Croatia in talks to save country's biggest private company

MarketsAssociated Press

The Croatian government has entered talks to save retailer Agrokor, the country's biggest private company and employer, from bankruptcy.

Agrokor's biggest creditor, Russian bank Sberbank, wants the Croatian government to take over the company's loan obligations before it considers further financing of the troubled company.

Continue Reading Below

Sberbank's deputy president, Maxim Poletaev, said after meeting Croatia's Prime Minister Andrej Plenkovic that future loans to Agrokor will depend "on the level of cooperation" of the government.

"We had a very straightforward meeting," Poletaev said. "We talked about many issues and I think we should find a solution."

Sberbank has said it will provide no new financing for Agrokor until an agreement is reached with the government, which has since April been trying to prevent the collapse of the company and to oversee a debt restructuring.

Agrokor has accumulated an estimated $6.5 billion (5.8 billion euros) in debt, or six times its equity, while rapidly expanding its operations. It owes some 1.1 billion euros ($1.2 billion) directly to Sberbank.

The company needs new loans to pay its suppliers. If they stop delivering goods, the company, which has stores in several neighboring countries, would have no choice but declare bankruptcy.

The Croatian prime minister sounded an optimistic note.

"We are in talks and new financing will come, probably under better conditions," Plenkovic said.