June 6 (SeeNews) - Russian lender VTB is said to be in talks with peers for refinancing the roll-up credit of Croatia's Fortenova Group, the successor to Agrokor concern, in order to reduce high interest payments, local media reported.
The aim is to collect some 1.2 billion euro ($1.35 billion), of which 700 million euro will have the rank of senior debt and the remaining 500 million euro will be junior credit, news daily Vecernji List reported on Wednesday, quoting unnamed sources close to the transaction.
The senior debt will be more secure and therefore carry an interest rate of just 5%, while interest on the junior debt will stand at 11%.
Furthermore, state-owned VTB is offering to refinance the best part of the credit, i.e. to invest 500 million euro in the senior loan, and if necessary to put in an additional 200-300 million euro in the higher-return junior loan, according to Vecernji List.
One of the top five banks in the U.S. could also participate in the transaction with negotiations being underway for some 200 million euro financing towards the senior loan.
In addition, Erste Bank has reportedly agreed to extend its existing credit arrangement of some 40 million euro.
Final talks on the refinancing are ongoing, with the transaction expected to be completed by the end of June at the latest, Vecernji List said. The refinancing operation aims to relieve Fortenova from current huge interest payments and provide VTB with majority control of the Croatian group, the media report says.
Vecernji List noted that the interest rate on the existing roll-up facility rose to 12.5% in June and will increase up to 14% in September when the credit is overdue.
Back in June 2017, Croatia's troubled Agrokor food-to-retail concern signed a roll-up financing arrangement of up to 1.06 billion euro with over 30 creditors. US-based hedge fund Knighthead Capital was the top lender under the agreement, contributing 200 million euro, or 20.83% of the total initial amount provided back then. The second biggest lender was Russia's VTB bank with 181.5 million euro, followed by the Croatian unit of UniCredit Group, Zagrebacka Banka, with 180 million euro.
The business operations of troubled Agrokor were transferred to newly formed Fortenova Group in April 2019 under a settlement agreement with creditors endorsed by a Zagreb court in June 2018. Under the settlement agreement a new business entity held by the creditors was established, in which the largest individual shareholder became Russia's Sberbank with a 39.2% stake. Along with Sberbank, the new owners include holders of Agrokor bonds with a 24.9% stake, Croatian financial institutions with 15.3%, VTB with 7.5%, and suppliers with 4.7%.
($=0.886048)