Croatia's Agrokor owner claims audit fixed to pressure stakeholders

"I have found inconsistencies and partial information in Agrokor's revised financial statements", Todoric said on his personal blog over the weekend.

The owner of Agrokor, from whom the government seized control of the food-to-retail concern in April under a special law designed to prevent the collapse of the group, said that the bulk of the loss provisions included in the audit refer to intercompany transactions and that some of the write-offs are even illegal.

"The financial statements validate the business strategy that Agrokor had at the end of 2016, as a solid plan for the continued development of the group in the coming years", Todoric said, claiming that the audit revealed the strength of each company.

He also noted that following the takeover of Slovenian retailer Mercator, Agrokor's food business was entering a phase of operational and financial restructuring which would have been complete by summer 2018, while both the food and agriculture businesses were preparing for an IPO.

Todoric explains that the food division was to enter trading on the London Stock Exchange in May 2017, while the agriculture division was due to follow in 2018.

Todoric ended his post by urging the reader to "conclude on your own what the goal of the emergency administration is and how it wants to achieve that goal".

The audit of Agrokor's key nine companies, made public on Thursday, revealed huge discrepancies between their 2015 financial results reported earlier and the audited figures. Inflated value of assets, understated claims towards group members, over-estimated inventory and undocumented costs were some of the reasons for the discrepancies.

The audit showed that the aggregate capital of the nine companies stood at a negative 2.4 billion kuna at the end of 2016, or 13.4 billion kuna ($2.1 billion/1.8 billion euro) below the figure initially reported at the end of 2015.

Audited consolidated results of Agrokor are expected to be announced on Monday afternoon.

Agrokor has been in financial turmoil since January when Moody's downgraded its corporate family rating of Croatia's largest privately-held concern. Following Moody's decision, Agrokor pulled out of a syndicated loan deal it had struck with several international lenders, which sent the price of its bonds on international markets into a downward spiral. In April, the Croatian parliament adopted a law allowing the government to appoint temporary administrators to lead a restructuring process at the request of the company's creditors or the debtor itself.

(1 euro=7.50055 kuna)