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Crisis at Retail Giant Agrokor Spreads Across Balkans

Troubled Croatian group and its suppliers employ over 100,000 in the region.

20 April 2017

Officials from four West Balkan countries meeting in Belgrade yesterday agreed on the need for joint action to protect jobs and ensure the stability of a galaxy of companies owned by Croatia’s debt-ridden Agrokor group, B92 reports.

 

The trade ministers of Slovenia, Bosnia, and Montenegro met with Serbia’s Prime Minister Aleksandar Vucic and the Serbian ministers of trade and agriculture. No Croatian representative attended the meeting.

 

Agrokor-owned supermarkets and their suppliers are major employers in the region, making governments extremely nervous about the consequences should it fail to keep up payments on more than $6 billion it owns banks and investors.

 

Agrokor president and 95 percent owner Ivica Todoric agreed to hand over temporary control to the Croatian state last week. Its debts will be put on hold for up to 15 months as the administrator hold talks with creditors, including Russian banks, Balkan Insight reports.

 

“If this company went down, the impact on the economy would be disastrous,” a person involved in talks between the group’s state-appointed administrator and its creditors told the Financial Times.

 

Agrokor’s annual revenues of 6.5 billion euros ($7 billion) are equivalent to about a seventh of Croatia’s gross domestic product, the FT says.

 

The group employs 40,000 people in Croatia and 20,000 in Bosnia and Serbia. Another 70,000 are thought to work for its Slovenian subsidiary Mercator and its suppliers, according to Balkan Insight.

 

 

  • One concrete result of yesterday’s meeting was a pointed message for Agrokor’s new management: "It is expected that the new administration of Agrokor Group applies an equal treatment to all suppliers, both in Croatia and outside Croatia," B92 reports.

 

  • Agrokor owns the Konzum and Mercator retail chains. Slovenia is ready to adopt a law similar to that enabling Croatia’s takeover of Agrokor, to ensure that the Croatian parent does not extract money from Mercator, Balkan Insight cites the business news site E-kapija as reporting.  

 

  • Croatia’s finance minister has warned that Agrokor’s financial crisis could reduce financial growth this year.

Compiled by Ky Krauthamer

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