Fortenova Group

Fortenova Group

File:Fortenova Group logo.jpg Official logo
Type	Joint-stock company
Industry	Food and Retail
Predecessor	Agrokor
Founded	April 1, 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)
Revenue	€4.18 billion (2021)
Net income	€70 million) (2021)
Total assets	€4.3 billion (2021)
Total equity	€147 million (2021)
Owner	the three largest shareholders hold over 70 percent of ownership, a third of which are owned by Croatian investors
Number of employees	50,000 (2021)
Subsidiaries	159
Website	fortenova.hr

Fortenova Group is a food producer and retailer based in Zagreb. It has been operating since 1 April 2019. 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.

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.

In less than a year after the Settlement Plan implementation, Fortenova Group successfully completed its refinancing by issuing a four-year bond, it has been implementing transformational processes, increasing its operating profits, 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.

Fortenova Group employs more than 50,000 workers in more than 30 administrative headquarters, 29 production plants, more than 2,500 sales locations and distribution centers across six jurisdictions and directly participates with its own business operations in food production, retail chain management and agriculture on the markets of Croatia, Slovenia, Bosnia and Herzegovina, Serbia and Montenegro. Through its affiliated companies Fortenova Group also owns a company in Hungary. Through the export of its food products Fortenova Group is present on the markets of more than 20 countries of the world, where the most significant outbound markets are the states of the region and the European Union. At the same time, in the SEE region it has a retail network featuring more than 2,500 retail stores. The key sectors in which Fortenova Group generates significant impacts on the market are the retail sector, the beverage production sector, the edible oil production sector, the fresh and processed meat production sector, the milk and dairy production sector, as well as the agricultural sectors of crop husbandry, livestock breeding, viticulture and wine production, olive growing and fruit and vegetable growing. Given the diverse nature of its operations, Fortenova Group places over 4,000 products and provides a large number of services on all the markets where it operates.

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

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 10 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.

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

The Extraordinary Administration Procedure has been accepted as an insolvency procedure in England and Wales by the High Court of England and Wales on 9 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.

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

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. 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. 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.

Over the period of two years since the implementation of the successful financial restructuring of the overleveraged Agrokor, Fortenova Group has achieved a high operational success, as reflected in the operating profits increase of around EUR 100m in the period between 2017 and 2019, as well as in the cash flow improvement of almost EUR 100m during 2020. With the divestment of the Frozen Food Business Group and a number of non-core businesses Fortenova Group has enhanced its capital structure and strengthened its financial position, having reduced its leverage (debt to EBITDA ratio) from seven to around four times. In late 2020 it has also realized its first acquisition of the Osijek-based dairy plant assets, where it commenced dairy production under the Kravica Kraljica brand on 1 January 2021.

With the transfer of 69.57 per cent of shares of Poslovni sistem Mercator from Agrokor d.d. to Fortenova Group, on 23 April 2021, Mercator became an integral part of Fortenova Group's Retail Division, with Fortenova Group now holding 88.1 per cent of Mercator. The Mercator share transfer took place in parallel to the refinancing of Mercator's debt with 55 banks in the total amount of EUR 385m. In cooperation with HPS Partners and VTB Fortenova Group secured the required funds and entirely replaced Mercator's debt, thus securing a smooth transfer of the ownership of Mercator from a bankrupt company to a stable company with a consolidated ownership and creditor structure. Prior to that Fortenova Group met a number of formal prerequisites for the realization of the Mercator transfer – among other things, it obtained all the required regulatory approvals.

Fortenova Group's retail network has thus grown to include two and a half thousand Mercator and Konzum points of sale with a total of 39 thousand employees working on five markets across the region with a population of almost 20 million.

Fortenova Group has completed in September 2021 the sale of its Frozen Food Business Group (FFBG) consisting of Ledo plus d.o.o., Ledo Čitluk d.o.o. and Frikom d.o.o. alongside several smaller affiliated companies to Nomad Foods Limited. The value of the transaction is EUR 615 million.

In October 2021, Fortenova Group, comprising some of the most significant companies in Croatia and the region, such as Konzum, Mercator, Jamnica, Zvijezda, Dijamant, Belje, Tisak, Sarajevski kiseljak etc., has formally joined the UN Global Compact, the world's largest sustainable development and corporate sustainability initiative. Through operating strategies in all of its core businesses Fortenova Group has opted for sustainable development and efficient management in the long term, thus also driving a stronger involvement of the business sector in activities intended to progress towards sustainable development goals and achieving corporate sustainability in accordance with the principles of the UN Global Compact.

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

September 2019 – Javna agencija agencija za varstvo 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.

December 2019 – On 16 December AVK passes the decision to temporarily seize Mercator d.d. shares from Agrokor d.d., allegedly 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.

June 2020 – With its judgment dated 1 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".

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.

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.

April 2021 – With the transfer of 69.57 per cent of shares of Poslovni sistem Mercator from Agrokor d.d. to Fortenova Group, on 23 April 2021, Mercator became an integral part of Fortenova Group's Retail Division, with Fortenova Group now holding 88.1 per cent of Mercator.

List of larger companies in Fortenova Group

Retail:

• Konzum

• Poslovni sistemi Mercator

• Tisak

Food:

• Jamnica

• Sarajevski kiseljak

• PIK Vrbovec

• Zvijezda

• Dijamant

• Roto dinamic

• MG Mivela

Agriculture:

• Agrolaguna

• Belje

• PIK Vinkovci

• Vupik

External links

• Official website