The Depositary Receipt Holders’ Meeting of Fortenova Group has granted approval to refinance Fortenova Group’s existing bond with the current majority creditor, the investment company HPS Investment Partners. The refinancing has been approved for up to EUR 1.22 billion for the period until the end of Q1/2026.

This arrangement will reduce the effective annual financing cost as well as the discount on the bond issuance. At the same time, with the extension of the arrangement with HPS the preconditions have been met for Fortenova Group to receive a credit rating in 2025 and proceed to refinance the HPS arrangement with traditional financial institutions as a next step.

Fortenova Group sent an invitation to the Depositary Receipt Holders today for a meeting to be held on 4th November 2024, where the DR Holders shall vote on Fortenova Group’s proposal to refinance the existing bond up to the amount of EUR 1.22 billion with its current majority creditor, the investment company HPS Investment Partners, for a period lasting until the end of Q1/2026.

Over the course of the ownership transformation process, which was completed in July, Fortenova Group exerted significant efforts to refinance the debt with commercial banks and arrange the best possible financing that would enable it to refinance the entire amount of the bonds due in late November 2024 under the most favourable conditions possible.

Due to the shortened deadlines, current market developments and SBK Art’s vexatious litigation related to their attempted obstruction and intimidation of financial institutions, the refinancing with commercial banks has not been realized and hence the DR Holders have been presented with a temporary extension arrangement proposal with the HPS funds, which proved to be the best solution for Fortenova Group under the given circumstances.

“Thanks to the ownership transformation and the exclusion of sanctioned shareholders from the ownership structure, with this arrangement we were able, in spite of all difficulties, to reduce the effective annual cost of financing as well as the discount on the bond issue after all. Most importantly, with the extension of the arrangement with HPS the conditions have been met for Fortenova Group to receive a credit rating in 2025 and to refinance HPS with traditional financial institutions as the next step”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.

Fortenova Group and Podravka signed a sale-purchase agreement, whereby Podravka has acquired the companies from Fortenova Group’s Agriculture Division, comprising Belje, Pik Vinkovci, Vupik, Energija Gradec, Belje Agro-Vet and Felix.

The value of the transaction on a cash-free/debt-free basis is EURO 333 million. Podravka shall acquire the vertically integrated agriculture operations diversified in 12 segments, from growing crops on 32000 hectares of farmland and operations including pig and cattle breeding farms, winegrowing and viticulture to the production of final meat and dairy products. The companies from Fortenova Group’s agriculture segment also hold biopower plants, silos and the reloading port of Vukovar and employ a total of more than 2600 employees. The agricultural segment is also connected to several hundred subcontractors through contract farms as well as individual contract farmers in crop, vegetable and fruit production.

“The fact that we have very quickly concluded the negotiations about all the conditions of the transaction testifies that we have made the right decision by choosing Podravka and is a great precondition for a long-term partnership in this area as well, which we are about to start today. With this agreement both companies are opening new stages in their respective operations, and I am sure that our agriculture will be in good hands, as we have paid attention to selecting a partner that will truly make the maximum contribution to the further development of the business. I would like to thank all employees of the Agriculture Division and Fortenova Group, who have over the last six months worked hard to bring the realisation of this process to the point of signing the agreement” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.

The completion of the transaction shall follow once the usual regulatory approvals are obtained.

Following the assessment of the binding offers received in the interest gauging process of the Agriculture Division divestment procedure, Fortenova grupa d.d. has evaluated the offer from Podravka d.d. as the best overall.

Accordingly, the two companies have signed an Exclusive Negotiations Agreement, pursuant to which Fortenova Group will continue the negotiation process on closing a sale-purchase agreement only with Podravka.

Fortenova Group’s Agriculture Division comprises the companies Belje, PIK Vinkovci, Vupik, Energija Gradec, Belje Agro-Vet and Felix. Detailed analyses of the binding offers received have shown that Podravka’s bid, besides offering the highest price, also in the best possible way meets the criteria set in the transaction as the most desirable strategic partner for those companies.

„We entered the interest gauging process for the Agriculture Division divestment with a view to maximizing the value and identifying potential partners who would be able to guarantee the development and sustainability of this nationally important industry and securing the further development of its operations and employment, the result thereof being the economic prosperity of the entire region of Slavonia and Baranja. We have found precisely such partner for our agricultural companies in Podravka. Podravka’s additional advantage is the fact that with it we would gain a strategic partner that would continue to provide high-quality domestic raw materials for further processing and production for PIK Vrbovec and the entire Fortenova Group system. Therefore, I am sure that by selecting Podravka as our exclusive partner to negotiate the details of the sale-purchase agreement we have made the best possible decision not only for the agricultural companies and our employees, but for all other stakeholders as well” – commented Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.

Herewith the half-year process of selecting a strategic partner for Fortenova Group’s agricultural operations has entered its final stage, and following the conclusion of the sale-purchase agreement it will be necessary to obtain the usual regulatory approvals from the competent market competition authorities in order to close the transaction.

Fortenova Group TopCo B.V., the Dutch top holding company of the Fortenova Group, the largest employer in the region with over 45,000 employees, and including well-known South East European companies such as Konzum, Mercator, Zvijezda, Dijamant, Jamnica, and PIK Vrbovec, is pleased to announce the successful completion of its ownership structure transformation by closing the pending sale of Fortenova Group MidCo B.V. (which holds Fortenova grupa d.d. and all Fortenova grupa operating companies) to Iter BidCo B.V., comprised of non-sanctioned equity holders of TopCo.

Consequently, as of today, Fortenova grupa d.d. no longer has any sanctioned or Russian or Belarusian equity holders. Upon completion and following a subscription process in which all non-sanctioned and non-Russian or Belarusian persons were entitled to participate in Iter BidCo B.V. on the same terms as Open Pass, Open Pass has become the majority equity holder with a 93.78% stake in Iter BidCo B.V. Over 80 minority equity holders have decided to participate in the new ownership structure and together hold a 6.22% stake.

As Open Pass has now exceeded the relevant 85% threshold, it is, in principle, obligated to make a mandatory offer for all DRs not held by it at a price equal to the subscription price in Iter BidCo B.V.. This allows minority equity holders, who initially decided to remain with the Fortenova grupa d.d. under the new ownership structure, the opportunity to sell their equity if they so choose.

The transaction, entered into in November 2023, aims to prevent further financing and operational difficulties and to avoid significantly increased financing and compliance costs stemming from the presence of sanctioned equity holders in Fortenova Group (more details: https://fortenova.hr/en/news/fortenova-group-soon-without-sanctioned-shareholders-in-ownership-structure/). On July 9, 2024, with all applicable approvals and conditions precedent satisfied or waived, the total purchase price was settled in full by eligible Fortenova Group equity holders who decided to transfer their stakes to the new ownership structure, and the shares in Fortenova Group MidCo B.V. have been transferred to Iter BidCo B.V.. 

On this occasion, Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors said: "Fortenova Group expresses its gratitude to all stakeholders who have shown patience and support throughout this complex transaction. The completion marks a new chapter for the Group, promising a more stable and prosperous future. With the removal of sanctioned equity holders, Fortenova Group will now direct its efforts toward refinancing its €1.2 billion debt and improving operational efficiencies. The Group is poised to enhance its daily operations, unburdened by the complexities associated with the previous sanctioned equity holders."

For further questions please contact the Fortenova Group at:  investors@fortenovagroup.nl. 

From:

Fortenova Group TopCo B.V. (hereinafter: TopCo) and Fortenova Grupa d.d. (hereinafter: Grupa d.d.)

To:

Holders of Depositary Receipts (hereinafter: DRs) issued by Fortenova Group STAK Stichting and holders of Convertible Bonds (hereinafter: CBs) issued by TopCo (hereinafter: DR Holders or you)

Dear investors and creditors,

We previously informed you of the proposed transfer by TopCo of all shares in the capital of Fortenova Group MidCo B.V. to Iter BidCo B.V. (hereinafter: the Transaction). As you are aware, TopCo entered into a Share Purchase Agreement and Relationship Agreement with (inter alia) Iter BidCo B.V. on 28 December 2023, in order to further progress the implementation of the Transaction. The Subscription Process has since also been concluded. More information can be found in the press releases (see https://fortenovagrupa.nl/Press).

Through this letter, we are providing you with a further update on timing. Satisfaction of the conditions precedent is progressing and we hereby inform you that closing of the Transaction is still anticipated to take place on or before the Longstop Date (30 June 2024).

Further we are reminding all DR Holders that will not participate in the Transaction to submit a duly completed cash-out form (Annex 1), if they wish to receive their entitlement to cash proceeds in accordance with the terms of the cash-out option, and to confirm: (i) details of their holdings of DRs and CBs as at the date of their respective cash-out forms; and (ii) their bank account details for the purposes of receiving any cash payment due to such DR/CB Holder. The cash-out form should be submitted to the Solicitation Agent at the following email address: fng@is.kroll.com.

For completeness' sake, we also inform you that, in accordance with your prior consent, TMF Netherlands B.V. (hereinafter: TMF) intends to share your KYC data with other service providers accommodating the completion of the Transaction, including GLAS Specialist Services Limited, Erste Group Bank AG and Kroll Issuer Services Limited, for the purpose of allowing them to meet their legal KYC obligations and to unburden you in providing your data for KYC purposes. TMF will ensure appropriate measures are implemented to ensure a safe transfer of your KYC data to said parties.

You may of course contact us should you have any questions in respect of the Transaction (or other related items).

We refer to the announcement published by Fortenova Group TopCo B.V. (“TopCo”) and Iter BidCo B.V. (“BidCo”) dated 16 February 2024 (the “Announcement”). The Announcement notified DR/CB Holders of the launch of the ongoing Subscription Process by which Eligible DR/CB Holders can elect to subscribe for depositary receipts to be issued by BidCo.[1] 

In the Announcement it was stated that the Subscription Process was scheduled to close at 5:00 p.m. CET on 15 March 2024 subject to any extension at BidCo’s discretion (upon consultation with TopCo).

BidCo confirms that it has exercised its discretion (following consultation with TopCo) to extend the Subscription Process and defer the deadline for completing and submitting a Subscription Form (in the case of participating Eligible DR/CB Holders only) and/or a Cash-out Form until 5:00 p.m. CET on 28 March 2024.

BidCo reiterates that all DR/CB Holders should review the Information Document and the FAQ document uploaded to the Investor Webpages in detail and submit their Subscription Form and/or Cash-out Form (as applicable) as soon as possible.

For further information please contact: investors@fortenovagroup.nl

This is a reminder to Eligible DR/CB Holders that on 16 February 2024 the subscription process for depositary receipts to be issued by Iter BidCo B.V ("BidCo") had started.[1] 

If you are an Eligible DR/CB Holder, you are reminded that you can either (i) elect to participate and subscribe for BidCo STAK DRs in the new BidCo structure; or (ii) receive your pro rata share of the Distributable Completion Purchase Price payable by BidCo to TopCo, as more fully described in the Information Document and on the terms and subject to the conditions of the Subscription Agreement, the Subscription Form and the Cash-out Form (as applicable).

If you, as an Eligible DR/CB Holder, wish to subscribe for BidCo STAK DRs in the new BidCo structure, you must complete a Subscription Form and submit it to the Solicitation Agent on or before 5:00 p.m. CET on 15 March 2024 (subject to a possible extension of the deadline by BidCo, the conditions for which are set out in the Information Document) on the Eligible DR/CB Holder Webpage accessible at the following address: https://deals.is.kroll.com/fng

Failure to submit a duly completed Subscription Form by that date will result in you being deemed to have elected the Cash-out Option.

If you wish to receive your pro rata share of the Distributable Completion Purchase Price, you must complete a Cash-out Form and submit it to the Solicitation Agent on or before 5:00 p.m. CET on 15 March 2024 (subject to a possible extension of the deadline by BidCo, the conditions for which are set out in the Information Document) via the Eligible DR/CB Holder Webpage accessed at the following address: https://deals.is.kroll.com/fng

We refer you to the above Webpage to access the Subscription Form (in the case of Eligible DR/CB Holders only), Cash-out Form, Information Document, Interactive Spreadsheet and Subscription Agreement. The Information Document contains further information about the subscription process. In addition, an FAQ document has been uploaded to the existing DR Holder portal and the Investor Webpages which address questions that have been raised by DR/CB Holders on the subscription and cash out process.

