Fortenova Group

Fortenova Group, based in Zagreb, Croatia, has been operating since April 1, 2019.[2] The company was established through the implementation of the Settlement Plan closed between the creditors of Agrokor which had, due to illiquidity and over-indebtedness, ended up in pre-bankruptcy, managed through the Extraordinary Administration Procedure pursuant to the Act on Extraordinary Administration Procedures in Companies of Systemic Importance for the Republic of Croatia.[3]

Fortenova Group
TypeJoint-stock company
IndustryConglomerate
PredecessorAgrokor
Founded1 April 2019 (2019-04-01)
Headquarters
Zagreb
,
Croatia
Area served
Southeast and Central Europe
Key people
Fabris Peruško (CEO); Maksim Poletaev (Chairman of the Board of directors)[1]
OwnerSberbank (39.2%)
Bondholders (25.0%)
Croatian banks (15.3%)
VTB Bank (7.5%)
(As of 1 April 2019)
Number of employees
52,000
Subsidiaries159
Websitewww.fortenovagroup.hr

As a result of the successfully conducted and concluded negotiations among Agrokor’s creditors and the adopted final and non-appealable Settlement Plan, Fortenova Group started its operations as a new company with a completely redesigned ownership, organisational and management structure.

The team, headed by Extraordinary Commissioner Fabris Peruško, that ran the process of Agrokor’s financial restructuring over the course of the Extraordinary Administration Procedure, was presented with the prestigious TMA Turnaround and Transaction Award for 2019 in the category of international transaction of the year. Namely, the process that resulted in the settlement among creditors and its successful implementation was assessed by the international financial industry as the most significant procedure of its kind in the world that year.[4]

In less than a year after the Settlement Plan implementation, Fortenova Group successfully completed its refinancing by issuing a four-year bond,[5] it has been implementing transformational processes, increasing its operating profits,[6] has significantly improved its cash position and become a financially entirely stable company. The company is managed by a Board of Directors and a team of Executive Directors headed by Fabris Peruško as Chief Executive Officer.

A reliable employer and partner, it employs more than 50,000 workers through its three core businesses – retail and wholesale, food and agriculture – and for more than 30 million consumers on eight key markets in Southeast Europe, its products are an indispensable part of their daily life. Over 30 well-known brands are produced in 12 manufacturing facilities in several countries.

The company has a strong strategic orientation towards working together with local suppliers, maintaining and developing shorter supply chains, developing regional agricultural and food production of local origin on all markets where it operates, investing in knowledge and innovation and increasing the competitiveness of the overall economic environment.

History

In order to prevent the collapse of the Agrokor system due to illiquidity and over-indebtedness as well as the consequences on the economies of Croatia and other countries in Southeast Europe, on 10th April 2017 the Extraordinary Administration Procedure was activated pursuant to the Act on Extraordinary Administration Procedures in Companies of Systemic Importance for the Republic of Croatia.[7]

The Commercial Court of Zagreb sanctioned the creditors’ Settlement Plan on 6th July 2018,[8] and by the decision of the High Commercial Court passed on 18th October 2018 the creditors’ Settlement Plan has become final.[9]

The Extraordinary Administration Procedure has been accepted as an insolvency procedure in England and Wales by the High Court of England and Wales on 9th November 2017, for the territory of Switzerland in February 2018 and in the US at the Bankruptcy Court New York according to Chapter 15 in November 2018. By Regulation of the European Parliament and the Council, in July 2018 the Act on Extraordinary Administration Procedures was included in the list of national laws recognized as insolvency procedures on the entire territory of the European Union.[10]

Fortenova Group commenced operations on 1 April 2019, taking over assets of indebted conglomerate Agrokor.[2] At the time of establishment, it had a total of 159 subsidiary companies in which 52,000 people are employed.[3]

In September 2019, Fortenova Group issued 1.16 billion euros in four-year bonds to refinance a 2017 loan. The new financing is structured as a EUR 1.2bn four-year bond.[5] This transaction and the financial restructuring of Agrokor during the course of the Extraordinary Administration Procedure, resulting in a settlement between the creditors and its successful implementation, was assessed in the USA as the most significant international company transaction of its kind worldwide. The team in charge of the process headed by the Extraordinary Commissioner Fabris Peruško won the prestigious 2019 TMA Turnaround and Transaction Award in the category International Company Transaction of the Year.[11] According to the choice made by readers of Večernji list, the refinancing of the roll-up loan at Fortenova Group was the commercial event of the year 2019 in Croatia. Thus Fabris Peruško, Chief Executive Officer of Fortenova Group, received the award presented since four years for the second time in a row and on that occasion he pointed out that the nomination itself was a great honour for the company, while the acknowledgment has confirmed the importance that the refinancing had for the business operations of Fortenova Group as one of the region's most important companies as well as the indirect impact this had on the economies of all countries in which Fortenova Group operates.[12]

