Hogan Lovells’ London restructuring team led by partner Tom Astle assisted our clients, lenders of a €1.06bn priority funding loan, with distressed Croatian retail giant Agrokor’s proposed restructuring settlement plan which was voted for unanimously at a meeting of key creditors in Zagreb this week on 19 June 2018.
Having an agreed settlement plan is a breakthrough stage in the process and paves the way for one of the biggest restructurings in the world so far this year. The settlement plan will now be put to the wider creditor vote, requiring 66⅔ by value to approve, before being submitted to the Commercial Court of Zagreb for approval prior to 10 July 2018.
As part of the terms of the settlement plan, Hogan Lovells have played a key role in negotiating the extension and amendment to the €1.06bn priority funding loan to enable funding to be made available to the New Group (as well as the existing Group) in return for an enhanced security package to cover a period of implementation. An English scheme of arrangement is envisaged later this year, and final implementation of the restructuring is expected to take place in late 2018 to early 2019.
The Agrokor Group is the largest privately owned company in Croatia with almost 60,000 employees. Its businesses in agriculture, food production and other related activities generate c. €6.5 billion annual revenues, equivalent to 15 percent of Croatia’s GDP.
Given its systemic importance to the Croatian and wider Balkan economies, the Croatian parliament passed a new special law in early April 2017 dubbed “Lex Agrokor” to create a new pre-insolvency regime for this business (and technically any business of similar size and importance in the future). The process provides a moratorium on creditor action in relation to the c.€6 billion debt obligations of the Agrokor Group, and a window of 15 months in which it can negotiate a settlement plan with its creditors. If no agreed plan is formulated and approved by 10 July 2018, the business would at that point enter a formal insolvency process.
This represents a continuation for our work for our clients. The Hogan Lovells team were originally engaged by an adhoc committee of holders of Agrokor’s c€900m bonds. One stressed debt fund went on to backstop an additional €1.06 billion “DIP” secured financing package providing Agrokor with €520 million of new money, with 1:1 roll up on existing debt, and this latter work has seen us take a key role throughout the restructuring over the last year culminating in the settlement plan launched this week.
The transaction was led by Tom Astle (Partner, BRI) with support in this phase from Alex Kay (Partner, BRI), with Jayne Sheffield (Senior Associate, BRI), Zoe Aarons (Senior Associate, BRI), Naomi Parmar (Associate, BRI), Louise Pederson (Trainee, BRI).