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Settlement Term sheet signed by creditors within the statutory deadline

Contents of the Settlement Term Sheet

Precisely one year after the Extraordinary Administration proceeding was initiated in Agrokor, all Members of the Interim Creditors' Council, representatives of the Suppliers’ Association and the representative of VTB have signed the settlement term sheet on 10 April 2018. This term sheet represents a framework upon which the actual text of the settlement will be drafted based on filed claims and their legal status.

The creditors have, within the statutory deadline defined by the Law on Extraordinary Administration Proceedings Companies of Systemic Importance for the Republic of Croatia, with the support of the Extraordinary Administration, reached a mutual agreement which leads the Extraordinary Administration proceeding towards a successful completion through a settlement.

The agreed term sheet includes the corporate structure of the new Agrokor Group, treatment and form of settlement of pre-petition claims, new debt of the new Agrokor Group and its capital structure, special arrangement with suppliers on settlement of the so-called border debt and the settlement implementation.

Business operations of the future Group is based on the arm’s length principle regarding intercompany relationships within the Group, meaning that the parties are equal and independent in their relationships. It has particularly been established that the main criteria for determining individual claim recoveries is the EPM methodology which has been used in the largest international corporate restructurings.

Since the creditors have agreed upon the key elements of the settlement, the Extraordinary Commissioner proposed to the Commercial court of Zagreb to prolong the Extraordinary Administration proceeding for another three months, since the creditors require additional time to finalize the text of the settlement. The Commercial Court of Zagreb has issued a decision prolonging the Extraordinary Administration Proceeding by another three months on 6 April 2018.

The creditors of Agrokor Group will use this additional time to finalize the text of the settlement. The Extraordinary Commissioner will present this finalized proposal to the Creditors’ Council, which will replace the Interim Creditors’ Council once it is established, for its approval. After it is approved by the Creditors’ Council, the Extraordinary Commissioner will submit the settlement proposal to the Court and the Commercial Court of Zagreb will schedule a voting hearing for the settlement.

“We consider it a great success that the creditors have, not even six full weeks since my colleague Irena Weber and I have been appointed as the Extraordinary Administration, through very demanding and constructive negotiations, successfully completed this, last stage prior the final agreement. We therefore express our thanks to the representatives of suppliers and financial institutions, but also to the Prime Minister, Mr. Andrej Plenković and Mrs. Martina Dalić, the Deputy Prime Minister, for the support they have given the Extraordinary Administration proceeding and all creditors in reaching the agreement.”, said Fabris Peruško, Agrokor’s Extraordinary Commissioner.

“We are truly proud that we have, in one year, reached the final stage of this very demanding and difficult process in which almost 6.000 creditors is participating with more than HRK 57 billion of filed claims. Simultaneously, the Agrokor system has been stabilized, all operational companies are performing well and their operative profit is increasing, while paychecks to all employees as well as all current expenses are being timely paid.”, said Irena Weber, Deputy Extraordinary Commissioner of Agrokor.