March 31 (SeeNews) - Four of the largest Croatian banks, Russia's VTB and Sberbank, and representatives of heavily indebted Croatian concern Agrokor have agreed on the key elements of a standstill arrangement and expect to sign it today, local Erste&Steiermaekische Bank said on Friday.
VTB, Sberbank, Erste&Steiermaerkische Bank, Privredna banka Zagreb, the local unit of Austria's Raiffeisenbank and Zagrebacka Banka, all members of Agrokor's coordination committee of financial creditors, have reached an agreement with the company to help it stabilise its operations and service its obligations to suppliers, Erste said in a statement sent to SeeNews.
"The standstill should facilitate the efforts of the company to address issues of liquidity, ensure business continuity, protect the value of the concern, as well as to present the basis for a sustainable restructuring of the group," Erste&Steiermaerkische Bank noted.
It added that, in line with the aim of the standstill, the management board will be strengthened, meaning that top management functions will be filled by independent experts who will lead the restructuring process.
The first step would be to appoint a chief restructuring officer as the key persons for the implementation of the stabilisation programme, Erste said.
Several Agrokor units reported on Friday that their bank accounts have been blocked due to outstanding financial obligations. Also on Friday, prime minister Andrej Plenkovic announced the Croatian government will endorse a bill to protect the country's economic and financial systems from the impact of large corporate failures.
The bill encompasses caretaker management of companies of systemic importance and it has not been drawn up to salvage any company in particular, but to protect Croatia, Plenkovic said.
Agrokor's financial issues became apparent earlier this year when Moody's downgraded the company's corporate family rating (CFR) to B3 from B2. The company then 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.