For further information please contact: investors@fortenovagroup.nl

All eligible Fortenova Group’s depositary receipt holders are informed that ITER STAK Stichting’s subscription documents and information are available to them on a portal set for this purpose, and to make decisions regarding their further participation in this subscription process, or cash-out from the equity structure.

As a reminder, in December last year the majority of 97% of Fortenova Group’s equity holders voted and approved the entry into a transaction between Fortenova group TopCo B.V as a seller and Iter BidCo B.V. as a buyer of 100% shares in the capital of Fortenova Group MidCo B.V., for a total consideration of up to EUR 660 million.

From today, all eligible DR holders can access relevant subscription and cash-out information and documentation and the subscription period is scheduled to close on 15 March 2024, subject to possible extension.

All eligible equity holders, among which there are a number of Fortenova Group’s partners and suppliers, have an opportunity to participate in the new ownership structure under the same conditions. Current non-sanctioned equity holders are thus able to either simply transfer their investment to the new BidCo or, by opting to provide an additional investment at own discretion, increase (up to double) their current ownership stake, or elect to cash out and exit the ownership structure.

The respective funds to be paid to the sanctioned equity holders will be paid to a special account where they will remain frozen until the sanctions regulations of the European Union, the US and the UK permit access to these funds.

What the new ownership structure will exactly look like will depend on the interest of the current non-sanctioned depositary receipt holders in additional equity investments. In order to ensure that the funds required for the transaction to be closed at the agreed price are available regardless of the level of the equity holders’ interest in additional investment, Open Pass Ltd. has committed to fund all the consideration payable, if necessary.

Once this process is completed, Fortenova Group’s ownership structure will no longer have any sanctioned equity holders.

Fortenova communicates with CB/DR Holders via the Investors' Website and the Registrar / Voting Portal.

Below is a short instruction, for CB/R Holders, may they have any problems regarding access to the Investors' Website or Registrar / Voting Portal.

The Investors' Website that is hosted by Fortenova (https://fortenovagrupa.nl/Identity/Account/Login) contains all financial information, governance documents and CB/DR Holder meeting information in a clear overview.

Please contact investors@fortenovagroup.nl if you have any problems regarding access to the Investors' Website or if you want to change the email address used for access to the Investors' Website.

The Registrar / Voting Portal that is hosted by Kroll (https://portal.krollbusinessconnect.com/login) contains information regarding the upcoming sale of Fortenova Group MidCo B.V. and enables DR/CB Holders to cast their vote for CB/DR Holder meetings.

Please contact fortenova@ats.kroll.com if you have any problems regarding access to the Registrar / Voting Portal or if you want to change the email address used for access to the Registrar / Voting Portal.

Should you have any other problem or questions regarding the access to the Investors' Website or Registrar / Voting Portal, please reach out to FortenovaGroupSTAK@tmf-group.com, FortenovaGroupTopco@tmf-group.com, or fortenova@ats.kroll.com.

At today’s Fortenova Group Depositary Receipt (DR) Holders Meeting the majority of 97% equityholders who voted approved the entry into a transaction between Fortenova group TopCo B.V as a seller and Iter BidCo B.V. as a buyer of 100% shares in the capital of Fortenova Group MidCo B.V., for a total consideration of up to EUR 660 million.

What the new ownership structure will exactly look like will depend on the interest of the current non-sanctioned depositary receipt holders in additional equity investments. In order to ensure that the funds required for the transaction to be closed at the agreed price are available regardless of the level of the equityholders’ interest in additional investment, Open Pass Ltd. has committed to fund all the consideration payable, if necessary.

According to the approved transaction, Fortenova Group’s ownership structure will no longer have sanctioned equityholders, who will be compensated for their ownership. All eligible equityholders, i.e. practically all non-sanctioned current DR holders of the company, among which there are a number of Fortenova Group’s partners and suppliers, will participate in the new ownership structure under the same conditions. Current non-sanctioned equityholders shall thus be able to either simply transfer their stake to the new BidCo or, by opting to provide an additional investment at own discretion, increase their ownership stake or elect to cash out and exit the ownership structure. The respective funds to be paid to the sanctioned equityholders will be paid to a special account that they will be given access to once the sanctions regulations of the European Union, the US and the UK permit it.

The acceptance of the agreement at the DR Holders’ Meeting was preceded by the decision of the Amsterdam District Court from 18 December 2023, which dismissed claims by SBK Art LLC and its purported shareholder, a UAE citizen Mr. Saif Alketbi, as well as an individual who recently acquired Fortenova Group’s DRs, for the postponement of today’s DR Holders’ Meeting. Thus, a line of litigations against the Fortenova Group by the sanctioned SBK Art and its purported owner has now been rejected by the Dutch judiciary for the 4^th time.

“With this key decision in the long process of Fortenova Group’s ownership consolidation we are entering the new year with new enthusiasm. The fact that non-sanctioned equityholders, including a significant number of our suppliers who are equityholders, have with a large majority supported the proposed solution, confirms what we have been emphasizing – that it is in the best interest of the business and all Fortenova group stakeholders. This solution also equally protects unsanctioned and sanctioned equityholders, to whom payment of the agreed amount preserves the value of their investments, which unfortunately decreases with each day of continued business with sanctioned co-ownership. After this decision, our equityholders can choose one of the options offered to them, and since the transaction needs to be approved by certain sanctioning bodies and competition regulators, we expect to conclude it in the second quarter of next year. Without sanctioned equityholders in the ownership structure, the company will be able to continue to operate successfully, achieve good results and increase value for all stakeholders.” said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors.

On Friday, 15 December 2023 a hearing in emergency summary proceedings took place before the Amsterdam District Court in which SBK Art LLC and its purported shareholder, a UAE citizen Mr. Saif Alketbi (hereinafter: SBK et al.), as well as an individual who recently acquired Fortenova Group's DRs, brought various claims against Fortenova Group TopCo B.V. and other parties involved in the proposed transaction to sell Fortenova Group MidCo B.V. In essence, the plaintiffs sought postponement of the second DR Holder meeting scheduled for 19 December 2023.

Today, 18 December 2023, the Amsterdam District Court decided in a summarized judgment to dismiss all their claims. The judgment means that the plaintiffs’ efforts to postpone the DR holders meeting have failed and that the meeting in which DR holders are voting on the proposed sale of MidCo can proceed as planned. Thus, litigation by the sanctioned person SBK Art and its purported shareholder Saif Alketbi has now been rejected by the Dutch judiciary for the 4th time.

Furthermore, SBK et al. have appealed their previous unsuccessful attempts to intervene in Fortenova Group's corporate structure to the Supreme Court of the Netherlands. On 15 December 2023, the Attorney General of the Supreme Court in summary advised the Supreme Court to dismiss the objections raised in the two appeals by SBK et al., thus reaffirming all of Fortenova Group's positions taken thus far and again confirming SBK Art's position as a sanctioned person which is prohibited from exercising its voting rights. The Dutch Supreme Court is expected to render a decision by 31 May 2024.

Fortenova Group TopCo B.V. (“TopCo”), the Dutch top holding company of the Fortenova Group’s corporate structure, is announcing a transaction for a revised equity structure designed to strengthen and ensure the future of the Fortenova Group. This structure is intended to prevent further financial damage and operational difficulties as a result of the presence of sanctioned entities in the current capital structure. Taking into account the interests of the Fortenova Group, its business and all its stakeholders, TopCo thoroughly considered all options to protect the viability and long-term success of the Fortenova Group, together with the assistance of a number of domestic and international advisory firms, including Akin Gump LLP, Houthoff Coöperatief U.A as well as Lazard Frères SAS.

TopCo has now reached an agreement with the largest non-sanctioned depositary receipt holder in Fortenova Group STAK Stichting (“STAK”), Open Pass Limited (“Open Pass”), who will underwrite the sale and transfer by TopCo of 100% of the shares in Fortenova Group MidCo B.V. (“MidCo”) to a newly incorporated Dutch corporate structure, Iter STAK Stichting and Iter BidCo B.V. (together the “BidCo Structure”) for consideration of up to EUR 660 m.

The decision is the result of a long process, in which TopCo has sought offers for the acquisition of the Fortenova Group, or for a similar such transaction, from a variety of parties, followed by extensive negotiations with Open Pass, which ultimately was the only party prepared to underwrite an acquisition of the shares in MidCo by the BidCo Structure. In arriving at the proposed transaction, the board of directors of TopCo, including two newly appointed independent directors along with the existing members of the management board, has taken into account the interests of all stakeholders, including the interests of the holders of depositary receipts in STAK, and has also given particular attention to matters such as certainty of funds and the governance of the new BidCo Structure. The proposed transaction also has the unanimous recommendation of Fortenova grupa d.d.’s executive directors, who decided to endorse the transaction, since it is in the best interest of the Fortenova Group, its business and all its stakeholders.

Approval of the transaction, which allows all existing eligible (non-sanctioned) depositary receipt holders in STAK to participate in the BidCo Structure on the same terms as Open Pass, with Open Pass underwriting the equity of the non-participating depositary receipt holders, has been submitted to a meeting of depositary receipt holders of STAK, the prior approval of which is required to implement the proposed transaction.

EUR 500 m of the consideration payable for MidCo is unconditional and will become payable at completion of the proposed transaction, while up to EUR 160 m is dependent on the Group reaching a sustainable refinancing of its senior debt ahead of maturity in November 2024 and reaching certain net debt-to-EBITDA ratio targets. This senior debt will remain in place after the MidCo sale and the creditors under the senior debt will continue to have a pledge on the shares of MidCo. Additionally, if certain events occur with respect to the business within 3 years of closing, including a listing or a disposal of a material amount of assets of the Fortenova Group, further consideration may become payable to non-participating holders of depositary receipts. An independent international investment bank, Houlihan Lokey, has provided a fairness opinion in connection with the proposed transaction.

Eligible depositary receipt holders in STAK will have a choice to either cash out and exit their investment in the Fortenova Group or continue their support of the Fortenova Group by re-investing their existing stake in the BidCo Structure, on the same terms as Open Pass. Should eligible depositary receipt holders decide to do so, they can also elect to provide additional funds to the BidCo Structure, thereby increasing their equity position. In order to ensure that the agreed funds are available regardless of the level of additional investment in the BidCo Structure, Open Pass has committed to fund all the consideration payable to TopCo, if necessary.

Funds to be paid by TopCo to sanctioned depositary receipt holders of STAK will, as required, be held in blocked bank account(s) where they will be accessible only after the sanctions regulations of the EU, US, and UK permit payment.

The voting of the depositary receipt holders of STAK is expected to complete on 19 December 2023. To assist depositary receipt holders, the Fortenova Group has prepared information materials which will be made available to holders of depositary receipts in STAK. The Fortenova Group will also be holding an update call with depositary receipt holders on 1 December 2023 at 3 pm CET.

Completion of the transaction is expected to occur in Q1-Q2 2024 and will amongst other things require certain sanctions licensing as well as competition authority approvals in multiple jurisdictions.

For further questions regarding the proposed transaction please contact the Fortenova Group at: investors@fortenovagroup.nl. 

Mercator signed a contract on the acquisition of 100 percent of shares in Entrotuš today, and together with the signing of the contract, the procedure has been initiated to obtain the approval of the Market Competition Agency of the Republic of Slovenia (AVK). The merger between Mercator, owned by Fortenova Group, and Engrotuš will strengthen the market position of both retailers and provide new development opportunities for Slovenian suppliers and employees. The signatories to the contract are convinced that the integration of the the two companies forms an excellent foundation for the future growth of the integrated company and its operational sustainability in the long term, which will bring benefits for all stakeholders and, consequently, also for the entire economy.

