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ZAGREB (Croatia), January 11 (SeeNews) - Croatia's ailing Agrokor concern said that many of its units are insolvent, with their collective worth estimated to be substantially lower than the total debt they owe.
The expected cash flows of the group are insufficient to service the current debt in a reasonable period of time, Agrokor said in its monthly report on Wednesday.
In December, Agrokor proposed a debt settlement plan which foresees a debt-for-equity swap and a partial debt write-off.
"The draft settlement plan offers the creditors a transparent, quick, fair and equitable solution designed to preserve the maximum total value," Agrokor said. "In order to achieve this, a total separation of assets from legacy liabilities is proposed as well as a separation of old shareholders of Agrokor from the new group planned to be formed as well as a full restructuring of pre-petition debt through a combination of re-instated debt and equity."
It added that after the completion of the process, the creditors would represent 100% ownership and would take full operational control over Agrokor.
"This simple transaction will place ownership of the viable businesses fully in the hands of the creditors and thus finalise the extraordinary administration procedure, which should happen as soon as possible," Agrokor noted.
Major suppliers and minority shareholders of Agrokor have, however, opposed the plan, saying that only the biggest creditors will gain from the swap.
The minority shareholders said earlier this month that the debt settlement plan is designed to pave the way for a takeover of the healthy part of Agrokor at an extremely low price, and at the expense of minority shareholders and suppliers of the food-to-retail concern.
Agrokor, however, argued on Wednesday that the settlement plan presents a path and the next steps necessary to be taken to successfully finalise the extraordinary administration procedure.
The settlement proposal must be submitted to the Commercial Court in Zagreb by April 10, 2018 at the latest. The settlement plan is first voted on by the creditors, while the final confirmation rests with the Commercial Court in Zagreb.