Wed 02/13/2019 11:01 AM
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Relevant Document:
Feb. 6 Notice

Agrokor is due to appear tomorrow in the English High Court before Justice Fancourt for a convening hearing in respect of its proposed scheme of arrangement. The Croatian food retailer is amending its €1.06 billion super senior credit facility so that it can incorporate the new Agrokor structure as agreed in the 2018 settlement plan.

On Feb. 6, Agrokor said 84.87% of the SPFA Lenders had locked up in support of the deal, meeting the minimum 75% threshold defined for an English scheme to be passed. The hearing is scheduled for 10:30 a.m. in Court 7 of the Rolls Building in London.

The amendments give the lenders additional protections and there are amendments to terms that provide the group operational flexibility. The terms amended include restrictions on financing of material non-Croatian Companies and the ability to better manage seasonal working capital by capitalizing the consent fee, which is due to be paid in April, and minimum liquidity threshold of €30 million in the months of May and June.

In exchange for signing the lock-up, holders of the SPFA will be paid a fee of 0.35%. The payment of this fee is likely to be addressed by counsel for the company, who will argue tomorrow that it does not create any class issues for the scheme.

SPFA Lenders who have not yet signed the lock up agreement may do so and receive the fee prior to the earlier of the Effective Date and 5.00 pm CET on Feb. 25. The creditors’ meeting is pencilled in for Feb. 26 in London.

A scheme can be used by a debtor to amend any agreement it has with its creditors or shareholders, so long as 75% by value and 50% by number in each class consent to the amendment. The process involves two hearings, first a convening hearing, as expected tomorrow and secondly a sanction hearing which usually occurs several weeks after the convening hearing.

In between the two hearings, creditors will be invited to vote on the proposed scheme and consent is required for the process to proceed to the sanction hearing. At the sanction hearing, also heard at the English High Court, the judge will sanction the scheme if they are satisfied that procedural, fairness and jurisdictional tests have been passed. Upon sanction, any amendment proposed by the scheme will be binding on the company and its creditors.

Earlier today, Agrokor disclosed its operating cost figures for 2018, showing total opex at the Agrokor D.D. level of HRK 1.322 billion (€178.5 million) in 2018. Consultants were paid HRK 767 million and the cost of new financing amounted to HRK 227.9 million. Legal costs were HRK 253.3 million and financial advisory services cost the company HRK 130 million in 2018. Restructuring advisory expenses were HRK 367.3 million.

The agent under the facility is advised by Hogan Lovells and Agrokor’s financial advisor is Houlihan Lokey.

The interest on Agrokor’s super senior loan stepped up to 10.5% on Feb. 1, split between 6% cash and 4.5% PIK. The interest rate will continue increasing until maturity in September as explained below:
 

 
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