Croatia’s government has drafted a law to protect the economy from any problems arising at Agrokor, a major employer that is weighed down by heavy debts, a newspaper reported on Friday. Agrokor, the largest food producer and retailer in the Balkans with revenues equivalent to 15 percent of Croatia’s gross domestic product, is under pressure from investors and the government to clear up its debts.
“The government has practically prepared a draft law on Agrokor which will be activated in case the situation in the economy suddenly worsens because of problems in Agrokor,” the Jutarnji List daily said, citing sources close to top officials. The report said the law would protect jobs and suppliers connected with Agrokor, which employs 60,000 people across the Balkans. The newspaper, one of the two biggest in Croatia by circulation, did not give further details.
The government declined to comment on the report. “It is a private company and so far we have done what is possible. We are in regular contact with the stakeholders,” the government spokeswoman told Reuters. Prime Minister Andrej Plenkovic has urged Agrokor owner, Croatian businessman Ivica Todoric, and the firm’s management to take “wise and useful” decisions. The government has also met food producers that supply Agrokor’s retail chain, offering to support if needed.
Agrokor piled up debts to support its rapid expansion but relied on borrowing with high interest rates, analysts say. Agrokor says it is servicing its obligations and stabilising the business, which extends across Slovenia, Serbia and Bosnia.
The company has said on several occasions it is working on a new business model to protect employees, suppliers and other partners, but has not provided details. Agrokor officials could not be reached for comment.
According to Agrokor figures released in September, its debt amounts to about 45 billion kuna ($6.55 billion), almost equal to its annual revenue of 50 billion kuna. A major portion of the debt, worth 500 million euros ($539.80 million), matures in early 2018. The firm has capital of about 7.5 billion kuna. Russia’s Sberbank is among Agrokor’s top creditors. It said this week it was doing everything possible to help Agrokor without citing specific measures.
Croatian media reported that Sberbank and other top creditors were considering a liquidity injection worth 2.7 billion kuna and a restructuring plan. Sberbank has not commented on these reports.