Secret Plans to Cut Mercator into Parts to Repay Owner’s Debt to Sberbank

By , 09 Oct 2019, 11:07 AM Business
A dodo and Mercator A dodo and Mercator JL Flanner

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STA, 8 October 2019 - Fortenova, the successor of the bankrupt Croatian food conglomerate Agrokor, is devising a secret plan to slash up the Slovenian retail group Mercator into parts and take control of the cash flows between the core company and its subsidiaries in Croatia, Serbia and Bosnia, the news web portal Siol reports.

Siol says that several sources have confirmed the plan is in the making, while Fortenova would not respond to the portal's questions. Fortenova would not need the consent of Mercator's creditors for the plan because their loans pertain to the core company in Ljubljana.

In its response for Siol, Mercator merely noted its role as the largest grocer in Slovenia and in the region and as such a platform for the long-term development of regional suppliers. "A successful financial and operational renewal of Mercator is what we believe the new owner will appreciate in all future decisions," the company is quoted as saying.

Siol says that Mercator's division into parts by countries would mean its irreversible folding into the concern Fortenova, which would assume control over Mercator Group's cash flows. The move would also undermine the position of Slovenian suppliers.

According to Siol, Mercator representatives have not been involved in the making of the plan, the ground for which started being prepared in the autumn when a taskforce started looking for synergies between the companies of former Agrokor.

The plan was given a new impetuous when the ownership of Fortenova passed into the hands of international banks and financial funds. Its biggest owner is the Russian state-owned bank Sberbank, whose sole interest is that it gets repaid a EUR 1.1 billion loan.

The debt's repayment depends on the financial sustainability of Fortenova, which in turn depends on Mercator. Without Mercator's cash flow, the financial architecture of Fortenova would collapse, and so would the Russian bankers' calculations, Siol writes.

Mercator remains in Agrokor's ownership as all creditor banks as well as the regulator need to give their go ahead for the retailer's transfer to Fortenova. The banks NLB and Abanka are said to have given their consent, while Siol's information indicates that the state-owned SID Banka and Bank Asset Management Company are not planning to give theirs for the time being.

Fortenova notified the European Commission of its Mercator concentration plan for Slovenia and Croatia in August. While the Slovenian competition watchdog has decided not to re-examine broader implications of the concentration, the Serbian market regulator did opt to do so at the end of last week.

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