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Mercator sheltered from Agrokor's woes, for now

Ljubljana, 5 December - Mercator, Slovenia's biggest retailer and biggest employer, remained relatively unscathed by the collapse of its Croatian parent company Agrokor.

Mercator's headquarters in Ljubljana.
Photo: Tamino Petelinšek/STA

After the Croatian state took control of Agrokor, the Slovenian government reacted in April with Lex Mercator, a special law that allowed it to appoint a trustee at Mercator to prevent Agrokor from diverting funds.

Slovenian courts also rejected the validity of the Agrokor insolvency in Slovenia, allowing Agrokor creditors to recover their claims from Slovenian assets. Mercator at the same time retook control of stores in Bosnia-Herzegovina that had been rebranded Agrokor and performed dismally as a result, in particular in the Serb-dominated Republika Srpska. This also removed one of the biggest causes of Mercator's EUR 73m loss in 2016, Agrokor's unpaid rent in Bosnia.

However, Mercator's high leverage remained a concern, with debt down just 5% in a year to EUR 800m in the first half of the year, on annual revenue of EUR 2.2bn; some of the debt is to be paid back with the disposal of a portion of Mercator's sizeable real estate portfolio.

More broadly, it remained unclear how much of a haircut Slovenian suppliers of Mercator would have to take in the event of Agrokor's bankruptcy, or what exactly would happen to Mercator if Agrokor goes under. Some even proposed a state purchase of the company, but that remained a distant prospect.

© STA, 2017