The best possible news for the entire Fortenova Group, our more than 45000 employees, our partners, customers and our whole environment on the markets of the region where we operate – we are about to enter the next year with an ownership structure that will no longer include sanctioned shareholders, as the basic contours of the Group’s future shareholdings will be known already in December.

Namely, the Dutch holding company Fortenova Group TopCo B.V., the ultimate owner of Fortenova Group and its operating companies in Croatia and the region, has reached an agreement with the company Open Pass Ltd., the largest non-sanctioned shareholder, on the sale and transfer of 100 percent of shares to a newly founded Dutch corporate structure for a consideration of up to EUR 660 million.

It is important to note that all non-sanctioned current depositary receipt holders of the company, among which there are a number of Fortenova Group’s partners and suppliers, can take part in the new ownership structure under the same conditions as OpenPass. Hence all current shareholders will be able to participate under the same conditions in the purchase of the company by transferring their shareholding to the new company or increasing their shareholding with an optional additional investment or they can opt to cash out and exit the ownership structure.

What the new ownership structure will look like exactly will depend on the interest of the current non-sanctioned depositary receipt holders in additional equity investments. Regardless of that interest, Open Pass has committed to fund the whole consideration payable, if necessary.

According to the transaction agreement, the buyers shall pay EUR 500 million unconditionally at completion of the transaction, while the payment of the remaining up to EUR 160 million is dependent upon Fortenova Group reaching the financial goals set forth in the agreement, which should be made possible by this very transaction. This primarily refers to the arrangement of a sustainable refinancing in 2024, under conditions better than the current, and reaching certain net debt-to-EBITDA ratio targets lower than the current. If within the next three years Fortenova Group should be listed on an organized market or dispose of a material amount of assets, the agreement sets forth possible additional payments to the current shareholders that will not be part of the new ownership structure. We have thereby particularly protected the rights of minority shareholders and suppliers, most of which are today Fortenova Group’s partners, to whom we will pay Agrokor’s debt in the amount of EUR 82 million as set forth in the Settlement Plan.

With regards to the two sanctioned shareholders – Sberbank and VTB – their respective amounts will be transferred to a special account that they will be able to access once the EU, US and UK sanctions regulations permit it.

It should also be noted that the transaction will be finally completed between Q1/24 and Q2/24, whereafter the approval of certain sanction authorities as well as the market competition authorities in several jurisdictions will be sought.

This company will thus, after a full two years, finally get rid of the stigma of its “sanctioned shareholders”. In addition to the excessive exploitation of all our resources, this has directly cost us over EUR 270 million of additional expenses (e.g. the one-off refinancing cost, the amounts paid for legal and advisory services due to the vexatious litigation that we have been exposed to etc.). That money was literally extracted from the Group’s operations, which has, of course, been reflected in the company’s total value.

This is why we see the future without the burden of sanctioned shareholders as a new chapter, indeed. I truly believe that for anyone outside Fortenova Group it is difficult to comprehend the challenges that we have been struggling with since the beginning of the war in Ukraine after having found ourselves, through no fault of our own, in a situation where the sanctioned Russian shareholding significantly restrained our operations and further development, particularly in the light of trying to achieve long-term and sustainable refinancing. As much as the Group and company managements and all our employees have done an exceptional job in preserving the business, as witnessed by our results, the weight of the sanctioned shareholding was too much of a burden. The new ownership structure will prevent the incurrence of further financial damage and the creation of operational difficulties, not to mention the exhaustion of the repeated attempts to deal with this problem. And in addition, I am convinced that the solution that has been elaborated is very transparent and inclusive for all 589 current non-sanctioned shareholders.

Along with these precisely defined steps of the ownership transformation, whereafter there will no longer be any sanctioned shareholders within the ownership structure, we shall enter into negotiations with commercial banks on the refinancing under sustainable terms with yet another changed condition. Namely, Fortenova Group’s entire debt under the secured bonds due in November 2024 is now held by HPS Investment Partners, as we were able to close the relationship with the sanctioned bondholder – VTB Bank, by making a one-off payment to a protected account in the UK in October, in accordance with permissions under the sanctions regulations.

Unfortunately, due to the problems that we had because of the two sanctioned shareholders, numerous other achievements in our regular operations in 2023 took a back seat. From, let’s say, two new acquisitions in retail – Franca markets in Montenegro and Engrotuš in Slovenia, where we are still awaiting the regulators’ approval of the transaction, through which we will gain another EUR 600 million in revenue, with a view to additionally raising profitability of the retail business and the Group through synergic effects, to investments in the primary processing plant at PIK Vrbovec, the new factory in Dijamant or new machinery in agriculture. In all our retail businesses we have throughout the year carried the burden of frozen prices of entire product groups, regardless of the fact that macroeconomic conditions (prices of energy, agricultural products, African swine fever and a major drop in edible oil prices) have affected our financial results. In addition, the price of labour at Group level has grown from EUR 650 million to EUR 820 million or 26 percent in two years.

Under the assumption that no significant negative macroeconomic shocks or another increase in energy prices take place due to the war in the Middle East and in the expectation that inflation will drop by year-end, the Group’s results in 2024 should be better than this year’s, while in addition to Franca in Montenegro and Tuš in Slovenia we could add some other acquisitions to our portfolio. The Group shall continue to pursue and strengthen its ESG initiatives. Given everything that we have been through, we have only gained more knowledge and capabilities for another sequel next year.