabilise the company's operations and ensure the settlement of trade payables towards supplier in the coming period," Erste stated, as some of its suppliers had blocked Agrokor's accounts on Friday.

"The standstill should facilitate the efforts of companies to address issues of liquidity, ensure business continuity, protect the value of the [Agrokor] Group, as well as present the basis for a sustainable restructuring of the Group," Erste further stated.

The press release concluded that the management of the company would be strengthened by introducing a role of "chief restructuring officer" in the process of company restructuring.

Meantime, Croatia's centre-right government on Friday agreed the draft of the Law on Procedures for Extraordinary Management, a special law that would give the state a role in the crisis management of so-called "systematic companies" - companies deemed vital for the normal functioning of the economy.

Media have nicknamed it the "Lex Agrokor" since it only concerns...