Agrokor administrator AlixPartners defends embattled Ramljak

15 February 2018 4 min. read
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AlixPartners, the consulting firm acting as administrator to Agrokor, has warned the Croatian government against replacing the ailing group’s Extraordinary Commissioner, Ante Ramljak. The consultancy believes his premature removal would derail the restructuring process of the foods conglomerate, which is Croatia’s largest employer.

The financial crisis of the largest privately-owned company in Croatia, foods group Agrokor, has dominated recent headlines in the region, after global agencies began reducing the company’s credit rating. Croatia recently emerged as one of the main tourist destinations in the heart of Eastern Europe, but the Balkans' largest food manufacturer and retailer Agrokor is deemed equally as important to the economy, representing around 15% of the nation’s GDP. Agrokor is also Croatia’s largest employer, hosting some 60,000 employees across its operations, adding further pertinence to its Extraordinary Administration proceedings, as the conglomerate attempts to rebalance its unmanageable debt levels.

Ante Ramljak, who was been appointed by the Croatian government as the firm’s crisis manager, recommended AlixPartners for the job of administrator last year, with the firm subsequently winning the approval of Croatia’s Ministry of Economy, Entrepreneurship and Crafts. Commenting on his choice at the time, Ramljak said, “In competition with five other respectable international firms, I believe we have chosen the best offer, which includes both quality and price. As a next step, we will prepare a restructuring plan and submit it for approval to creditors."

Agrokor administrator AlixPartners defends embattled Ramljak

Since then, however, both Extraordinary Commissioner Ramljak and AlixPartners have come under intense scrutiny regarding their handling of the process, and mounting political pressure has seen the calls for Ramljak’s replacement gain traction in recent weeks. At the end of January, Agrokor's Association of Minority Shareholders requested the dismissal of the government appointed Extraordinary Commissioner, for apparently acting outside of the law and causing damage to the company. Earlier, documents had emerged alleging that Ramljak had supplied “defective work”, specifically regarding unaffordable guarantees given by subsidiaries to Agrokor.

Soon after, Ramljak was implicated in further allegations, this time regarding a conflict of interest. The European media reported that Texo Management, a company where he was employed, prior to being installed as Agrokor’s emergency administrator, had signed a contract with AlixPartners at the end of April 2017 for consulting services as part of Agrokor’s restructuring, for almost 250,000 kuna (£29,810) a week. Following this, Ramljak was asked by Croatia’s Prime Minister Andrej Plenkovic to supply a detailed analysis for the costs relating to the sub-contractors hired by US-based AlixPartners. He subsequently handed over documents relating to the consultancy, which the government of Croatia will analyse in detail, before deciding on further steps.

The law on emergency administration in systemically important companies, such as organisations integral to the economic wellbeing of a nation’s workforce, envisages a one year period, and according to Alastair Beveridge, AlixPartners are continuing to work according to that deadline. According to the London-based Managing Director at AlixPartners, “If various circumstances don’t distract us too much from the basic job, I believe we can achieve the goal in that time.”

Following Beveridge’s further assertion that replacing Ramljak due to political pressure would “absolutely” endanger the process of administration at Agrokor, the Managing Director responded to questions from Croatian news platform Jutarnji List that the hiring of Texo was, in his view, justified. Beveridge said that, alongside the important boost of bringing experts already familiar with the situation on-board the project, “one clear advantage of such an approach is local consultants lower fees, which correspond to the local market, and which made our joint approach cost-effective, more favourable to Agrokor.”