Croatia's parliament considers law to shield economy from Agrokor-like fallouts
ZAGREB, April 5 Croatia's parliament could pass an emergency law as early as Wednesday to shield the economy from big company failures after the country's largest private firm Agrokor piled up debts, leaving it struggling to pay creditors and suppliers.
Agrokor, the biggest food producer and retailer in the Balkans with some 60,000 employees, built up debts of about 45 billion kuna ($6.5 bln), or six times its equity, as it expanded rapidly.
"We want to protect our financial system, the economy, jobs, suppliers, family businesses and all the stakeholders involved in developments around our biggest firm," Prime Minister Andrej Plenkovic told parliament as he presented the new law.
Under the law, which could be approved by parliament as soon as Wednesday, the state will be able appoint an executive to steer a restructuring process at the request of a debtor as well as at creditors' request with the company's agreement.
The law envisages reaching a restructuring deal within 15 months.
Agrokor struck a deal on Sunday with six lenders led by Russia's Sberbank and VTB to freeze debt repayments and get an unspecified cash injection.
In line with that, a restructuring expert was appointed to rescue the business. Antonio Alvarez III, of consultants Alvarez&Marsal, said on Tuesday there was no guarantee that the company could be saved.
Agrokor suppliers, who are owed around 16 billion kuna ($2.29 billion), hope the new law will facilitate unfreezing of the company's accounts.
But food producers that supply Agrokor's retail chain Konzum, which controls almost one third of the local market, are worried payments will come too late to keep their businesses running.
"We're still delivering products, but we have no information whatsoever on how and when we will be paid," said Zvonimir Belic whose tomato producer Zarja near the capital Zagreb employs some 50 people. "I really don't know how to pay salaries this month."
The central bank said on Tuesday some banks might need a capital boost due to their exposure to Agrokor although the banking system as a whole was not in danger due to high average capital adequacy. (Editing by Susan Thomas)