“It is our great pleasure to close the year with yet another great acquisition in retail. Following Franca markets in Montenegro, the acquisition of Tuš stores is the second major expansion of our retail network within short time, whereby we have definitively affirmed the status of the region’s strongest domestic retail chain, proving what we had announced when we integrated Mercator into Fortenova Group’s network in 2021. Our satisfaction is even greater taking into account the challenges that retail operations have faced over the course of this and the last year. In spite of that, we have remained very focused on the realisation of our strategy, with the main goal being to get as close to our customers as possible across the entire network and to continuously offer them a wide choice of products and services at affordable prices, while strengthening the national economies in the five countries where we operate by fostering excellent relationships with local suppliers at the same time. It is our strong belief that this is the best guarantee for the long-term development of the entire national economy – from production through processing to retail – which then constitutes a significant contribution to the sustainable development of the region’s economies through employment and investment support” – said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors.

On behalf of the sellers, the companies Tuš holding and AH Invest 1, Andraž Tuš pointed out: “Today we have signed a sale-purchase agreement for 100 percent of shares in the company Engrotuš d.o.o., without the operations of Tuš drugstore, which is in the process of being spun off. After several months of negotiations we have decided to proceed with a buyer that, in our opinion, is the best choice for our employees, business partners and the development of the company’s core business. We believe that this integration will have positive effects on the Slovenian economy.”

Tomislav Kramaric, President of the Management Board of Mercator, said: „This transaction marks the continued ownership consolidation in the retail sector. Mercator has recorded stable organic growth, and the acquisition of and merger with Engrotuš will help us realize our business goals. I am convinced that the integration is in everyone’s best interests, from employees to Slovenian suppliers across the chain. The integration will also strengthen the stability of both companies and offer Slovenian consumers the best choice of products and services.”

Pending the obtainment of approval from the Market Competition Agency, no details of the contract or further development plans of the merged companies can be disclosed.

The interim relief judge at the Court of Amsterdam yesterday rejected all remaining claims by SBK Art and Saif Alketbi, essentially aimed at attempting to halt the sale process of Fortenova Group MidCo B.V. and dictate the course of that process, despite being sanctioned parties without voting rights. This vexatious litigation by SBK Art and Saif Alketbi has now been rejected for the third time by the Dutch judiciary.

The judgment was made following the oral hearing of the parties on June 14, 2023, where the court initially rejected the request to prohibit the convening of the depositary receipts holders’ meeting. Yesterday, both that decision and the present judgment rejecting all other requests by SBK Art and Saif Alketbi were thoroughly reasoned.

From the detailed reasoning of the judgment, the emphasis of the Court is placed on the previous rulings that sanctioned individuals such as SBK Art are prohibited from exercising voting rights, either directly or indirectly.

Primarily, the Court concluded that Fortenova Group TopCo B.V. has a legitimate interest in selling Fortenova Group MidCo B.V. to ensure the sustainability of Fortenova Group’s financing, which has been compromised by the involvement of sanctioned parties in the ownership structure.

The ongoing process of exploring interest in the purchase of Fortenova Group MidCo, according to the Amsterdam Court, has adequate safeguards to protect the interests of all stakeholders. The claims that Fortenova Group intends to eliminate SBK Art through the sale of MidCo to the second-largest unsanctioned shareholder at an unreasonably low price are deemed “insufficiently plausible” by the judgment of the Court of Amsterdam.

The Court also determined that SBK Art receives all the information to which it is entitled, while Mr. Saif Alketbi “is not a certificate holder and therefore, under the terms of the administrative rules of Fortenova Group STAK, does not have the right to access information.”

The plaintiffs, SBK Art and Saif Alketbi, have been ordered to cover the legal costs and court fees of Fortenova Group.

At today’s DR Holder Meeting Fortenova Group Depositary Receipt Holders have approved, with almost 98% majority of those voting, the Group’s proposal to refinance the existing bond in the amount from EUR 1.1bn to EUR 1.2bn with the Group’s current majority creditor HPS Investment Partners.

After significant efforts to find financing with banks and bond markets, the Fortenova Group management has decided to enter a new bridge-type financing for the period until 29 November 2024 arranged by HPS, the existing leading non sanctioned creditor, which the DR Holders have supported with a large majority of votes in favor of this proposal.

The conditions of the new financing of the entire amount of the current bond ranging from EUR 1.1bn to EUR 1.2bn offered by HPS in regards of margin and EURIBOR floor remain the same as for the current bond. The additional terms of the new bond include an Original Issuer Discount, a one-off payment of 6.75 percent of the bond amount to be issued, which reflects sanctioned entities being in the Group’s capital structure thus limiting financing options.

This cost is the price of increased risk due to sanctioned equity holding and the inability of the market to participate in the refinancing of the Group that has Russian sanctioned co-owners. It should be noted that such a cost is also the price paid because of the sanctioned co-owners by all the company’s shareholders The short term 15-months maturity opens the last opportunity for the Group to find the solution for sanctioned entities to cease to be co-owners, which is a prerequisite for the Group to be able to refinance again in that short period of time at the capital markets.

Following the oral hearing of the parties, the interim relief judge of the Court of Amsterdam has rejected the claims filed by SBK Art and Saif Alketbi to forbid Fortenova Group STAK to hold the DR Holders’ Meeting scheduled for tomorrow, where the Holders will decide on the appointment of Fabris Peruško to the management boards of the Dutch companies.

The urgent hearing was held upon request dated 8th June 2023 and took place the day before yesterday. Among other things, SBK Art requested to stop the meeting where the Depositary Receipt Holders will vote on appointing Fabris Peruško, Chief Executive Officer of Fortenova Group, as Director of Fortenova Group’s management companies in the Netherlands, on technical amendments to the documents of the umbrella organisation Fortenova STAK Stichting and amendments to Fortenova Group’s Articles of Association reflecting the conversion of the company’s share capital from kuna to euro.

Given the urgency of the proposal and the forthcoming Meeting tomorrow, the Court of Amsterdam rejected the claim without a detailed statement of grounds, which will follow subsequently. The other points of the claim shall as well be decided by the Court of Amsterdam subsequently. 

The rejection of another SBK Art’s claim is one in a series of decisions adopted by Dutch courts rejecting the attempts of a sanctioned person to interfere with the Group’s corporate decisions.

Sanctioned SBK Art cannot vote at Fortenova Group’s Shareholder Meetings

At its official website the Amsterdam Court of Appeal published its judgment according to which SBK Art, through which Sberbank of Russia holds 42.5 percent of votes at the Shareholders’ Meetings of Fortenova Group STAK Stichting, being a sanctioned company has no voting rights and cannot attend the meetings of Fortenova Group shareholders, i.e. Depositary Receipt holders.

This judgment is based on the construction of the way the sanctions imposed by the European Commission in November this year work, according to which the voting rights of shareholders under sanctions are explicitly considered to be an intangible economic resource and have to be frozen, i.e. their exercise must be prevented.

Today’s judgment has thus dismissed the judgment of another Dutch court from September this year, whereby SBK Art was allowed to partly exercise their voting rights in some matters. The Dutch Court of Appeal has fully applied the European Commission’s instruction from November, according to which the shareholders of sanctioned companies cannot exercise their direct or indirect voting rights under any circumstances nor for any purpose whatsoever, i.e. their voting rights have to be completely frozen.

The company SBK Art had appealed to the Dutch Court that they were not allowed to take part in Shareholders’ Meetings and exercise their voting rights. This judgment has dismissed all of SBK Art’s requests and confirmed beyond doubt that the sanctions rules prevented SBK Art from being accepted at the Shareholders’ Meetings and from voting at the Shareholders’ Meetings. SBK Art was also ordered to pay all court expenses related both to the dismissed and to today’s Dutch court judgments.

By way of reminder, with the Regulation of the EU Council No. 2022/2475 dated 16th December 2022, which constitutes part of the ninth package of sanctions against legal and natural persons related to Russia and the Russian aggression on Ukraine, the company SBK Art LLT, through which Sberbank of Russia holds 42.5 percent of ownership shares in Fortenova Group, has been included on the sanctions list. In the statement of reasons it is specified that the purported acquisition of SBK Art, and through it of the ownership share in Fortenova Group, was actually an attempt to breach the sanctions regime which is in effect in the European Union and the United Kingdom. The inclusion of SBK Art on the sanctions list has confirmed beyond doubt that everything related to that company is subject to the Council Regulation concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, and any breach of the sanctions entails criminal liability for all citizens of countries of the European Union and the United Kingdom who may have taken part therein.

Fortenova Group presented its detailed results for I-IX/2022 to the DR Holders, having confirmed the continuing excellent operating trends in all of its core businesses. As opposed to the preliminary results for the first three quarters that Fortenova Group had presented last week, this presentation featured the same key performance indicators in more detail, as shown in this presentation. The factors with the greatest positive impact on the growth of all of the Group’s performance indicators were the excellent tourist season, significant operational improvements, as well as inflation.

In I-IX/2022 Fortenova Group has thus generated total consolidated revenues from continuing operations of HRK 30.3billion or EUR 4 billion, which is an increase of 38 percent in a year-on-year comparison. Net of the effects of the Mercator integration, total revenues from continuing operations were 15 percent higher compared to the same period of 2021.

At the same time the consolidated adjusted EBITDA of the period has grown 22 percent against last year’s and amounted to HRK 2.1 billion or EUR 275 million. In spite of the high cost of debt and the increased costs of energy and labour, in the first nine months of 2022 Fortenova Group generated profits from continuing operations in the amount of HRK 534 million, which is an improvement of HRK 918 million against last year’s loss of HRK 384 million.

At the end of September Fortenova Group had a cash position of almost HRK 2 billion on its accounts. In parallel, it has continued to reduce its leverage and brought the net debt to adjusted EBITDA, according to the definition of its creditors, down to 3.58 times at the end of the period, thus having halved it from 7.2 times which was the leverage ratio at the point of Fortenova Group’s incorporation.

In comparison to the non-consolidated results at the end of Q3 2021, the 18 companies from the Group’s core businesses – Retail and Wholesale, Food and Agriculture – realized 12 percent more total revenue, while the non-consolidated EBITDA of the core businesses grew by 11 percent.

Retail and Wholesale thus realized 9 percent higher revenue and 9 percent more EBITDA. When it comes to revenue, that growth was supported by numerous activities of the company related to price optimisation and network expansion, and partly also the high inflation, while the focus on store optimisation, synergies and energy saving measures resulted in higher EBITDA. The wholesale segment owes its 18 percent better result primarily to the recovery of the HoReCa channel. Among Fortenova Group’s retail companies, the best results were generated by Konzum Croatia, Mercator B&H and Mercator Serbia, which recorded revenue increases of more than 10 percent. In general, inflation also had the largest adverse effect on the results in retail, having increased the prices of products and services as well as labour costs.

The Food Division companies, on the other hand, were under strong pressure of higher logistics costs through the growth of fuel and raw material prices. Nevertheless, Fortenova Group’s Food Division overall generated as much as 24 percent more revenue, driven by both higher sales and inflation, with all of the companies having recorded double-digit revenue growth compared to the same period last year. A higher growth of EBITDA was neutralized by the aforementioned higher raw material prices, input cost inflation and salary increases and amounted to 2 percent compared to 1-9/2021.

Revenues in the Agriculture Division grew 7 percent, primarily accounted for by pig breeding, cattle breeding and milk production, while EBITDA grew by 60 percent, mostly due to the growth of agricultural commodity prices and the strong control of operating costs.

Pursuant to the published final ruling of the Commercial Court of Zagreb, the Extraordinary Administration Procedure in Agrokor has been closed and Agrokor d.d. has been erased from the Court Registry.

With its Ruling dated 19^th July 2022 the Commercial Court of Zagreb has established that with the legally effective amalgamation of 46 non-viable companies to the debtor Agrokor d.d. as transferee the Settlement Plan of Agrokor’s creditors shall be considered implemented and the Extraordinary Administration Procedure over the debtor Agrokor d.d. closed. One of the world’s major restructuring-through-bankruptcy proceedings, recognized as such on an international level, has thus been successfully completed, after having gained legal legitimacy in the European Union, United Kingdom, the USA and Switzerland. During the Extraordinary Administration Procedure the overindebted Agrokor, although in bankruptcy, continued its business with all operations and full employment  having been preserved in the process. At that point the system employed over 50,000 people in SE Europe and its failure, due to its impact on thousands of associated companies, would have had severe negative consequences on the economies of Croatia and all countries of the region.

