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Balkans food retail giant struggles with debt

ZAGREB, Croatia - Troubled Agrokor, the Balkans' main food maker and retailer, made it to the top of Croatia's political agenda Thursday when Prime Minister Andrej Plenkovic tried to calm fears over its crushing debt.
Konzum, the largest Croatian food retailer, is a part of Agrokor Group.
The Agrokor concern directly employs some 60,000 people in the region - of which two-thirds in Croatia and others in neighbouring Bosnia, Serbia, Slovenia - where unemployment runs high. A network of suppliers means dozens of thousands more people are linked to the company indirectly. Its owner is Croatian businessman Ivica Todoric.

Agrokor's has annual revenue of some 50 billion kunas (6.7 billion euros, $7.2 billion), the equivalent of over 15% of the country's gross domestic product (GDP). According to figures released in September its debt amounted to some six billion euros. Among the firm's major creditors figure Russia's state-owned banks Sberbank and VTB.

"We hope for a positive solution of the situation" regarding Agrokor, Plenkovic told a government session, and called not to "dramatise".

"We should all calm down ... using a common sense approach a dialogue with the company and its major creditors from whom we expect that they very soon jointly start a plan for resolving the existing problems in (Agrokor's) business operations."

He stressed that the "government's role is to take care of overall stability and sustainability of the country's economic and financial system".

Agrokor said in a statement Wednesday it was analysing with its partners "all possible options to stabilise the company's business activities".

Earlier this year international rating agencies lowered Agrokor's credit rating citing namely its high indebtedness and rising refinancing risks. A big part of its debt matures in 2018. Analysts say Agrokor's financial problems could be solved by restructuring, changes in ownership or the sale of some of the 61 companies it owns. They say the government should not interfere in the firm's consolidation but rather create a framework that would enable its recovery.

"When Agrokor wobbles the whole of Croatia wobbles," opposition leader Social Democrat (SDP) Davor Bernardic warned.

The Croatian Chamber of Commerce said that the next moves over the firm would "certainly affect the economic and social situation in the whole country".

Unemployment in the EU member country was 15% in January.

Source: AFP


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