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Croatia in talks with potential US, European partners of troubled Djuro Djakovic group

Author Iskra Pavlova
Croatia in talks with potential US, European partners of troubled Djuro Djakovic group Djuro Djakovic headquarters; Source: Djuro Djakovic

ZAGREB (Croatia), November 4 (SeeNews) - Croatia has been in talks with the US government and two European companies on the future of diversified group Djuro Djakovic [ZSE:DDJH] which has plunged into a liquidity crisis, economy minister Darko Horvat said.

"Talks have been underway between the defence ministries of Croatia and the US on a joint project, in which the US government will participate financially, logistically, as well as via transfer of knowledge and technology," Horvat said in told reporters on Saturday. An audio file with his comments was uploaded on the website of public broadcaster HRT.

"There are good prospects with a nice financial arrangement on the table and I believe we in the government and the management of Djuro Djakovic should do our best to get this job done," Horvat said.

He added that the government in Zagreb has also been in talks with two European companies interested in entering into a strategic partnership with Djuro Djakovic, but did not reveal their names.

According to earlier media reports, UK-headquartered BAE Systems is interested in entering Djuro Djakovic's ownership structure, planning to produce the Bradley combat vehicles in Croatia's Slavonski Brod where the group is based.  

Horvat also said that Djuro Djakovic's workers will receive their delayed salaries for September this week. He was speaking after a meeting with the management of Djuro Djakovic and local banks.

Last month, blue-chip Djuro Djakovic said it was in talks with creditors, trying to resolve a liquidity crisis which has left it short of funds to pay out the September salaries. The group and two of its four affiliated companies were unable to pay their workers the September salaries.

After the announcement, some 600 employees went on strike, demanding the payment of their salaries and the resignation of the director of the management board. Last week, the group's board chairman Marko Bogdanovic submitted his resignation after the accounts of several companies in the group were blocked by suppliers.

Horvat called on suppliers on Saturday to be patient as the economy ministry has a plan on how to finance the completion of what has been almost ready for delivery.

The group reported last week its net loss widened to 38.75 million kuna ($5.8 million/5.2 million euro) in the first nine months of the year, from a net loss of 5.4 million kuna in the like period of 2018.

At the same time, the government-controlled stake in Djuro Djakovic dropped to 22.45% in October, after London-based businessman Ivan Bozidar Ivanovic acquired 8.7% shareholding interest from the government's centre for enterprise restructuring and privatisation, CERP. Following the transaction, the government's holdings in  the group's total capital comprise a 14.36% stake kept at its account in CERP, and an 8.09% stake kept at its account at local lender HPB.

The Croatian Pension Insurance Institute, HZMO, owns 6.5% of Djuro Djakovic, and CERP itself has a 0.04% stake. Outside the government and its funds, local individual Nenad Bakic controls the largest single stake of 17.71% in Djuro Djakovic, according to November 4 stock exchange data.

The group's main business lines are manufacturing of equipment for steelworks, industrial and power plants and production of rolling stock and special-purpose motor vehicles.

Djuro Djakovic's shares closed 0.6% lower at 4.97 kuna on the Zagreb bourse on Thursday. There was no trading in them at Monday's opening. The Zagreb Stock Exchange was closed for trading on Friday as Croatia celebrated All Saints' Day.

(1 euro = 7.45444 kuna)