New Economy Minister Hopeful for Agrokor Settlement Agreement

By 28 May 2018

ZAGREB, May 28, 2018 - Economy Minister Darko Horvat said on Monday that he expected an agreement on a settlement with Agrokor's creditors to be reached by July 10 as only that way would creditors' losses be reduced, adding that there could not be an ideal, win-win situation in Agrokor.

"I am not a prophet, but it is logical to expect that a settlement would be agreed by July 10 because in that way the creditors would lose the least," Horvat said in an interview with the Croatian Radio.

Asked if a settlement plan could be agreed without Agrokor's suppliers, since the votes of 66% of those who hold Agrokor's debt would suffice for that, namely if it could be agreed if Russian and other banks and U.S. funds reached an agreement to that effect, Horvat said that that was possible but that the most important thing in the process was to be fair to suppliers.

"The key to the functioning of the company are creditors-suppliers and the extent to which the settlement will enable them to recover what they have invested in Agrokor. There can be no ideal, win-win situation in the Agrokor case, but if we ensure the company's long-term functionality, the losses of all stakeholders affected will be covered through the good market functioning of Agrokor in the next few years," Horvat said.

Commenting on the announcement by Prvo Plinarsko Drustvo (PPD) and INA that they would recapitalise Petrokemija with 150 million kuna, Horvat said that giving up on Petrokemija would be a bad move both for the country and for Kutina, where Petrokemija is based, as well as for the national industry.

He welcomed the two companies' interest but also mentioned pension funds in the context of Petrokemija's recapitalisation. The minister noted that at the moment the state still did not have their 100% consent but that talks were nearing completion.

"Petrokemija has a very good product and almost 80% of its output is exported," he said, stressing also that the price of mineral fertiliser on the European market had never been lower and that the price of natural gas, needed for the company's operation, had never been higher, which was causing problems in Petrokemija's functioning.

"That means that even with the planned restructuring, once it is finally outlined by August 15, the government will not be 100% sure that it has put Petrokemija where it wants it to be," said Horvat. He noted that Petrokemija would in the future have to change its production, no longer rely on government subsidies and face market competition.

As for problems in the shipbuilding sector, he said that he expected government guarantees for new loans to the Uljanik and "3. Maj" shipyards to be realised as soon as possible.

"There is room for Croatian shipyards, on the one hand, to cut their costs and on the other, to start making a different type of vessels. Vessels that will find their market much more easily, that will include more Croatian-made components, and have much higher added value than is now the case," said Horvat, adding that he expected loans for the two shipyards to be obtained by mid-July.