U.S. Fund to Replace Russia’s VTB as Loan Provider to Croatia’s Fortenova

Instead of Russian state-run bank VTB, U.S. investment fund HPS Investment Partners, based in New York, will provide a roll-up loan for Croatia’s troubled Fortenova (former Agrokor Group), Poslovni.hr reported

The big turning point comes after months of negotiations between the interim management of debt-ridden Fortenova, once the biggest food retailer in the Balkans.

This month, the Fortenova story turned towards the Russian VTB bank and the agreement of VTB and U.S.-based hedge fund Knighthead Capital to secure refinancing, with the possibility of participating in the new arrangement with other existing lenders.

But now it is suggested that VTB is no longer in the game, and that Fortenova with HPS has signed an exclusive contract to resume negotiations in the next month, by the end of July.

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. Knighthead was the top lender under the agreement, contributing 200 million euro ($227 million), 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 the 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%.