Creditors Mull Recovery Plan for Croatian Food Co SMS

The rescue plan will have the following goals: reviving production, reassuring customers and restoring confidence in SMS brands throughout the region, retaining as many employees as possible and developing joint production, primarily of olives and olive oil, but also of other vegetables as raw materials for SMS-branded products, Podravka said in a filing with the Zagreb Stock Exchange (ZSE) on Friday.

The SMS creditors that attended the meeting were the Development and Employment Fund, development bank HBOR, Hrvatska Postanska Banka, and Partner Banka, the statement said, adding that a financial advisor and a Tax Department representative were also on hand.

The creditors agreed at the Friday meeting that a solution should be sought in the take-over of SMS by Podravka and the restructuring of its bank debts, news portal Bankamagazine (www.bankamagazine.hr) reported on Friday, quoting unofficial sources.

A concrete course of action will be chosen after advisory firm KPMG performs a due diligence at SMS which should begin as soon as possible, Bankamagazine said.

Another local daily, Poslovnik Dnevnik, reported on Monday that the KPMG report should be ready in a month's time.

According to a revised financial report for last year, SMS was facing long-term obligations towards Podravka totalling 65 million kuna ($13 million/8.9 million euro) with a further 78.6 million kuna in long-term debts to banks and other financial institutions. Short-term loans at the end of 2008 totalled 25.76 million kuna, 17.07 million kuna of it owed to suppliers, while the company's profit amounted to 477,000 kuna, Bankamagazine reported.

Podravka shares closed down 2.96% at 262 kuna on the ZSE on Monday.

(1 euro=7.273 Croatian kuna)