Butković and Marić: Through the Restructuring of the Road Sector, Highways Remain in Croatian Hands

Prime Minister Andrej Plenković stated on Thursday that refinancing the debts of the road sector will result in annual savings on interest reaching 50 million euros, that business restructuring is also underway, and he assessed that these are significant, strategic shifts.

As part of the second round of financial restructuring of the road sector, the Government today made decisions to provide guarantees for loans to Hrvatske autoceste, Hrvatske ceste, and the company Autocesta Rijeka-Zagreb.

>>>The Government Approved State Guarantees of 1.8 Billion Euros for the Road Sector

Finance Minister Zdravko Marić and Minister of the Sea, Transport and Infrastructure Oleg Butković assessed that the Government’s model of restructuring the road sector allows for the retention of highways in Croatian hands and the long-term sustainability of the road system.

Butković emphasized at a press conference that last year’s bond issuance and today’s Government consent and guarantee for bank loans totaling 1.8 billion euros enable the retention of roads “in Croatian hands.”

Sustainable and Profitable System

– We have opted for restructuring, not for sale or monetization, and we can say that we have kept the highways in the hands of the citizens, and through reform, we are making the system sustainable and profitable, said Butković.

He highlighted that today’s Government decisions, along with the previous issuance of eurobonds, enable savings of at least 350 million kuna annually.

– When multiplied by 12 (years), that amounts to one Pelješac Bridge, said Butković.

>>>Marić: Positive Rating Obligates, Details of Road Sector Restructuring Are Being Finalized

Loans have been approved for a term until March 31, 2030, with an interest rate determined based on the reference rate of the six-month Euribor, increased by a margin of 1.95 percentage points annually, and in the case that the value of Euribor is negative, the reference rate is set to zero.

The effective interest rate is 2.05 percent. In the first three years, the loans are repaid semi-annually at a total of 5 percent of the principal, while the remaining 95 percent of the principal is repaid in the next 18 semi-annual installments.

– Companies will be able to repay their debt burden on their own, and we expect that this debt will be repaid in the next 15 years, he said.

>>>Marić and Butković: The Restructuring of the Road Sector Continues

– We are transparently and effectively managing public debt, restructuring existing debt, making significant savings on interest, and in this way, we are opening additional space, not only for these three companies but also for the overall result of the general state budget, added Finance Minister Zdravko Marić.

50 Million Euros in Savings

– When the effects of the bond issuance and the new, more favorable loan obligations are summed up, a total of 3.1 billion euros of debt from the three road companies is being refinanced out of a total of 5 billion euros of debt, with annual savings of at least 50 million euros, said Marić.

He also announced the refinancing of an additional 400 million euros of debt, for which they will wait until 2019, leaving 1.5 billion euros that should be repaid regularly as obligations become due.

>>>Plenković: Negotiations Are Ongoing for the Refinancing of 1.3 Billion Euros of Road Debts

In comparison, through monetization, Marić said, “two and a half billion euros of debt would be ‘resolved’, and for the rest, new debt would need to be incurred.

– Someone before us assessed that there was no alternative to monetization or sale, but our model is an improvement of the operational business of the companies and a reduction of the burden of financial obligations, especially interest, said Marić.