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Russian VTB Bank accuses Croatian Agrokor of hiding debt in books

Staff Writer |
"Agrokor’s debt has not been completely shown in financial reports," said in Moscow Yuri Soloviev, vice president of VTB Bank from Russia.

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According to Russian media, he directly accused Agrokor majority owner Todorić and company management of irregularities in financial statements, reports on March 29, 2017.

Croatian government and a pool of creditors of Croatia's heavily indebted foods and retail group Agrokor plan to sign a standstill agreement this week, Yuri Soloviev, first deputy chief executive with Russia's VTB told reporters.

"Standstill will be relatively short at the beginning... a week or a month, not a year... Changes in shareholders structure are possible (following debt restructure)," he said, adding that VTB exposure to Agrokor was at around 300 million euros ($322.7 million).

He also said that pool of creditors may provide Agrokor with short-term liquidity. "A local development bank may also provide guarantees to suppliers to continue supplies. Combination of short-term financing... and government support is possible."

Moody's Investor Services said on Wednesday it has downgraded the Croatian retailer and food manufacturer Agrokor corporate family rating (CFR) to Caa1 from B3 and its probability of default rating (PDR) to Caa1-PD from B3-PD.

Moody's has also downgraded the senior unsecured rating assigned to the notes issued by Agrokor and due in 2019 and 2020 to Caa1 from B3. The outlook on the company's ratings remains negative, it said in a statement.

"Our downgrade of Agrokor's rating reflects our view that the company is no longer able to sustain its high level of trade payables, which may constrain its liquidity position", Vincent Gusdorf, a vice president - senior analyst at Moody's, is quoted as saying.

"This comes at a time when the company has limited means to raise additional sources of liquidity owing to its restricted access to credit markets and its reliance on a limited number of banks".

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