Agrokor, the Balkans' main food producer and retailer faced with crushing debt, on Friday reached a deal with creditors to help stabilise the troubled company.
The crisis within Agrokor, which employs around 60,000 people, two-thirds of them in Croatia, has dominated that country's political agenda for the past few weeks.
Agrokor's representatives and a board of creditors have agreed "in principle the key elements of a standstill agreement" that freezes its repayment of debts to banks, the Croatia office of Austria's Erste Bank (IOB: 0MJK.IL - news) said in a statement.
The board also included Agrokor's main creditors -- Russia's state-run Sberbank and VTB bank -- and Croatia branches of Austria's Raiffesenbank as well as Privredna Banka Zagreb and Zagrebacka banka owned by Italy's Intesa Sanpolo and UniCredit (EUREX: DE000A163206.EX - news) , respectively .
"The standstill agreement should ease Agrokor's efforts to solve liquidity issues, secure continuity of its business, protect the concern's value and lay the basis for (its) sustainable restructuring," the statement said.
During the restructuring process top management positions will be filled with independent experts to make it "transparent and sustainable," it said.
The deal, to be signed later on Friday, also foresees the position of a "chief restructuring officer."
The announcement came just hours after Prime Minister Andrej Plenkovic presented a bill aimed at protecting Croatia?s economy from the impact of large companies' financial problems.
The bill, to be discussed by the parliament Wednesday, relates to troubled companies employing more than 5,000 people and with at least one billion euros debt.
Agrokor's owner is Croatian businessman Ivica Todoric and his fate within the company remains unknown.
The company has annual revenue of some 50 billion kunas (6.7 billion euros, $7.2 billion), the equivalent of over 15 percent of the country's gross domestic product (GDP).
According to figures released in September its debt amounted to some six billion euros.
Earlier this year international rating agencies lowered Agrokor's credit rating citing its high indebtedness and rising refinancing risks.
A big part of its debt matures in 2018.
Analysts said Agrokor's financial problems could be solved by restructuring, changes in ownership or the sale of some of the 61 companies it owns.