What does the amended restructuring plan for Dioki entail?

The Dioki group announced on the Zagreb Stock Exchange an amended financial and operational restructuring plan that is part of the pre-bankruptcy settlement for Dioki and Dina Petrokemija, in which the total claims of creditors of the Dioki group are determined at 1.79 billion kuna.

The plan envisages a connection with a strategic partner, namely Crodux plin, in which the company commits to supplying the raw materials necessary for the production of polystyrene, while the Dioki group commits to processing.

The financial restructuring plan, as stated, is aligned with the proposal of the strategic investor Crodux plin ‘to the extent possible given the legal provisions governing the pre-bankruptcy settlement process’.

The strategic partner is familiar with the technological and commercial potentials of the production facilities and has committed to starting production immediately upon the creditors’ agreement in this process, while also committing to secure working capital for the initiation and continuation of production. The total amount of working capital for Dioki and Dina would be 27 million euros –

15 million for Dina, 10 million for Dioki, and 2 million euros for the costs of starting production for both companies, as stated in the plan.

The financial restructuring plan provides for the write-off of all regular and default interest, as well as other costs and fees related to the collection of creditors’ claims. Thus, the total level of obligations would be reduced by 176.4 million kuna.

The plan also includes the write-off of debt, i.e., the reduction of the principal of creditors’ claims, amounting to a total of 359.4 million kuna.

The sale of assets not necessary for regular business operations is also proposed. Part of these assets consists of shares in the company Ćuf d.o.o. Omišalj, which are owned by related companies Dina-Petrokemija and Adriaoil.

Ćuf d.o.o. owns land in Omišalj intended for the construction of an LNG terminal, and since this is a property essential for achieving the strategic interests of the Republic of Croatia, the government tasked the ministries of economy and finance at the beginning of August last year to prepare the transaction for the sale of the company Ćuf d.o.o. to Hrvatska elektroprivreda, as noted in the plan.

The idea is that this sale will settle the debt of the Dioki Group to Hypo Group as a secured creditor of 23.5 million as well as the workers’ claims of the companies Dina-Petrokemija and Dioki. The total claims of workers as of March 14 amounted to 61.5 million kuna.

The plan also provides for the conversion of the entire principal of claims of the HEP group and Zagrebačka banka, totaling 153.67 million kuna, into capital.

It is also proposed to defer the maturity of obligations totaling 138.1 million kuna, as well as a number of other measures.

The operational restructuring plan envisages the continuation of operations of the polystyrene production facility and the expanded polystyrene production facility in Zagreb’s Žitnjak.

The plan anticipates that this year there will be 118 employees (63 production, 55 non-production), and next year 132.

The amended plan also announces that in the restructuring process, the general assembly should first make decisions on the simplified reduction of share capital (by reducing the nominal value of the share from 240 to 100 kuna per share), from 970.1 million kuna to 404.2 million kuna, and thereafter on the increase of share capital by converting creditors’ claims into share capital totaling 153.67 million kuna, after which the share capital would amount to 557.9 million kuna.

If the creditors accept the proposed plan, after the implementation of the financial restructuring, the ownership structure of Dioki would also change, and according to the data presented, the majority owner would become Crodux plin with a 55 percent stake, small shareholders would hold 17.45 percent of the shares, and with the recapitalization, the ownership structure would also include the HEP group with a 15.35 percent stake and Zagrebačka banka with a 12.20 percent.