The Extraordinary Administration Procedure in Agrokor had commenced on 10^th April 2017 and comprised a total of 77 Agrokor subsidiaries. The company’s total debt at that point amounted to HRK 56 billion, with a debt to operating profits ratio of around 30 times and only six kunas on its accounts. Within only a year’s time the Extraordinary Commissioner Fabris Peruško and his team normalized the operations and completed negotiations on the creditors’ settlement, and the Settlement Plan was adopted with over 80 percent of the creditors’ votes in July 2018 and declared final and non-appealable in October 2018.

The most important result of the Extraordinary Administration Procedure, besides the accomplished settlement and preserved business operations, was the fact that during the Procedure itself the debts to a total of 2400 micro and small suppliers were settled in full, while other creditors’ recoveries amounted to 60 percent on average. All payments to suppliers and the overall costs of stabilizing the collapsed operations were settled from Agrokor’s operations and assets, without spending any Croatian tax payers’ money. At the same time, the Extraordinary Administration Procedure received international legal protection and with the TMA Award the international financial industry declared it to be one of the world’s best restructuring processes in 2018.

With the cessation of Agrokor’s existence, the authorities and duties of Fabris Peruško in his capacity as Extraordinary Commissioner under Art. 12 of the Act on Extraordinary Administration Proceedings in Companies of Systemic Importance for the Republic of Croatia, i.e. his rights and obligations as the debtor’s administrative body and representation authority shall cease.

“We can rightfully be proud to have completed one of the most important economic processes ever to have taken place in Croatia, with impact on the entire region. It was a challenging and complex process; the scope of work was enormous and the deadlines short. During the very difficult settlement negotiations we had to reconcile the frequently diametrically opposed interests of the different creditors. In our attempts to reach an agreement that would be acceptable to everyone, we had to face tensions, renouncement and compromises. Finally, the high percentage of support provided by the creditors to the Settlement Plan at the hearing and everything that we have done thereafter in transforming the company towards Fortenova Group, bear witness to the fact that we have had the knowledge and the determination required to manage this complex process. The Government of the Republic of Croatia, the financial creditors, suppliers, employees, myself in the capacity as Commissioner and our entire team have exerted exceptional efforts for the Extraordinary Administration Procedure to secure viable operations for a company that had practically been bankrupt. This was the basic assumption for everything that we have done in the period of three and a half years since the incorporation of Fortenova Group, which we have brought to a point where it has five billion euros of revenue, a leverage ratio of less than 4 times and the status of one of the most desirable employers and major investor across the region. I would like to thank everyone who has made a personal constructive contribution to the Extraordinary Administration Procedure, the Government of the Republic of Croatia that had nominated me for the responsible task of the Extraordinary Commissioner and the Commercial Court of Zagreb that appointed me. I take particular pride in the fact that today, together with the team in which there are numerous colleagues who also took part in the Extraordinary Administration Procedure, I run a company that has, thanks to the positive changes, successfully overcome all the challenges that we have been faced with” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, on the occasion of closing the Extraordinary Administration Procedure and the completion of his role as Extraordinary Commissioner.

In H1/2022 Fortenova Group generated HRK 18.8 billion of total revenue from continuing operations, which is 57  more than in the same period last year mainly driven by the integration of Mercator. On a like for like basis revenue grew by 14%.

At the same time the Group’s consolidated EBITDA for the first six months of the year exceeded a billion kuna which is 74% more than in the same period last year, while on a like- for-like basis the adjusted consolidated EBITDA grew by 19%.

The fastest growth of revenue was recorded by the companies from Fortenova Group’s Food Division, while the Agriculture Division saw the fastest growth of EBITDA.

Net profits of the period, after exclusion of currency exchange impacts, amounted to HRK 12 million, as against the loss of HRK 213 million after exclusion of currency exchange impacts in H1/2021. At the end of H1/2022 Fortenova Group also had HRK 1.7 billion of cash on its accounts and continuing its already long-term deleveraging trend, it closed H1/2022 with a debt to operating profit ratio moving 3,94 times.

“The strong realization in the first half of the year continues the positive trend that we recorded throughout the last year, with positive underlying business improvement accelerated by the integration of Mercator into Fortenova. This underlying growth is shown by the Group’s total revenue from continuing operations in H1/2022 has grown by 14% on a like for like basis excluding Mercator. These excellent operating results were generated in spite of the negative impacts of inflation on the increase in prices of labour, energy and raw materials and the consequently increased costs across the supply chain. The ’22 tourist season in Croatia is almost at the level of the record year 2019, which is an additional driver for our results that will show its full benefit in the third quarter of the year, which is the most important time period for us” – said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors, commenting on the half-year results.

“Looking further forward the expected changeover to the euro will have an additional long-term positive impact on the Group’s credit profile, as after the conversion 80 percent of our business will be generated in euros. Additionally, the currency risk for our debt will be eliminated,” – Peruško said. He also noted that the process of ownership transformation and the divestment of shares held in Fortenova Group by Sberbank continues and that over the course of H1/2022 the final prerequisites for a court ruling on closing the Extraordinary Administration Procedure in Agrokor will have been met.

James Pearson, Fortenova Group’s CFO, commented that the Group had a very positive first half of the year, having focused on market realization and achieving the planned operational improvements.

“Following the significant deleveraging achieved by Fortenova Group in 2021 by the transactions related to Mercator, the Frozen Food Business Group and a number of non-core business and property disposals, in 2022 we have continued to generate higher revenues and operating profits, which brought about a further decrease in the leverage ratio, which now amounts to 3.94 times which reflects the increasing financial strength of the Group. ” – Pearson said.

Fortenova Group has prepared its 2021 Sustainability Report and published it on its website (https://fortenova.hr/en/sustainability/ ). It is the Group’s first Report of this kind, whereby it has established its ESG (Environmental, Social and Governance) sustainability objectives, prepared in compliance with GRI standards – sustainability reporting guidelines devised by the Global Reporting Initiative (GRI).

The Report provides a comprehensive and detailed overview of the Group’s entire business operations in 2021, as well as insight in its strategy and key values and sustainability topics that are material for Fortenova Group and its stakeholders, i.e. those where the Group has the greatest impact.

It comprises seven key topics starting from the objective to build sustainability as a relevant criterion into the Group’s decision making processes, through reducing GHG emissions, waste management across the chain from food production to packaging, improving life quality by way of the quality of food, reducing the impact that the Group and its operating companies have on soil and waters, impact on improving the standard of living in the communities where it operates to continuing to encourage diversity and inclusion at all levels.

The Report features a lot of data related to the above topics from the Group’s 45 companies that have significant operating activities and actively employ. At the same time, the 2021 Report also includes selected initiatives that were launched in early 2022 to illustrate the current status of topics that are the most relevant for the Group.

Furthermore, given that some of the operating companies’ everyday activities comprised in the Report also include activities specified in the first two objectives of the EU Taxonomy – climate change mitigation and climat change adaptation – in order to act in accordance with its regulatory obligations for 2022, as a first step Fortenova Group disclosed the evaluation of eligibility for 2021.

Namely, the Taxonomy Regulation is the EU’s key document for the achievement of climate objectives and features a classification system that establishes a list of environmentally sustainable economic activities and aligns the criteria for determining whether an economic activity qualifies as environmentally sustainable.

„Everything that we have done over the last few years, and particularly in 2021, is part of the activities that have improved our social and corporate responsibility, while having a positive impact on the economic development of the communities in which we operate. This Report not only shows that we have timely accepted the responsibilities arising from the European Green Deal, but that in 2021 we laid the organizational foundation, as well as the foundation pertaining to activities required for sustainability to be integrated in our internal management system and become part of the Group’s long-term strategy. We have thus raised the responsibility not only to ourselves, but to our consumers, partners, suppliers, the environment and the society as a whole – to an even higher level” – commented Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of publishing Fortenova Group’s first Sustainability Report.

According to the assessment of the Expert Commission of the Croatian Business Council for Sustainable Development (HR PSOR), Fortenova Group’s 2021 Sustainability Report is in accordance with the core level of GRI reporting and complies with the legal provisions of the Republic of Croatia in the area of sustainability reporting.  

„ We as a Commission noted that Fortenova, as the largest regional company, has prepared a very comprehensive and thorough report with a lot of useful information that give us complete overview of all their operations. Even though there are some parts of the Report that can be improved, generally, considering that it is the Group’s first report of this kind, we found it very well aligned with the requirements of GRI. It is in our opinion one of the most complete reports to be published in Croatia in recent years and probably one of the finest sustainability reports in the region. We commend Fortenova Group for this accomplishment and look forward to their future work on sustainable practices and on the development of the reporting process itself“  – HR PSOR stated in its assessment of Fortenova Group’s first Sustainability Report.

Fortenova Group’s 2021 total consolidated revenue from continuing operations amounted to HRK 31.4 billion, with consolidated adjusted EBITDA in the amount of HRK 1,955 million and a net profit of HRK 523 million after the gain on the sale of the Frozen Group. The Group closed the year with HRK 1,872 million in cash on its accounts.

These results equate to a growth of consolidated revenue from continuing operations of 65 percent and adjusted consolidated EBITDA growth of 52 percent vs 2020. The main driver of the consolidated results performance is due to Mercator Poslovni Sistemi, being consolidated into Fortenova Group’s results as of May 1st, 2021.

Compared to the 2020 year-end results, the 18 companies from the Group’s core business, excluding the Frozen segment that has been sold and including full year of Mercator Group companies, recorded on a like-for-like basis a revenue growth of 5 percent, an increase in EBITDA of 20 percent, and an increase in EBIT of 64 percent.

These positive growth trends have continued in 2022 and in Q1 2022 our 18 companies from the Group’s core business realized on a like-for-like basis higher net sales revenues by 6 percent, higher EBITDA by 2 percent and higher EBIT by 6 percent, compared to Q1 last year.

„We had very strong performance last year and in the beginning of this year with the key achievements being Mercator’s refinance, transfer and integration along with immediate delivery of planned synergies, closing of Frozen segment sale and resulting deleveraging in Q3 ‘21 as well as significant operational improvements and a good summer season. As a result, our net profit of HRK 523 million shows an improvement of HRK 1.8 billion compared to 2020 and our cash position remains very strong, with HRK 1.9 billion at the end of 2021.

We can look back at a really excellent year, in terms of the results and strengthened capital and financial structure that have set the foundations for continued growth. All activities that we have pursued were aimed at increasing our value as well as Fortenova Group’s overall corporate and social responsibility, in the sense of impact we have on the economies across the region as this region’s largest employer.

I am especially proud of the fact that everything that we have done has also resulted in meeting one of our most important goals – raising the investment strength of Fortenova Group, which is now in the position to pursue a regional investment cycle worth over EUR 130 million in ‘22. All our investments are focused on more sustainable and more efficient operations, so that they can further build on their leading positions. I would also like to emphasize that in addition to all of that, in 2021 we have set very ambitious ESG objectives and have prepared our first Sustainability Report, which will be published in the coming days” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, summarizing the key features of the 2021 operations.

James Pearson, Fortenova Group’s Chief Financial Officer, said that “We continue to deliver on our planned financial strengthening and simplification of the Group. Through the transactions dealing with Mercator, Frozen Group as well a number of non-core and real estate sales we reduced debt in 2021 by HRK 4.4 billion which led to an underlying leverage ratio of 4.3x at year end. This is a significant decrease from the 6.8x leverage ratio we had at the beginning of the year and demonstrates the great step we have taken.

The results are also a testament to ability and great resilience of the Group’s employees. Despite covid, earthquakes, supply chain pressure, inflation etc they continue to deliver whether improving customer service, improving existing offers or developing new ones all of which is all leading to the reported results.” – Pearson said.

