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12th Monthly Report of the Extraordinary Administration Published: Trend of Good Operating Results Continues, Particularly in Retail

Creditors signing an arrangement on key elements of the settlement is the most important event at Agrokor lately

Agrokor Monthly Report March 2018

Agrokor has published the 12th Monthly Report of the Extraordinary Administration pertaining to the period from March 11 to April 10, 2018. The report covers the development of the economic and financial situation of the Agrokor Group and outlines the realization of operating activities of the Extraordinary Administration and the overall business operations of both the parent company Agrokor d.d. and the major operating companies of the Group.

The most important news of this reporting period is that on April 10, 2018 all Members of the Interim Creditors’ Council and other creditors have reached an in-principle agreement on all key structural elements of the settlement. This Agreement constitutes the basic framework for setting forth the specific wording of the settlement agreement based on the registered claims and their legal status.

The key elements agreed comprise the corporate structure of the new Agrokor Group, the treatment and form of recovery of the pre-petition creditors’ claims, the new debt of the new Agrokor Group and its capital structure, the special agreement with suppliers regarding the recovery of so-called border claims and the implementation of the settlement.  

The operations of the future Group shall rely on the arms’-length principle when it comes to intercompany relations within the Group, which means that the parties are equal and independent in their mutual relationships. With regards to the recovery of individual claims, it has been specifically agreed that the major criterion in determining their amounts shall be the so-called EPM (Entity Priority Model) developed by international institutions and used in major international company restructuring processes.    

In terms of the Agrokor Group business operations in the reporting period, the majority of operating companies and business segments have continued the positive trends from the previous periods and recorded improved operating results and good performance indicators. In spite of the unfavorable weather conditions, the Retail and Wholesale sector recorded an increase in the average basket and margin, which along with the cost efficiency resulted in the defined EBITDA for the period having been achieved. The turnover in Konzum’s retail network, which accounts for the major part of turnover of the entire company, was 3.6% above plan in February. Poor weather conditions and very low temperature in February led to a lower footfall, but at the same time the reduced footfall was set off with the average purchase being 6.2% higher in a year-on-year comparison.

The Food sector generated operating profits (EBITDA) in February significantly exceeding plans. Agricultural operations over the course of this reporting period continued to be affected by the drop in pork and cheese prices, while an increase in prices in the forthcoming period is expected to generate growth of both EBITDA and revenues.

In the reporting period suppliers received payments of more than EUR 490m of old and border debt.

In the reporting period the Extraordinary Commissioner for Agrokor Fabris Peruško and Sberbank’s First Deputy Chairman of the Board Maksim Poletaev on March 21, 2018 signed an agreement setting forth the principles according to which Sberbank and its affiliates shall in due course withdraw the litigations brought against Agrokor and its affiliated companies and the Extraordinary Commissioner shall recognize the challenged claims of Sberbank and propose for Sberbank’s recognized claims to be included in the updated list of verified claims submitted to the Commercial Court in Zagreb. The recognition of Sberbank’s claims will enable them to vote in the settlement and facilitate progress towards the mutual goal, which is a settlement among all creditors that will deliver a sustainable future for the new Agrokor.

In line with the announcement regarding additional transparency levels, Agrokor’s Extraordinary Administration on March 26, 2018 disclosed the documents submitted to the Commercial Court in Zagreb. The SPFA was published in its cleansed version, as amended by all annexes concluded by the date of publication. Moreover, the Fee Agreement with the Lenders’ Agent for the SPFA was published as well.