Temporary Creditors' Council made decisions on the recapitalization of Konzum in Bosnia and Herzegovina and further payments of old debt to suppliers

Today a sixth meeting of Agrokor d.d. Temporary Creditors’ Council was held at Agrokor headquarters where a decision was reached to make a payment in the amount up to EUR 120 million, e.g. HRK 889 million of “old-debt” to the rest of suppliers of Agrokor companies that have registered their claims. Payments of a portion of old debt will start next week to small, medium and large suppliers of Agrokor companies. These funds are only available to Agrokor companies who are guarantors for the credit line from which a portion of funds is directed to old debt payment.

As a reminder, as part of the new financing, a maximum amount of EUR 150 million was allocated for the purpose of repaying the old debt to Agrokor suppliers.

At a previous meeting members of the Temporary Creditors’ Council gave approval to Agrokor to pay old debt in the total amount of HRK 132 million to 2,166 suppliers, more precisely those who are family owned agricultural producers (OPG), small entrepreneurs and micro-suppliers whose annual revenue was less than HRK 5,2 million, so called Group A who will receive payment of debt in full. With today’s consent, members of the Temporary Creditors’ Council have approved amendments to payments of matured claims for additional 284 micro-suppliers compared to payments to small suppliers anticipated by the decision from 26 June 2017 for repaying debts that were generated before the initiation of the extraordinary administration in the amount of HRK 19.5 million. In this way, debt in the total amount of HRK 151, 5 million to 2,450 micro-suppliers, small entrepreneurs and OPG will be paid in full.

Today’s second decision, also related to payments to suppliers refers to the payments to the remaining suppliers – small, medium and large – from the so called Group B. Amount of HRK 603 million was approved for payments to 2,426 suppliers from this group in which old debt repayment is limited to a maximum of 40% of each individual claim total amount.

Through decisions made in this and the previous Creditor’s Council meetings payment of old debt to a total of 4,876 Agrokor suppliers in all categories was approved. When these payments that were approved last and this month are added to the payments of the old debt since the beginning of the extraordinary administration process, the total amount of paid old debt rises to more than one billion kuna, or to be precise HRK 1,051.1 million.

With the repayment of old debt, in this amount and to such a large number of suppliers, stability was ensured for the part of the Croatian economy that is directly dependent of Agrokor as well as the time needed for it to adapt and transform.

Today’s meeting of the Temporary Creditors’ Council was attended by Marica Vidaković as representative of the “large suppliers” creditor group, Mato Brlošić as representative of the “small suppliers” creditor group, representatives of Knighthead Capital Management, LLC as representatives of the “bond holders” creditor group, representatives of Sberbank as representatives of the “unsecured creditors” creditor group and representatives of Zagrebačka banka d.d. as representatives of the “secured creditors” creditor group, along with Ante Ramljak, Extraordinary Trustee for Agrokor.

At the meeting the Council also supported the intended actions of the Extraordinary trustee for the financial and business restructuring in Bosnia and Herzegovina and gave consent to the Extraordinary trustee to recapitalize Konzum d.o.o. Sarajevo in a way that Agrokor companies in BIH, namely Ledo d.o.o. Čitluk and Sarajevski kiseljak d.d., would transform the claims they have towards Konzum d.o.o. Sarajevo in the amount of EUR 34,6 milion into ownership of Konzum shares.

The Council also confirmed today the plan by the Extraordinary trustee to resolve the situation with Konzum d.o.o. Sarajevo which includes a loan in the amount of EUR 15 million that Agrokor will provide to Konzum d.o.o. Sarajevo.

Decisions made today fulfill all preconditions necessary for Agrokor d.d. to realize the plan that includes the return of Mercator to the market of Bosnia and Herzegovina by taking over 83 of its stores from Konzum, while Konzum will continue its business in the remaining 173 stores.

The funds provided by the loan, as well as the the funds obtained by the selling of the inventory that Konzum d.o.o. Sarajevo has in 83 outlets it rents from Mercator BiH, will be used to repay a portion of the Konzum d.o.o. Sarajevo debt towards the suppliers.

In this way the announced process of transformation and stabilization of Konzum BIH business operations by reintroducing the Mercator brand to the market of Bosnia and Herzegovina, as well as the separation of Konzum’s and Mercator’s stores will continue as planned.

The Council was also presented with the progress achieved in the restructuring process and with the status of arranging an additional tranche of EUR 50 million for suppliers that provides priority settlement as anticipated by the existing financial arrangement. The application deadline expired on 25 August 2017 and big interest was expressed by the suppliers to participate in the so called roll-up. Review of the received applications is ongoing as well as the preparation of a list of suppliers and this topic will be discussed more thoroughly in the next Council meeting.