Mercator

April 2019 – on 1st April 2019 Mercator was not transferred to Fortenova Group

September 2019 - Javna agencije za varvstvo konkurence / Public Competition Agency (of Slovenia) (AVK) passed a non-final ruling in September 2019, unprecedented in the history of that Agency, imposing a fine of EUR 53.9m due to failure to file the concentration of the company Costella, acquired by Ivica Todorić, i.e. Agrokor AG from Switzerland, back in 2016. Agrokor lodged an appeal against this decision.[13]

December 2019 – On 16th December AVK passes the decision to temporarily seize Mercator d.d. shares from Agrokor d.d., allegedly in order to secure funds for the collection of the fine. The interim measure of seizing the shares of Mercator d.d. was passed pursuant to the Misdemeanour Act, specifically the provisions of that Act that otherwise apply in case of traffic offences or similar offences discovered in flagranti, committed by foreign natural persons in the Republic of Slovenia. This in fact constituted an expropriation of private property of Agrokor d.d., whereby the Mercator shares were temporarily seized without any court decision and with no valid legal justification.[13]

June 2020 – With its judgment dated 1st June 2020 the court Okrajno sodišče of Ljubljana altered the decision of the Competition Agency of the Republic of Slovenia on the amount of the fine imposed on Agrokor for not having filed the acquisition of the company Costella with the Agency for assessment at a time when Ivica Todorić managed the company and was its owner. The monetary fine in the amount of EUR 53.9m was reduced by the Court to one million euros, with the explanation that the failure to file the concentration was not the result of the “intention to bypass the filing of the concentration in order to possibly cause harmful effects on market competition”, but was rather the “result of unconscientious negligence of the responsible person Ivica Todorić”. The Court has therefore assessed that a monetary fine of one million euros was the “appropriate and equitable sanction for the offence in question".[14]

July 2020 – The Supreme Court of the Republic of Slovenia passes a judgement pursuant whereto the Mercator shares temporarily seized in late 2019 by decision of the Public Competition Agency of the Republic of Slovenia, have to be returned to Agrokor without delay. The Supreme Court declared the seizure of shares to be unlawful, arguing that AVK had no legal foundation to issue the ruling on seizing the shares.[15]

The request for the protection of lawfulness was filed with the Supreme Court of the Republic of Slovenia by the State Attorney’s Office of the Republic of Slovenia, where it basically stated that the Slovenian AVK had acted unlawfully by seizing the Mercator shares from Agrokor. With its final and non-appealable judgement the Supreme Court confirmed that statement, changed AVK’s decision and stopped the procedure run by AVK against Agrokor, in which the Mercator shares had been seized. Thus the Supreme Court enabled Agrokor to freely dispose of the shares.

September 2020 – The European Commission cleared the concentration of Fortenova Group and Mercator, thus paving the way for the transfer of Mercator to Fortenova Group.[16]

References
  1. Management
  2. "Fortenova Group begins its business operations today". agrokor.hr. 1 April 2019. Retrieved 13 April 2019.
  3. "Agrokor to be renamed Fortenova, to restart operations in April". reuters.com. 28 February 2019. Retrieved 13 April 2019.
  4. "Agrokor Financial Restructuring Project Receives Prestigious International Award in Cleveland". fortenova.hr. 27 September 2019. Retrieved 20 August 2020.
  5. "Croatian food group Fortenova hopes $1.3 bln bond issue marks start of new era". reuters.com. 6 September 2019. Retrieved 30 September 2019.
  6. "Croatia's Fortenova reports Q1 EBITDA of 93.6 mln kuna (12.4 mln euro)". seenews.com. 2 July 2020. Retrieved 26 September 2020.
  7. "Croatia struggling to contain Agrokor fallout - new restructuring head". reuters.com. 10 April 2017. Retrieved 26 September 2020.
  8. "Settlement Plan of Agrokor's Creditors Voted in Favor by 80.20 per cent of Total Claims". agrokor.hr. 4 July 2018. Retrieved 26 September 2020.
  9. "High Commercial Court confirms settlement between creditors and Agrokor". glashrvatske.hrt.hr. 26 October 2018. Retrieved 27 September 2020.
  10. "Extraordinary Procedure over Agrokor Fully Recognized in the United States". agrokor.hr. 2 November 2018. Retrieved 27 September 2020.
  11. "Agrokor Financial Restructuring Project Receives Prestigious International Award in Cleveland". fortenova.hr. 27 September 2019. Retrieved 20 August 2020.
  12. "The Roll-up Refinancing – Croatia's Business Event of the Year 2019". fortenovagrupa.hr. 12 March 2019. Retrieved 27 August 2020.
  13. "Fortenova accuses Slovenian regulator of unfounded seizure of Mercator shares". N1info.com. 18 December 2019. Retrieved 27 September 2020.
  14. "Slovenian court slashes anti-trust fine on Croatia's Agrokor - report". seenews.com. 22 June 2020. Retrieved 27 September 2020.
  15. "Supreme Court orders release Mercator shares". sloveniatimes.com. 30 July 2020. Retrieved 27 September 2020.
  16. "EC approves Fortenova's acquisition of Mercator". N1info.com. 22 September 2020. Retrieved 27 September 2020.
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