Plenković: No one forced the funds to enter Fortenova

Prime Minister Andrej Plenković stated on Wednesday that it is bordering on fantasy that someone from the Croatian government forced pension funds to purchase Sberbank’s stake in Fortenova, reacting to the Financial Times article the day before, and he also stated that Fortenova has very good results and that it is up to the owners and management to seek solutions that are good for the company and the Croatian economy.

After a government meeting with county heads, representatives of the Association of Cities of Croatia, and the Croatian Community of Municipalities in Slavonski Brod, journalists asked Plenković whether the government, Foreign Minister Gordan Grlić Radman, or the Croatian ambassador to Germany Gordan Bakota pressured Allianz in any way to enter the ownership structure of Fortenova, as reported by the Financial Times.

The Prime Minister reminded that the former owner of Agrokor, Ivica Todorić, sought loans from numerous banks in Croatia, Western Europe, and ultimately in Russia.

– After the entire company was practically handed over to us on the brink of bankruptcy, blockage, and insolvency, it underwent a restructuring process, in which out of seven billion in debts, those that were written off or restructured, and 30,000 jobs were saved in the company, that is, in all components of that company in Croatia and 30,000 jobs in companies of that same company in neighboring countries – said Plenković, adding that all suppliers and all agricultural family farms remained afloat, and that it did not cost the Croatian state.

After that, an extraordinary administration followed, a settlement process, and now that company is fully private, has its owners and management, as well as its interests on how to operate in the circumstances of Russian aggression against Ukraine and the related changes in the status of Russian banks, which were former creditors of Agrokor and co-owners in Fortenova, and which now fall under the EU sanctions regime, Plenković noted.

– What is the company doing at that moment? It is trying to take advantage of the time window provided at the EU Council level to free itself and similar companies that found themselves in such co-ownership space and context from elements of Russian ownership – said Plenković. This is, as he noted, something that Croatian diplomacy and the Croatian government advocated when various sanction packages were being adopted at the EU level.

– We contributed to creating a time frame to change the ownership structure – emphasized Plenković, adding that the company is in talks with pension funds in Croatia, and those same funds ‘are seeking approvals from our bodies to pursue the purchase of the co-ownership stake in the company that Russian banks had’.

– They come to us to inform us about this and our bodies, no one is forcing them – said the Prime Minister. He noted that at one point one of those funds, emphasizing that ‘the money those funds have is not some abstract money coming from Australia, it is the money of Croatian pensioners’, suddenly at the last minute says that they will not.

– And that’s all. Was anyone forcing them, was anyone blackmailing them, was anyone pressuring them, that is really bordering on fantasy. I wouldn’t say scientific but some kind of popular, popular effort to invent some problem – he said.

In response to a journalist’s question whether there was a meeting between Minister Radman and Ambassador Bakota with representatives of German Allianz after the AZ fund withdrew from the agreement, Plenković said it is normal for Croatian diplomatic representatives, who serve that purpose, to go ask what is going on. – That is the difference between checking information and questioning a decision and pressure. The difference from heaven to earth – asserted Plenković.

When asked if the two of them received an answer at that meeting about what happened, Plenković said they received ‘an appropriate answer’. But for that, one should ask the company and the AZ fund, he conveyed.

When asked by a journalist whether it is true that Allianz did not want to enter Fortenova because they did not want the money to go to Russia, Plenković said that this must be asked ‘of the head of the AZ fund here and Allianz in Germany’. When asked whether the government ordered the supervision of that fund from Hanfa, Plenković stated that Hanfa is an independent body.

To the part of the opposition that wants to portray this topic as pro-Russian actions of the government, Plenković conveyed: ‘How uninformed, uneducated, how ignorant must one be, that if a legal space is created for Russian co-owners to exit the company, if there are funds that want to buy that stake, that such a large and significant company for the Croatian economy no longer has that element in the context of the sanctions regime, by what logic can that be a pro-Russian stance?’

When asked whether a new law on Fortenova will be adopted, Plenković replied that he does not know where the idea that some new law would be adopted even comes from.

– Fortenova has very good results according to what has been publicly announced, look at their profits and functioning, and it is up to the owners and management to seek solutions that are in their favor and good for the Croatian economy – concluded Plenković.

Let us recall, yesterday the Financial Times reported that the Croatian government pressured the German insurer Allianz, and Hanfa threatened measures against its AZ fund after it withdrew from an agreement that involved the payment of 500 million euros to Russian Sberbank for a 42.5% stake in Fortenova, the largest employer in Croatia with 45,000 employees and revenue of 5.2 million euros.

Allianz stated that the AZ board independently decided not to invest in Fortenova “because the risk and return profile was completely inappropriate for pensioners and because the financial structure posed potential risks of regulatory violations that it deemed unacceptable”.

Croatian Foreign Minister Gordan Grlić-Radman and Croatian Ambassador to Berlin Gordan Bakota subsequently lobbied several Allianz directors, sources told FT. Grlić-Radman urged Allianz board member Klaus Peter Roehler to overturn that decision, emphasizing that Fortenova is important for the Croatian economy.

After Allianz refused to reconsider the decision, the Croatian Financial Services Supervisory Agency (Hanfa) explicitly threatened AZ with financial penalties and the dismissal of management if it discovers errors in the management and risk control system, sources for FT claim.

The German government was informed about the pressure from the Croatian government and Hanfa on Allianz, sources for FT said. A spokesperson for the German government told FT that it would not “comment on internal business decisions or the content of confidential discussions with representatives of other countries”.

Regarding the operational business of the Fortenova Group, preliminary unaudited results for 2022 showed that the company achieved total revenues of over 5.2 billion euros, operating profit of over 470 million euros, and adjusted operating profit of over 300 million euros. The Group’s net debt amounts to 1.1 billion euros with a net debt to adjusted operating profit ratio of 3.5 times and liquidity in accounts exceeding 280 million euros.

Meanwhile, after pension funds withdrew from the purchase of Sberbank’s stake, and the sale of Sberbank’s stake to an Arab investor was also blocked, the Fortenova group began an international process at the end of April to gauge interest from potential investors for the purchase of a stake in Fortenova Group MidCo B.V., a Dutch company that owns Fortenova Group d.d., but unofficially it is learned that none of the potentially interested investors submitted a non-binding offer. In September, a one billion euro bond matures that needs to be refinanced.