Fortenova shareholders approve bond refinancing plan

After significant efforts to find financing with banks and bond markets, the Fortenova Group management has decided to enter a new bridge-type financing for the period until November 29, 2024 arranged by HPS, the company said in a press release.

The conditions of the new financing in terms of margin and EURIBOR floor remain the same as for the current bond. The additional terms of the new bond include an original issuer discount, a one-off payment of 6.75% of the bond amount to be issued, which reflects sanctioned entities being in the group’s capital structure thus limiting financing options.

This cost is the price of increased risk due to sanctioned equity holding and the inability of the market to participate in the refinancing of the group that has sanctioned Russian co-owners, it added.

The short term 15-month maturity opens the last opportunity for the group to find a solution for sanctioned entities to cease to be co-owners, which is a prerequisite for the group to be able to refinance again at the capital markets in that short period of time.

Fortenova, a successor to collapsed food-to-retail concern Agrokor, is Croatia’s top employer and largest retailer and a major food producer.

Earlier this month it said that it plans to launch the sale of its agriculture units as part of a new financing deal with HPS Investment Partners.

The sanctioned equity holders - Russian lenders Sberbank and VTBE, hold 49.9% of the equity in the Fortenova Group. Sberbank, which is target of sanctions by the European Union due to Russia’s invasion of Ukraine, has been trying to find a buyer for its 42.5% stake in Fortenova. Although the Fortenova Group itself is not subject to international sanctions, the sanctioned co-ownership significantly complicates business operations and negatively affects the value of the company for all stakeholders, Fortenova said in April.

No bids were submitted in an international process for examining the interest of potential investors for the purchase of Fortenova Group MidCo B.V., the Dutch holding company that fully owns Croatia's largest privately-held business group Fortenova, Croatian media reported earlier this month.

($ = 0.912 euro)