Fortenova grupa d.d. is 42,51% owned by SBK ART LLC (whose ultimate majority owner is Sberbank of Russia), while 7,39% is owned by VTB BANK (EUROPE) SE. During the restructuring, a sanctions safeguard mechanism was implemented that prevents shareholders subject to sanctions (either EU, UK or US sanctions) from exceeding the 50% of ownership, independently or jointly. In the event that the sanctioned shareholder should acquire new shares and thus exceed 50% (independently or jointly), this exceeding shares are placed in a special account of the Escrow agent (independent third party that manages the securities). Shares held in an Escrow account are registered in the name of the Escrow agent and do not give sanctioned shareholders either ownership or voting rights. Escrow Agent is an international company based in London, which is also required to comply with UK and US sanctions regulations.

The screening of sanctions lists, which ensures compliance with this sanctions safeguard mechanism, is performed on a daily basis.

Given this, Fortenova grupa d.d. is not majority owned nor can ever become majority owned by the shareholders who are subject to sanctions.

In case of need for additional clarifications, please contact us via compliance@fortenovagrupa.hr.

The minority owner of the Fortenova Group, Russia’s Sberbank and the European investment fund based in Hungary, Indotek, have signed an agreement with the intention of sale and purchase of the largest single stake in the Fortenova Group. To conclude the transaction, it is necessary to obtain regulatory approvals in several markets.

On the occasion of the signing of the SPA and the announced change in ownership, Fabris Peruško, CEO and Member of the Board of Directors of Fortenova Group said: „We welcome the entry of Indotek, which we recognize as a long-term strategic partner, into the co-ownership of the Fortenova Group and we hope and expect that in the next few months all the approvals required to complete the sale and purchase of shares will be obtained. Regardless of a possible change in co-ownership, the Fortenova Group continues with regular business operations. Our operating companies are successfully managing market disruptions caused by rising operating costs and disruptions in some supply chains, that our many customers do not feel, and we are fully focused on preparing for this year’s tourist season from which we have significant expectations.”

On Friday, 1^st April 2022 Fortenova Group acquired all remaining shares of Mercator and became 100% owner of Mercator. With the transfer of 621,251 shares to Fortenova Group the process of squeezing out minority shareholders from the ownership of Mercator has been completed, and Fortenova Group has become the sole shareholder of Mercator.

“With this last transaction we have completed the acquisition process that started back in 2014, and the fact that this last step was taken on the third anniversary of Fortenova Group’s operations has a particularly symbolic meaning for us. It was a long-lasting and challenging process, with lots of intermediate legal and financial steps that were all leading to one and the same goal – forming the leading regional grocery retail chain.

Over the last year since the formal transfer of Mercator to Fortenova Group’s ownership we have concluded the squeeze-out procedure, but more importantly, we have started to unleash the full potential of our business model in retail by achieving significant operating synergies that we are reinvesting back into the Group” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of acquiring the 100 percent ownership share in Mercator.

He also pointed out that Mercator is the leading grocery retailer in Slovenia, with significant shares in Serbia and Montenegro, and Konzum is the leading grocery retail chain in Croatia whilst both Konzum and Mercator have a significant combined share in Bosnia and Herzegovina. “The synergies available to Konzum and Mercator by working together as part of the region’s largest retail group are numerous, which provides leverage for further strengthening our leading positions on the markets” – he said.

„The payment to minorities of EUR 22.4 mn was made using Fortenova’s own internal cash and demonstrates the increasing financial and operating strength of the Fortenova Group. The Group has made great progress over the last few years, this latest transaction completes another step in our plans and gives us further opportunity to invest and grow”, said James Pearson, Fortenova Group’s CFO, commenting on the transaction.

With regards to the question of a possible impact of the present and any potential new sanctions that Europe has announced in relation to Russia, Fortenova Group does not expect them to have a negative impact on its operations. The banks in Russian ownership do not have majority management and ownership rights in Fortenova Group, those are below 50 percent, and the second largest shareholder of the company are local Croatian owners. Also, Fortenova Group has a stable capital structure with the financing headed by HPS Investment Partners, a US investment company, hence the sanctions are not expected to affect the financing of Fortenova Group, either.

Fortenova Group has completed the sale to Nomad Foods of the Frozen Food Business Group after receiving all regulatory approvals.

The Frozen Food Business Group comprises Ledo plus d.o.o. in Croatia, Ledo Citluk in Bosnia & Herzegovina and Frikom d.o.o. in Serbia, as well as several related companies in other South East Europe markets and has a market leading portfolio of frozen food and ice cream brands enjoying a strong recognition among consumers in Croatia, Serbia, Bosnia and Herzegovina, with a tradition of more than half a century.

“This major transaction has been closed one year after the Frozen Food Business Group divestment process was initiated in Fortenova Group, despite the project having been carried out under very challenging circumstances of the pandemic. We have worked hard and are proud of the fact that with this transaction we have met our most important goals in full. The achieved price of EUR 615m has acknowledged the value of our business and at the same time we have introduced a strategic partner to the region who will continue to develop the business and be focused on developing Ledo’s and Frikom’s iconic brands. We also expect Nomad Foods will be an important business partner for Fortenova’s regional retail business going forward. For Fortenova 2021 is becoming a transformational year. We have not only completed the refinance and transfer of Mercator, where we are delivering on planned synergies, we have also delivered on a successful summer season and now we have completed the planned sale of the Frozen Food Business Group, all of which are now resulting in Fortenova having a substanitally stronger capital structure.” – said Fabris Peruško, CEO and member of the Board of Directors of Fortenova Group, thanking all employees of the Frozen Food Business Group for the contribution that they have with their work built into the operational success of their respective companies. “We wish them all the best with the new partners and hope for their success in the future, which they truly deserve” – Peruško added.

“In 2021, besides the refinance and transfer of Mercator, the delivery on all our plans in the summer season, where all our businesses and Divisions have delivered excellent operational results both in profit and cash, and the sale of the Frozen Food Business Group, Fortenova has also completed its program of non-core divestments and achieved numerous operational improvements to our businesses, all of which are contributing to the improvement of our financial metrics. In respect of this transaction, we will use the funds from the sale of the Frozen Foods Business Group to immediately repay debt and as a result we will be significantly deleveraging the company. With clear and continued delivery on our plans in 2021, Fortenova can now look forward with real confidence to the future as this Frozen Food transaction step changes our financial position and capital structure and will allow us to invest and grow our very strong businesses in the coming years. Finally, I would also like to thank our friends and colleagues in all companies in the Frozen Food Business Group for their skill, commitment, and hard work during the time when they were part of Fortenova Group.” – said James Pearson, CFO of Fortenova Group.

Fortenova Group, now reporting with Mercator consolidated from 1^st May 2021, and also benefiting from improved trading condition vs H1/2020, recorded a consolidated revenue from continuing operations increase of 35 per cent. In addition, H1/2021 adjusted consolidated EBITDA was 14 per cent higher, and the Group recorded a net profit in the amount of HRK 318 million vs a loss in H1/2020. At the end of H1/2021 the Group also had more than HRK 1,8 billion of cash on its accounts so maintaining its strong liquidity position. These were the key highlights of Fortenova Group’s half-year results presentation to its depositary receipt holders.

“With consolidated revenues from continuing operations of HRK 12 billion, adjusted consolidated EBITDA of HRK 1.1 billion and HRK 318 million of net profit we can proudly say that behind us is the best first half of the year ever, not only in terms of performance, but also in terms of several major projects having been closed, which have placed the Group on track in terms of strengthening its profitability. First and foremost of these is business integration of Mercator and its consolidation into our financial statements from 1 May 2021. Given the excellent tourist season, the Group is continuing to trade strongly in Q3, and this along with the synergies that we are achieving in Retail, and the expected closing of the Frozen Food Business Group sale to Nomad Foods will mean that the Fortenova Group’s financial position will continue to improve” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, commenting on the results achieved in H1/2021.

When it comes to non-consolidated results of the core businesses pertaining to 21 companies in the Retail, Food and Agriculture divisions of Fortenova Group, the total generated net sales revenue increased by 2.4 per cent, EBITDA grew by 12.5 per cent, while EBIT was as much as 39.5 per cent higher compared to the same period last year, when Mercator is included on a like for like basis.

In terms of the respective divisions, Food division generated the best improvement in results compared to last year, with a 12.5 per cent higher net sales revenues, 23.6 per cent higher EBITDA and 40.1 per cent higher EBIT in the first half of the year, following the impact of COVID-19 on H1/2020 results and the launch of several innovative products on the market in 2021.

The Retail division saw revenue growth of 1.2 per cent, EBITDA grew 10.9 per cent and EBIT grew 65.9 per cent, with Mercator included on a like for like basis. These improvements are a result of synergies, improved general trading as well as the wholesale segment in Konzum experiencing a strong recovery, following the relaxation of COVID-19 measures and the opening of HORECA channels.

Due to the major decrease in pork selling prices vs H1/2020, the Agriculture division incurred a decline in revenue of 12.5 per cent, which resulted in an EBITDA decline of HRK 19 million and EBIT decline of HRK 21 million.

“In H1/2021 Fortenova Group was very focused on in-market execution, delivering planned improvements to the business, and completing a number of key projects. This focus on delivery is clearly shown with improved operating performance, the divestment of the Frozen Food Business Group fully on track, Mercator debt being refinanced alongside 89.73% of its shares transferred to Fortenova Group and its integration into the Retail Division proceeding very successfully, as well as several non-core business divestment transactions being completed, enabling further focus on the core divisions. Overall, this has been a very positive H1 for the Group.” – said James Pearson, Fortenova Group’s Executive Director of Finance.

In 2020 Fortenova Group performed well despite the adverse effect of the COVID-19 pandemic, which impacted April – December of 2020 business operations. The COVID-19 impact was particularly felt in Croatia given the size of tourism in the country. The Group maintained or even increased its market shares in a number of key product categories, realized several key strategic projects and due to the implemented preventive measures, alleviated the impact of the crisis and increased its cash liquidity by HRK ~350 million, to an amount of HRK 2 billion at year end.

Those were the basic features of the 2020 operations highlighted in the presentation of the 2020 results held for Fortenova Group’s DR holders.

Fortenova Group’s total consolidated revenue from continuing operations for the year amounted to HRK 21 billion, while the total consolidated adjusted EBITDA amounted to HRK 1.3 billion.

Compared to the 2019 pro forma consolidated results of Fortenova Group, net of the results of the discontinued operations Kompas Ljubljana, Kompas Porec and the entire Kompas network for both periods, Fortenova Group’s total consolidated revenue was 11.7 per cent lower, while on the thus adjusted basis consolidated EBITDA was 30.1 per cent lower. The announced 2020 results are net of Mercator, which will be integrated into Fortenova Group in 2021.

“The COVID-19 pandemic left a trail on everything, including the operating results of our companies. It had the strongest negative effect on those companies that are closely related to the tourist industry and the HORECA channel. Also, the markets where the tourist season has a strong impact on the GDP, such as Croatia and Montenegro, were hit more severely. Serbia, for example, has not felt the consequences of the weak tourist season, but the market was faced with all the other consequences of the pandemic. Nevertheless, our companies successfully met and even outperformed their 2020 plans, which had been corrected last year in view of the pandemic and envisaged lower results than those in 2019” – said Fabris Peruško, Chief Executive Officer of Fortenova Group and Member of the Board of Directors, commenting on the 2020 results.

Comparing the non-consolidated results of core businesses including 16 companies in the retail, food and agriculture divisions of Fortenova Group with their 2019 performance, the 2020 non-consolidated total revenues in the amount of HRK 23 billion were six per cent lower, while EBITDA in the amount of HRK 1,6 billion was 16.8 per cent lower.

The pandemic had the strongest negative effect on the operations of the Food Division companies that are directly linked to the HORECA channel and the consumption during the tourist season, as well as the Retail and Wholesale Division. Consequently, both their non-consolidated revenues and EBITDA were lower than in the year before. Non-consolidated total revenue of the Food Division was nine per cent lower than in 2019, while the non-consolidated revenue of Retail decreased by five per cent. The non-consolidated revenue of the Agriculture Division was only one per cent lower compared to 2019.

