Fortenova Group convened a meeting for 27 June at which depository receipt holders will vote on a proposal to refinance a bond due in September in the amount from €1.1 billion to €1.2 billion with HPS Investment Partners under the current terms and a one-off cost of 6.75% of the bond amount.

HPS Investment Partners is the Group’s majority creditor, a press release from the group said on Friday.

“In the materials for the meeting, the DR Holders were provided with a detailed presentation on how the Group’s management, prior to putting the proposal on accepting the terms and conditions of the refinancing offered by HPS to the vote at the DR Holders’ Meeting, explored all other viable refinancing options that were available to Fortenova Group, including extensive discussions with regional and investment banks as well as bond market considerations,” the press release said.

“After significant efforts to find financing with banks and bond markets, the Fortenova Group management has decided to enter a new financing for the period until 29 November 2024 with HPS, the existing leading non sanctioned creditor, provided that the DR Holders vote in favour of this proposal,” they added.

The conditions of the new financing of the entire amount of the current bond remain the same as for the current bond.

“The terms of the new bond include an Original Issue Discount, a one-off payment of 6.75 percent of the bond amount to be issued, which partly reflects sanctioned entities being in the Group’s capital structure and underlines the necessity of dealing with this problem as soon as possible.”

The bond was issed in 2019 to refinance a €1.06 billion roll-up loan realised in June 2017 to service the Agrokor conglomerate’s debts. The bond was issued for four years in the amount of €1.2 billion at 7.3% interest.

“When the issue of the sanctioned entities being in the Group’s capital structure is resolved, Fortenova Group’s access to the banking market will reopen and the company will explore it again,” the press release said. “One of the terms agreed with HPS as part of the new financing is the commencement of a process for the potential divestment of Fortenova Group’s Agriculture Division by no later than 31 December 2023. Should the divestment actually take place, proceeds will be used for the Group’s further deleveraging or for strategic investments in the Group’s other core retail and food businesses.”

The Fortenova Group continues to perform extremely well, the press release said, adding that preliminary unaudited results for 2022 show net revenues exceeding €5.2 billion, operating profits of more than €470 million and adjusted operating profits of more than €300 million), €1.1 billion of net debt, liquidity in excess of €280 million, and that the Group achieved “its best-ever ratio of total net debt to adjusted operating profits of 3.5 times.”

In late April, Fortenova Group launched an international process to examine interest among potential investors regarding the purchase of a stake in Fortenova Group MidCo B.V., a Dutch company that owns Fortenova Group d.d. , but none of the potentially interested investors has submitted a non-binding offer.