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Settlement Plan of Agrokor’s Creditors Voted in Favor by 80.20 per cent of Total Claims

The Settlement Plan between the creditors of Agrokor has been voted in favor by 80.20 per cent of total claims, ie. HRK 27,075,097,019.27 out of HRK 33,759,582,335.23 of total claims.

The Settlement Plan received the affirmative vote at the Settlement Plan voting hearing held on 4 July, 2018 at the Dražen Petrović Basketball Center – CIBONA Hall in Zagreb.

„Today is a great day for Agrokor, indeed. The Extraordinary Administration’s goal was to achieve a Settlement Plan which would be voted in favor by the majority of creditors within the statutory deadline, and this is what we have accomplished. We have thus brought the Extraordinary Administration Procedure almost to the very end.

Behind us is a long and occasionally very difficult negotiation process of six months, during the course of which we as Extraordinary Administration tried to reconcile creditors’ interests which were frequently diametrically opposed, to enable them to achieve an agreement which would be acceptable to everyone. There were some extremely difficult moments when a settlement did not seem to be likely, but finally reason has prevailed.

Hence, I would first of all like to thank all creditors who have taken the opportunity provided by the Act on Extraordinary Administration in Companies of Systemic Importance to the Republic of Croatia to rescue part of the tens of billions of kunas they had lent to Agrokor or invested in Agrokor under the former Management Board. Thank you also to all the employees of Agrokor and its companies who have performed their work in a responsible manner under difficult circumstances and thank you as well to all other stakeholders who were actively involved in this demanding and complex process. My special thanks go to the Members of the Temporary Creditors’ Council who have done everything humanly possible to get to a mutually acceptable solution, in spite of all the losses everyone has suffered.

It is a great success to resolve the threatening collapse of the largest Croatian company, which would have had devastating consequences on the economies of Croatia and the region, in only 14 months. Due to the fast and determined reaction of the Government, the collapse of this large company has not spilled over to Croatia’s entire economy.

Thanks to the responsibility of the creditors, on the other hand, the company has a new future ahead of it. With today’s act Agrokor is entering the final stage of its full transition into the hands of those it has owed money to, money it was not able to repay, and as its owners-to-be they take full responsibility for its future.

Ahead of us is the period of waiting for the ruling to become effective, whereupon we will start with an as-fast-as-possible implementation of the Settlement Plan. This is a technically very demanding process for which we have so far identified more than 70,000 steps. A great deal of the preparations for this final stage of the procedure, which will take several months, have already been done.

Almost all of Agrokor’s operating companies are generating good operational results which exceed both budget and expectations. With the season ahead of us, the Extraordinary Administration will do its best for the results to have an upward trend in order to hand an as successful as possible new company structure over to the new owners for management.

We take particular pride in the fact that a great structural change at Agrokor and all its companies has already started over the course of this procedure and that they are no longer a generator of illiquidity and bad practice of corporate governance. We have initiated that change and we shall insist upon the quality and responsibility in management to continue being improved, which will certainly also be reflected on everyone with business connections to Agrokor and have a positive impact on the economy as a whole“ – said Fabris Peruško, Extraordinary Commissioner for Agrokor upon the Settlement Plan having been approved by Agrokor’s creditors.

Around seven thousand and three hundred pages of the Settlement Plan and the pertaining Schedules represent the agreement by which the creditors are dealing with the problem caused by Agrokor’s former owner Ivica Todorić and his way of running the business. At the same time, they constitute a viable solution in one of the currently most demanding financial restructurings worldwide.

The Extraordinary Administration Procedure was activated on 7 April, 2017, when the former President of the Management Board of Agrokor d.d. Ivica Todorić and all Members of the former Management Board submitted the request to the Zagreb Commercial Court to apply the Act on Extraordinary Administration Proceedings in Companies of Systemic Importance to the Republic of Croatia, due to the likelihood of an uncontrolled bankruptcy caused by the blockade of accounts of Agrokor d.d. and its key subsidiaries, which reached the amount of more than HRK 3bn.

More than 5700 creditors of Agrokor filed almost HRK 58bn of claims during the procedure. The negotiations on the settlement involved representatives of all creditors – from large international and local lenders, Croatian and foreign suppliers to small and micro companies and family farms.

After the first draft of the settlement plan had been presented to creditors and the public in December last year, the six-month negotiations and consultations of all creditors regarding the settlement plan proposal and the entity priority model (EPM) started.

The term sheet containing all key structural elements of the Settlement Plan was signed on 10 April, 2018 and at the session held on 19 June, 2018 Members of the Temporary Creditors’ Council unanimously accepted the proposed wording of the Settlement Plan between the debtors and all creditors.

This proposal was accepted by the majority of votes of Agrokor’s creditors on 4 July, 2018. The Settlement Plan is expected to become effective upon decision of the High Commercial Court.