The non-consolidated EBITDA of Food was 12.5 per cent lower compared to the 2019 performance, while in Retail the drop amounted to 6.5 per cent. Due to the negative impact of the major drop in pig prices in Q4/2020, the drop in cattle prices and lower yields of agricultural crops, EBITDA in Agriculture was lower by 56.8 per cent compared to the year before.

Nevertheless, both Dijamant and Frikom also performed strongly as they not only gained share but benefitted from increased consumption in Serbia with COVID-19 restrictions limiting travel from the country. Also, despite the lack of tourists, Konzum was on a like-for-like basis able to keep its 2020 retail sales above 2019 by 0,3 per cent, as it performed well in manging its supply chain and benefited from its store format and on-line offer.

“As Konzum generates around 40 per cent of its total revenues and around 70 per cent of its annual EBITDA in the four months from June to September, the results achieved in 2020 are excellent, indeed. Looking at the entire Fortenova Group, the overall negative effect of the pandemic and non-cash foreign exchange losses could unfortunately not be compensated, but given the projects that we have initiated, we expect a performance improvement already in 2021. A refinancing of Fortenova Group’s debt at more favourable conditions is planned to take place in the period of the next two years and will additionally strengthen the company’s financial position” said James Pearson, Fortenova Group’s Executive Director for Finance.

 “We are satisfied with the 2020 operating performance due to, among other things, the implementation of a number of measures intended to alleviate the negative effects of the pandemic, as well as additional improvements achieved in our business operations and cost control. In spite of the crisis caused by the pandemic, by exerting exceptional efforts and with increased costs related to the health preservation of our people and to securing an uninterrupted supply chain for the market under the conditions of the crisis, we were able to realize several development projects, too. Last year we acquired the assets of Meggle’s Osijek-based dairy plant and have now recently launched the new Kravica Kraljica dairy brand. Furthermore, Jamnica’s investments in development resulted in the launch of the new product Botanica last year, and of Barts - the first alcoholic sparkling water in Croatia – this year, which is now building distribution. Further new product launches, upgrades and improvements will be appearing from our other food businesses as we go through this year and complete the development work done in 2020.

Looking ahead, two major projects that will positively affect our results in 2021, are the divestment of the Frozen Food Business and the integration of Mercator. We are also hoping that this year’s tourist season will be better than last year’s, ahead of a full tourist season returning in 2022. What cannot be seen directly in these results, is the engagement of all our employees in making the business run smoothly under the crisis circumstances and in meeting all plans set. I would like to sincerely thank all Fortenova Group employees for that, as it really made an impact.

Through 2020 and already in 2021 Fortenova management team has delivered on a number of key projects specifically managing the impact of COVID-19, completing the transfer of Mercator and fixing its capital structure through the sale of the Frozen business, which puts the Group into a fundamentally stronger position going forward.” – Fabris Peruško said.

Today 69.57 per cent of shares of Poslovni sistem Mercator have been transferred from Agrokor d.d. to Fortenova Group, whereby Mercator has become an integral part of the Retail Division of Fortenova Group, which now owns 88.1 per cent of Mercator shares. The transfer of Mercator shares was simultaneous with the refinancing by Fortenova Group of the debt that Mercator had with 55 banks, in the total amount of EUR 385 million. In cooperation with its creditors, HPS Partners and VTB, Fortenova Group has secured the required funds to entirely replace Mercator’s aforementioned debt and thus ensured seamless transfer of ownership of Mercator from a bankrupt to a stable company with a consolidated ownership and creditor structure. As of today, Fortenova Group’s retail network consists of around two and a half thousand Mercator and Konzum points of sale with a total of 39 thousand employees working on five markets in the region, with a population of almost 20 million people. 

Agrokor had acquired Mercator shares in 2014, but until today Mercator was not operationally integrated into the business of its owner. “As of today Fortenova Group is proud owner of Mercator, decided in the intention to be the best owner that Mercator has ever had. This is a new beginning that opens up a number of new possibilities for all of us. Fortenova Group’s new, optimized capital structure provides for stability and the ability for strong investments in our companies going forward to drive their future growth. With Mercator within Fortenova Group we are consolidating the region’s largest retail network, increasing the stability of the supply chain, jobs and tax revenues of the countries in which we operate as well as opening new opportunities and continuing to support the growth of local suppliers” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors. Peruško pointed out that following the integration of Mercator and the divestment of the Frozen Food Business, with over 50 thousand employees Fortenova Group will be the region’s largest employer, generating approximately EUR 5 billion in revenue, operating profits of more than EUR 270 million and planning for this year, in spite of the continued pandemic, to realize more than EUR 125 million of capital expenditures.

"Today’s closing of the additional financing to enable the Mercator transfer is fully in line with our strategic financial plans. We have made great progress over the last few weeks in delivering on our plans not only with this refinance arrangement but also with the Frozen divestment, other non-core sales and with a very strong Q1 business performance. At the heart of this has been a multinational, multi-location team that has been completing a really large amount of work and they deserve huge credit for all that has been achieved" – commented James Pearson, Fortenova Group’s Chief Financial Officer.

Siegfried Ganshorn, Fortenova Group’s Executive Director of Retail, called the transfer of Mercator to Fortenova Group “one of the most important days in the history of Mercator, Konzum and Fortenova Group”. “To be where we are today would not have been possible without our people, the professional management, the support and help of our suppliers and all other partners and stakeholders that we trust. Our joint efforts will enable us to utilize our full potential to the benefit of our customers” – Ganshorn said. As the crucial parts of Fortenova Group’s retail development strategy he singled out the operational excellence, the clear differentiation against competitors, the continuous improvement of the business’s position and increase in market share, the flexibility of microlocations and the true multichannel experience. “The foundation and the key factor that will enable us to realize that is the developed digital transformation strategy, due to which our significant investments will be into digital development and e-commerce, intended to drive growth in all countries” – Ganshorn concluded.

“Mercator today is not only a retailer, but much more. It is a platform connecting employees, customers and suppliers, that has successfully developed numerous new sales concepts. The employees’ knowledge, efforts, experience, abilities and sense of belonging are the creators of Mercator’s success. Being a company that cooperates with over three thousand suppliers and realizes purchases worth EUR 1.2 billion a year from local and regional partners, this merger provides a great business opportunity for the long-term development of their brands” – said Tomislav Cizmic, President of the Management Board of Mercator. In his words, along with the continued accelerated digitalization and the development of digital multichannel platforms, Mercator’s priorities in consolidating Fortenova Group’s retail are the strengthening of the store network and the development of a modern logistics infrastructure.

“Over the last two years since the Settlement Plan implementation and the successful financial restructuring of the overleveraged Agrokor, Fortenova Group was able to achieve a high operational performance, as reflected in increased operating profits by around EUR 100 million in the period from 2017 to 2019, as well as in a cash flow improvement of almost EUR 100 million during 2020, in spite of the negative effects of the COVID-19 pandemic on the operations. Fortenova Group has also strengthened its capital structure and improved its financial position, with the leverage ratio reduced from seven to around four times, as expected to be achieved by the end of this year. Hence, after a long period of uncertainty, today Fortenova Group is a financially stable company that is beyond any doubt capable of growth and that will, with its development strategy and by realizing its priorities, also preserve existing and open new jobs. I therefore wish all our colleagues from Mercator a warm welcome to the large community of Fortenova Group’s hard working and talented employees. I also look forward to continuing the cooperation with our key partners, small and large, local and global suppliers and to our common further growth” – concluded Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.

On Tuesday, 30th March 2021, the process of transferring the shares of Poslovni sistem Mercator to Fortenova Group has started. The shares held by Sberbank in Poslovni sistem Mercator were swapped for shares in Fortenova Group and thus 18.53 percent of Mercator shares were transferred to Fortenova Group.

“Yesterday’s commencement of the Mercator share transfer to Fortenova Group  and the divestment of the Frozen Food Business Area concluded on Monday are part of Fortenova Group’s portfolio optimization intended to strengthen and consolidate the capital structure and key areas in which Fortenova Group is market leader. Once the Mercator share transfer to Fortenova Group is completed, together with Mercator Fortenova Group will be the indisputable regional market leader in retail, with significant capacity for investments and further growth” – said Fabris Peruško commenting on the commencement of the Mercator share transfer procedure.

Peruško also pointed out that in the year of the pandemic Fortenova Group companies have been key in securing the provision of supplies for customers on the markets of their operation, also due to thousands of large and small, local and international suppliers that Fortenova Group companies have had long-standing and stable business relations with.

“The forthcoming integration of Mercator with Fortenova Group’s retail is a great opportunity for all key suppliers” – Peruško emphasized, adding on the report of the Slovenian Extraordinary Commissioner at Mercator published on Wednesday which has confirmed full compliance of Mercator’s operations with the Slovenian Lex Mercator. The Report points out that Mercator has offered its strategic suppliers in Slovenia to sign long-term cooperation agreements, signed by all those who have found their business interest in such agreements.

Fortenova Group d.d. and Nomad Foods Limited have signed a Sale and Purchase Agreement (SPA) for the Frozen Food Business Group (FFBG) consisting of Ledo plus d.o.o., Ledo Citluk d.o.o. and Frikom d.o.o. alongside several smaller affiliated companies.

The value of the transaction is EUR 615 million, on a debt-free, cash-free basis, with completion planned for Q3 2021. Upon completion, Nomad Foods will become the owner of FFBG which comprises a leading European frozen food portfolio of iconic local brands with strong consumer awareness in Croatia, Serbia, Bosnia & Herzegovina and several other countries in South East Europe (SEE). With more than half a century of tradition, the FFBG is the largest producer and distributors of ice cream and frozen foods in its respective markets. 

“This is a transformational transaction for Fortenova Group with all the funds to be used to deleverage the Group and deliver a Fortenova Group that is, after many years, financially strong and able to fully invest in all its businesses”, said James Pearson, Fortenova Group’s Chief Financial Officer. 

 “Our Frozen Food Business Group is the market leader in the region where we operate, and I am glad that we have achieved our main goal in its sales process. The goal was, over and above maximizing value, to conclude this transaction with a strategic partner who will make the maximum contribution to further the development of FFBG and recognize the full value and potential of this business and its people”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors. “With completion of this transaction we will fulfil a key prerequisite for the capital structure optimization that will enable strong investment in our businesses and drive their future growth. I am very thankful to all people in the Frozen Food Group and in the Fortenova Group who have worked very hard over the past six months to make this happen. Knowing that our Frozen Food is going to be in very good hands, we are looking forward to cooperating with Nomad Foods as an important future business partner in this region”, concluded Peruško.

Completion of the transaction is subject to regulatory approvals in the applicable markets as well as Fortenova Group’s shareholders’ approval. Fortenova Group’s Board of Directors, consisting also from representatives of majority shareholders, has unanimously supported signing of the SPA with Nomad Foods.

Fortenova Group was advised on this transaction by Akin Gump Strauss Hauer & Feld LLP, Bogdanovic, Dolicki & Partners Law Firm, Citigroup Global Markets Europe AG, Isailovic & Partners Law Firm, KPMG Croatia, Maric & Co Law Firm and VTB Bank (Europe) SE.

At the Meeting of Holders of Depositary Receipts issued by Fortenova Group STAK Stichting, held today in the Netherlands, the shareholders have voted in favour of all the decisions proposed, among others those regarding the consolidation of Fortenova Group’s operations related to the transfer of shares of Poslovni sistem Mercator from Agrokor to Fortenova Group. Thus Fortenova Group has received approval to extend the existing financial arrangement with HPS Partners and VTB Bank by the amount of not more than EUR 390 million, to be used as a loan from Fortenova Group to Mercator intended to refinance Mercator’s bank debt.

The shareholders have also adopted the decision to swap the shares held by Sberbank in Mercator for Fortenova Group shares, whereby the 18.53 per cent of Mercator shares owned by Sberbank shall be transferred to Fortenova Group. At the same time, with this swap Sberbank’s share in Fortenova Group’s ownership rises to 44 per cent.

Given that on 5^th March 2021 the Competition Protection Commission of the Republic of Serbia approved the intention of Fortenova Group to acquire control over the company Poslovni sistem Mercator d.d., Ljubljana on the market of the Republic of Serbia, all the remaining key prerequisites for the soon to be effected transfer of shares of Poslovni sistem Mercator to Fortenova Group have been met.

„I would like to thank the shareholders who have recognized the importance of the proposed decisions for the future of Fortenova Group and with their votes provided support for the realization of plans intended to strengthen our operations and affirm our position as the largest employer in South and Southeast Europe. With this shareholder decisions and last week’s approval of the Serbian regulator there are no formal obstacles any more for Mercator to become part of Fortenova Group by the end of this month. There work ahead of us now is related to closing arrangements and contracts to put the decisions of the Assembly into practice. In the previous period we have prepared the detailed steps that will now be operationalized and whereby we shall, as already announced on several occasions, proceed with consolidating the company on several levels – in intragroup ownership, Group crediting and last but not least in retail across the region.  We will thus finally be able to start using all the synergic benefits and strengthen our positions in retail on all markets. The transfer of Mercator is also the conclusion of all remaining obligations from the creditors’ Settlement Plan, marking, to my personal satisfaction, the successful closing of the Extraordinary Administration Procedure at Agrokor after exactly four years” – said Fabris Peruško, Member of the Board of Directors and CEO of Fortenova Group.

Regarding other important decisions adopted at the Assembly, the shareholders approved the appointment of Roman Goltsov, Daniel Gusev and Damir Spudic as non-executive members of Fortenova Group’s Board of Directors.

Roman Goltsov is currently Senior Managing Director, Head of the Structured Finance division within the Corporate Lending Department of Sberbank. In this role he directly leads execution teams for various complex restructuring, project finance and acquisition finance transactions. Along with the financial expertise, he is also an expert in oil and gas operations, having spent much of his career on projects in this sector around the world.

Daniel Gusev is managing partner in Gauss Ventures, a European-US Venture Capital firm. He is a seasoned entrepreneur in financial services innovations, having lead product development projects in fintech startup firms and worked as consultant and head of numerous design-driven projects in financial institutions.

Damir Spudic is Member of the Management Board and CFO of Energia naturalis (ENNA) and CFO at ENNA Group, responsible for planning, implementing, managing and running all finance activities. He is also Member of the Supervisory Board of Pevex d.d. and Luka Ploce d.d. and participated in the financial stabilization and successful restructuring of Petrokemija d.d. He joined ENNA Group in 2012.

With the appointment of the new Members to the Board of Directors, the resignation of Miodrag Borojevic from the position as Non-Executive Member of the Board of Directors has become effective and hence his obligations in other governing bodies of individual Fortenova Group operating companies have ceased as well.

On 5 March 2021, the Commission for Protection of Competition of the Republic of Serbia approved the intention of Fortenova Group to acquire control over the company Poslovni sistem Mercator d.d., Ljubljana also on the Serbian market.

With this decision of the Serbian Commission, Fortenova Group has fully met the regulatory prerequisites of obtaining approval for the concentration with Mercator from the competent national regulatory authorities for the protection of market competition in all required territories - Serbia, Bosnia and Herzegovina, Montenegro and Northern Macedonia. At the same time, with the concentration approval issued by the European Commission, this prerequisite has been met for the entire EU territory.

“With this decision another formal obstacle has been removed for the realization of Mercator’s transfer to Fortenova Group. We expect the transfer of shares from Agrokor to Fortenova Group to happen by the end of March 2021 which will enable us to start consolidate and further develop our regional retail network” – said Fabris Peruško, Chief Executive Officer of Fortenova Group, commenting on the decision of the Serbian Commission.

At the Depositary Receipt Holders’ Meeting of Fortenova Group, convened for Friday, 12th March 2021, the shareholders will vote on several decisions important for the business consolidation of Fortenova Group, the largest private employer in Croatia and several countries of the region and one of the largest private companies of South and Southeast Europe. The key decisions to be made by the shareholders are related to the transfer of shares of Poslovni sistem Mercator from Agrokor to Fortenova Group and if adopted, these decisions will provide Fortenova Group with the approval to extend the existing financial arrangement with HPS Partners and VTB Bank by the amount of up to EUR 390 million, to be used as a loan from Fortenova Group to Mercator for the purpose of refinancing Mercator’s bank debt.

The shareholders will also decide on swapping the shares held in Mercator by Sberbank for shares in Fortenova Group. Should the share swap be approved, 18.53% of Mercator shares owned by Sberbank will be transferred to Fortenova Group. At the same time, with that swap Sberbank’s ownership share in Fortenova Group would increase to 44 per cent. With the adoption and realization of these decisions and upon receiving regulatory approval for the concentration of Mercator and Fortenova Group on the market of Serbia, all key prerequisites pending for the soon to be realized transfer of shares of Poslovni sistem Mercator to Fortenova Group would be met.

Besides the decisions related to Mercator, the shareholders will also decide on strengthening Fortenova Group’s Board of Directors which, provided the proposal is accepted and adopted, will comprise three new non-executive members – Roman Goltsov, Daniel Gusev and Damir Spudic, experts with extensive international experience whose qualities, knowledge and professional expertise could significantly contribute to the achievement of Fortenova Group’s business goals. At the same time, with the vote on the appointment of new BoD Members, the resignation of Mr. Miodrag Borojevic from his position as Non-Executive Member of the BoD shall become effective.

"We would like to thank Mr. Borojevic for his contribution to the work of the Board of Directors over the last two years and wish him success in his further professional career" - said Maksim Poletaev, Chairman of Fortenova Group's Board of Directors. With the adoption of the decision on the appointment of new members Mr. Borojevic shall cease to be Member of the BoD and his obligations in the governing bodies of individual Group companies shall cease therewith as well.

“The Assembly ahead of us is very important, as the shareholders will vote on decisions important for our operations in various aspects. First of all, by adopting the proposed decisions related to Mercator the last remaining elements of the Settlement Plan among Agrokor’s creditors shall be met. I am personally particularly pleased that this will formally close all obligations arising from the Settlement Plan, exactly three years after I accepted the challenge of running the Extraordinary Administration Procedure of Agrokor under complex circumstances. With the adoption and delivery of the Assembly’s decisions the ownership within the Group will be consolidated, the new financing will consolidate the credit position as well and therewith we will meet all prerequisites for the consolidation of our retail operations across the region and the strengthening of our position in that industry. Provided that the shareholders adopt the proposed decisions next Friday, I believe that the transfer of Mercator shares will be closed by the end of the month”, said Fabris Peruško, Member of the Board of Directors and Chief Executive Officer of Fortenova Group.

Fortenova Group has formally completed the sale of Kompas Group to Springwater Capital after fulfilling all regulatory and administrative conditions.

The Kompas Group is the leading travel company in the region with presence in fifteen countries. Kompas is also one of the oldest and largest tour operators in the Adriatic region. Headquartered in Slovenia and Croatia and founded in 1951, Kompas is the leading tour operator in the region, integrated with a network of DMCs in the main European cities focused on escorted tours and Adriatic cruises wholesaling. The company is also involved in retail and online travel agency (OTA), Meetings, Incentives, Conference and Events (MICE) and Business Travel Centre (BTC) segments.

After completing due diligence process for the sale of the companies Ledo plus d.o.o., Ledo d.o.o. Citluk and Frikom d.o.o., forming together with several smaller affiliated companies the Frozen Food Business Group, Fortenova Group d.d. (www.fortenova.hr) have decided to move forward to the next phase by entering into exclusive negotiations with Nomad Foods (www.nomadfoods.com). 

“Nomad Foods is a company with outstanding investment and operational track record that has a clear focus on frozen foods segment in Europe. There is of course still a lot of work to do and a number of conditions that need to be fulfilled before coming to a final agreement, but we fully expect to be able to do this”, said James Pearson, Fortenova Group’s Chief Financial Officer. 

“Multi-party due diligence process for the Frozen Food Business Group has been brought to a successful completion by our acceptance to continue negotiations exclusively with Nomad Foods, who have so far proved to be an extremely strong potential partner for our Frozen Food Business Group. Fortenova Group’s ultimate goal, over and above maximizing value, remains to be the conclusion of a transaction with a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group and recognize the full value and potential of this business and its people”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors. “This transaction is part of the process of the capital structure optimization that will enable the further development of the Fortenova Group. I expect the next phase of the Frozen Food Business Group sale process to be completed by the end of Q1 this year through the signing of a Sale and Purchase Agreement. If so, the transaction could be completed post receipt of regulatory approvals, as early as Summer 2021. We will continue to keep our people and the market informed of further developments in a timely manner”, concluded Peruško.

Fortenova grupa d.d. entered into a definitive agreement with KHA cetiri d.o.o., a Croatia-based hotel development company, to sell its 25% stake in KHA cetiri to that company. In a separate transaction, Fortenova grupa d.d. agreed to acquire a 26% stake in A.N.P. Energija, held by the open venture capital investment fund with private placement – Prosperus FGS, thus gaining a controlling stake in the firm A.N.P. Energija.

A.N.P. Energija d.o.o. is the sole owner of Energija Gradec d.o.o., a company which operates five bio-fuel power plants in Slavonia and Central Croatia with installed capacity of 9.8MW, using biomass supplied by Fortenova Group’s agricultural companies to produce electricity from biogas.

These two transactions will allow Fortenova Group to exit this non-core hotel project and unlock significant value for Fortenova Group’s Agriculture segment by consolidating the Energija Gradec biogas power generation business.

“This provides another step forward in Fortenova Group’s strategy of divesting non core businesses and focusing on its core retail, food and agri divisions. With the consolidated holding in these bio fuel plants, Fortenova is not only investing in direct financial improvements but is also continuing to develop a more environmentally sustainable agri business model for the future.” – said James Pearson, Chief Financial Officer of Fortenova Group.

Fortenova Group and Springwater Capital (“SWC”) signed an agreement on the sale and purchase of Kompas d.d. Ljubljana and Kompas d.o.o. Porec.

The Kompas network is one of the oldest and largest tour operators organising individual and group travel in the Adria region, and the region’s largest destination management company. In 2019, more than a million travellers used the wide range of the Kompas network’s tourist services, having realized over six million overnight stays.

SWC has a deep investment expertise in the tourism sector with investments in Spain, Portugal and Belgium: this includes Spain’s fourth largest company in the travel sector, as well as the largest travel agency network in Portugal.

“With this transaction Fortenova Group will largely complete the process of exiting its tourist investments that accounted for a significant part of our non-core business, which we have been successfully disposing of throughout the course of this year. We are very pleased to have found an excellent strategic partner for the Kompas network’s portfolio and employees, that has a very strong expertise and knowledge of tourist operations, and who will be looking to further invest and grow the business. As such I believe this transaction will have significant positive benefits to the existing business and employees who, on behalf of the Fortenova Board and Executive Directors, I would like to thank for all their hardwork and dedication in what has been an extremely challenging year in the tourism sector.

For Fortenova, as already communicated, exiting non-core investments enables us to focus on strengthening all the parameters of our core businesses – retail, food and agriculture, and streamline our organisational and management structures” – said James Pearson, Fortenova Group’s Chief Financial Officer.

The transaction will be formally closed following the approval of the concentration of SWC and Kompas by the Slovenian Market Competition Agency.

After receiving a number of non-binding offers for the acquisition of the companies Ledo plus, Ledo Citluk and Frikom, forming together with several smaller affiliated companies the Frozen Food Business Group, Fortenova Group have decided to move forward to the next phase of the sales process by inviting a select number of bidders to start due diligence.

“The market test has confirmed that there is strong international interest among potential investors in our Frozen Food business. The qualified non-binding offers come from companies with outstanding investment and operational track record. We are glad that we will be entering due diligence process with some extremely strong potential partners”, said James Pearson, Fortenova Group’s Chief Financial Officer. 

“Our ultimate goal, over and above maximising value, remains to be selection of a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group. Even though we are entering the due diligence phase now, completion of the process still depends on finding the partner who will recognize the full value and potential of this business and its people”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors. “In order to proactively achieve our targeted capital structure via deleveraging the company, Fortenova Group is ready to dispose of only one segment of the core business, which potentially would be the Frozen Food Business Group. I expect the due diligence process to be completed by the end of this year and we will continue to keep our people and the market informed of further developments in a timely manner”, concluded Peruško.”

Belje plus, part of the Fortenova Group, and MEGGLE Croatia reached and signed an agreement on the purchase of the assets of the MEGGLE dairy in Osijek. By purchasing MEGGLE’s property and production line – with the intention to commence own production as of 1st January 2021 -  Belje will preserve the long-standing tradition of milk production in that part of Slavonia.

With the start of the production in Osijek Belje will purchase a certain quantity of milk from MEGGLE’s present contractors, while the need for employees is still under review, with around 100 people expected to be employed.

Fortenova Group already accounts for around 10 per cent of the total milk quantity produced in Croatia, which is around 5 per cent of the local needs. Most of the milk produced at Belje is used for the production of ABC cheese, with its annual production currently at the level of 3,700 tonnes, while plans have been developed for the significant expansion of its portfolio.

“We are happy with the agreement reached and with having closed the sale of MEGGLE’s assets in Osijek, as well as with Belje’s decision to produce on that location following our withdrawal. After having made the final decision on closing down our production in Croatia, the MEGGLE Group has exerted maximum efforts to find a buyer for the assets in order for as many of our employees as possible to have new employment after 31st December and for our contractors not to have any standstill in the purchase of milk. Until the end of the year MEGGLE shall continue to restructure its operations, in accordance with the agreement reached with the trade unions, while meeting all the assumed obligations in time and in full”, said Marjan Vucak, President of the Management Board of MEGGLE Croatia.

“The MEGGLE Group is aware of how important it is to preserve the milk production in Osijek, which is why we had delayed our decision for as long as this was possible and we are glad that with the new owner it will be continued after all. Over all these years Meggle has been a socially sensitive and responsible employer and a reliable business partner. Having reached this agreement with Fortenova Group confirms that we have continued to behave that way in this restructuring process, too, and we shall keep operating according to the same principles going forward”, said Matthias Oettel, CEO of the MEGGLE Group.

“Fortenova Group has continuously worked on further improving the value and strengthening the portfolio of its brands. In order to utilise all potentials of ABC fresh cream cheese, which is one of the strongest regional brands and one of our strongest export products, Belje needs additional production capacities and MEGGLE’s withdrawal enabled us to secure them within short time. With the Osijek plant we have secured the prerequisites for the development of new products, made of local raw material, of premium quality and higher added value. With this move we shall continue to work on the preservation and further growth of the local agricultural production, which along with saving existing and opening new jobs is of great significance for Slavonia and the broader community. Fortenova Group views its operations in the long term and we are currently preparing the company for operations in the period following the crisis in order to have as strong as possible a lever for growth once the recovery starts, with this transaction to be entirely financed from our operations” – said Fabris Peruško, Chief Executive Officer of Fortenova Group.

“The acquisition of Meggle’s assets and the development of new products can be an additional encouragement to increase the quantities of milk produced and for small producers to invest in dairy cow farms in Croatia. This would certainly have a positive effect on the change of trends, after this year the long-lasting decline in milk quantities produced in Croatia has finally been stopped. The dairy industry is one of the major focus areas of the 2020-2025 strategy in Fortenova Group’s Agriculture Division, and the Belje food industry will be the platform on which the development in that segment will gain momentum” – says Andrej Dean, President of the Management Board of Belje.

The transaction will be carried out once all the required regulatory approvals are in place.

Fortenova Group has received a number of non-binding offers for the acquisition of the companies Ledo plus, Ledo Citluk and Frikom, forming together with several smaller affiliated companies the Frozen Food Business Group, which operates within Fortenova Group’s Food Division.

“Over the last few years, and again in recent weeks, there has been occasional comment and discussion in regards to offers being made for various Fortenova Group’s assets. Whilst this interest reflects the strength of our business, brands and management it obviously creates uncertainty and concern for our employees. We will therefore aim to quickly review the offers received and decide whether to move forward with one or more of them. Our aim is for this decision to be taken by mid-October, which will then be communicated first to our employees and then announced to the public. Our ultimate goal, subject to achieving a satisfactory price, is to select a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group and completion of the process depends on finding such partner”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors.

 “With our clear strategy to financially strengthen the company in mind, a sale of the Frozen Food Business Group, if concluded, would result in a reduction of debt that would transform the financial position of the overall Fortenova Group. This would then allow full investment in the remaining businesses to drive their future growth. The Executive Directors and the Board will review the offers received and will quickly take a decision on how to move forward”, said James Pearson, Fortenova Group’s Chief Financial Officer.

“To proactively achieve our targeted capital structure via deleveraging the company, we are ready to dispose of only one segment of the core business which potentially with these offers would be the Frozen Food Business Group. Beyond this, the divestment of our non-core operations in order to focus on the core business will be continued”, concluded Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors.

The European Commission has cleared the intention of concentration whereby Fortenova Group acquires control over Poslovni sistemi Mercator, Ljubljana.

For the territories of Serbia, Bosnia and Herzegovina, Montenegro and North Macedonia the concentration was filed with the competent local market competition regulators and all national authorities except for the Competition Commission of the Republic of Serbia have now approved the concentration.  

“We are pleased with the decision of the European Commission to approve the transfer of Mercator from Agrokor to Fortenova Group has been given. We expect that the approval from the Serbian Commission will follow shortly. This has paved the way for the transfer of Mercator to be realized by the end of this year and for Fortenova Group’s retail as of 2021 to start acting on the market as a common, regional group, whose operations are in the interest of all stakeholders – from employees through suppliers and shareholders to the entire economic environment, both in the national states and regionwide” – said Fabris Peruško, Chief Executive Officer of Fortenova Group commenting on the EC decision.

“A strong owner will enable Mercator's further growth and development, and support Mercator's strategic projects, including the 130-million-euro investment into a new logistics centre in Ljubljana,” added Tomislav Cizmic, President of the Management Board of Mercator.

Fortenova Group’s DR Holders have today at the General Assembly meeting voted in favor of changes in the Group’s Board of Directors by adopting the resolution to approve the acceptance of resignations of two of its members – Mr. Alexander Torbakhov and Mr. Paul Foley.

Mr. Torbakhov’s resignation has been prompted by the fact that he has been appointed the CEO of a major Russian telecommunications company VimpelCom.

Mr. Foley has decided to focus cooperation with Fortenova Group fully on its retail operations through the roles of a member of Supervisory Boards of Mercator in Slovenia and Konzum plus in Croatia, that he already holds. Mr. Foley is also expected to become the Chairman of the Supervisory Board of Konzum, thus putting to best use his lifelong experience in the retail industry.

A meeting of holders of Depositary Receipts issued by Fortenova Group STAK Stichting, a foundation with registered seat in the Netherlands, has been convened today to be held on 30 September 2019. Depositary Receipt Holders represent the ultimate owners of Croatia-based Fortenova grupa d.d. and at the forthcoming DR Holder Meeting they will decide on the appointment of two new members to the Board of Directors of Fortenova grupa d.d. Following the recent resignation of two non-executive members of the Board of Directors, Kelly Griffith and Daniel Michael Böhi, it is proposed that at the DR Holder Meeting the shareholders would decide on the appointment of Paul Bastone and Alexander Torbakhov to the Board of Directors of Fortenova grupa d.d. for a three-year term of office. DR Holders will be able to either vote electronically as of today at 5 p.m. until 5 p.m. on Friday, 27 September 2019 or at the DR Holder Meeting itself on Monday, 30 September 2019.

Furthermore, the Workers' Council of Fortenova grupa d.d. today advised the company's Board of Directors of the appointment of Ivica Mudrinic to the Board of Directors as workers' representative. While this appoinment pursuant to the decision of the Workers' Council is effective immediately, the other two appointments mentioned above have to be adopted by the majority of votes of the Depositary Receipt Holders.

On Friday, 6 September 2019 Fortenova Group issued a EUR1.157 billion bond, thereby successfully concluding the process of refinancing the Super-Priority Facility Agreement (SPFA) dated 8 June 2017. The new financing is structured as a 4-year bond in the amount of EUR 1.157 billion, with a 7.3% interest rate plus EURIBOR, with 1% floor and is led by HPS Investment Partners in cooperation with VTB Bank.

The refinancing agreement envisages the interest rate to be successively reduced as the Fortenova Group will be reducing its leverage ratio.

„By closing the new financing arrangement Fortenova Group has fully refinanced the SPFA loan and provided for its mid-term stability and long-term viability, growth and development. We would like to thank all shareholders who have recognized and supported the process that is in the interest of all stakeholders. Fortenova Group is now entering a new stage of operations focusing on profitability increase, efficiency improvements and value creation for all stakeholders“, said Fabris Peruško, CEO of Fortenova grupa d.d.

Holders of Depositary Receipts, issued by Fortenova Group STAK Stichting, voted today at the General Assembly held in Amsterdam with over 80% majority in favor of the new financing arrangement of Fortenova Group, with the purpose to refinance its current Super-Priority Facility Agreement dated June 8th, 2017. The new financing is structured as a 4-year bond in the amount of up to 1.2 billion euro, with a 7.3% interest rate plus EURIBOR with a 1% floor, and it will be led by HPS Investment Partners. The closing of the refinancing process will be finalized by the end of August.

“The General Assembly vote proved that the majority of our shareholders recognized the importance of this new financing for Fortenova Group in terms of securing our mid-term financial stability as well as long-term sustainability, growth and development. I am thankful to our shareholders for supporting the decision of the Fortenova Group's management. I would also like to thank all our stakeholders that were involved in achieving this critical milestone in the refinancing process. Fortenova Group is now focused on closing the transaction after which we will enter a new stage of our business operations that will be focused on increasing profitability, improving performance and creating additional value to all stakeholders.” said Fabris Peruško, CEO of Fortenova Group d.d.

To the attention of noteholders in respect of the (a) EUR 325 million 9.125% New York law governed senior notes due to mature in 2020 (ISINs: XS0836495183 / XS0836495696) (the "EUR2020"), (b) USD 300 million 8.875% New York law governed senior notes due to mature in 2020 (ISINs: USX0027KAG32 / US00855UAB52, CUSIPs: X0027KAG3 / 00855UAB5) (the "USD2020") and (c) EUR 300 million 9.875% New York law governed senior notes due to mature in 2019 (ISINs: XS0776111188 / XS0776110966) (the "EUR2019") issued by Agrokor d.d. (the "Notes" and the holders thereof being "Noteholders").

Under the Settlement Plan , BNY Mellon was entitled to receive the New Instruments issued for the Notes and to appoint Noteholders as its designees to receive their respective portion of New Instruments on its behalf (see Cl. 18.3.1 of the Settlement Plan). BNY Mellon designated (a) in relation to 1,904,277 Strips allocated to BNY Mellon in respect of the EUR2020 and USD2020 Notes, and in relation to 1,126,698 Strips allocated to BNY Mellon in respect to the EUR2019 Notes, certain entities to receive such distributions on account of its Assigned Claim and (b) in relation to the remainder, each Noteholder to receive such distributions, pro rata based on each Noteholder’s holding of Notes (“Designation”). For further details, please refer to the notice from BNY Mellon on 2 April 2019 (Trustees Notice).

The meeting of holders of depositary receipts of Fortenova Group STAK Stichting , a foundation (stichting), incorporated under the laws of the Netherlands, with its corporate seat in Amsterdam, the Netherlands, was held on 1 April 2019 in Amsterdam.

The holders of 168,300,328 depositary receipts were present or represented at Initial DR Holder Meeting, representing 63.76% of the aggregate number of issued and outstanding Depositary Receipts with voting rights. The agenda of the meeting consisted of the appointment of the members of the board of directors of Fortenova grupa d.d., the remuneration of members of the board of directors of Fortenova, appointment and remuneration of the managing directors of Aisle Dutch HoldCo B.V. and the Company and granting of the title of managing directors and acquisition by the Company from Agram Invest d.d. of certain shares in Agrolaguna d.d. and Žitnjak d.d.

All proposals were accepted with high majority of present votes of the Initial DR Holder Meeting.