One of Europol's most wanted has been arrested in London. The founder of Agrokor, which makes up 15 percent of Croatia’s GDP, is accused of running the strategically important firm into the ground.
Ivica Todoric (above, center) is appearing at Westminster Magistrates' Court on Tuesday, the Metropolitan (London) police said.
The 66-year-old is on Europol's list of most wanted fugitives for suspected corruption, forgery of administrative documents and fraud. He has denied the accusations.
He told a London court on Tuesday he would oppose extradition to Croatia.
Croatian Prime Minister Andrej Plenkovic said later on Tuesday he was not surprised by Todoric's surrender to the UK police and that he would not comment on when he will be handed over to Croatian authorities.
"Now we face the usual (extradition) procedure," Plenkovic said. "As a suspect, Todoric has his rights that I believe he will use," he added without elaborating.
Police raided Todoric's home in Croatia in October along with the homes of former top aides. Twelve people were briefly arrested, including his two sons, who managed the company with him.
Todoric has written on his blog that he is not hiding and that his conscience is clear. "As a man whose human rights are deeply violated I have the right to oppose political persecution," Todoric wrote.
Agrokor - which began as a flower-growing business in a greenhouse in Yugoslavia in the 1970s - underwent an expansion drive up to 2016 over that saw it run up debts to creditors and suppliers of 50 billion kuna (about €6 billion, $6.8 billion).
It reported revenues of €6.5 billion in 2015, equaling about 14.8 percent of Croatia's GDP.
Agrokor's debt problems stem mainly from the acquisition of Slovenian retailer Mercator, which was funded using a €485-million PIK (payment in kind) loan in 2014. PIKs allow companies to cover interest payments using new debt if they are short of cash.
The Croatian government ruled in March that Todoric - a 95-percent owner known as "the Boss" - had been responsible for the poor state of the firm.
Todoric stood down from an operational role and a government-appointed crisis management team took over the company's management, soon after starting settlement talks with creditors, including two Russian banks, Sberbank and VTB.
The firm - which produces meat and dairy products and bottled water, runs a newspaper distribution chain and has eight listed units on the Zagreb Stock Exchange (ZSE) - employs 55,000 in the Balkan region (40,000 in Croatia) and accounts for 2.5 percent of the Croatia's total employment.
Prime Minister Plenkovic then passed a law freeing public cash to bail out the firm. The law set up a form of bankruptcy protection for systemic enterprises.
In bad shape
The ratings agency Moody's said earlier this year Agrokor's adjusted (gross) debt to EBITDA (the most commonly used measure of a company's financial health) will hit 6x at the end of 2017, or 6.8x including the PIKs. Even in the liquid retail sector and immature markets such as Croatia, this ratio is dangerously high, placing Agrokor's bonds in 'junk' status.
Furthermore, this still rather dire scenario also assumes that Agrokor will be able to stem the erosion of its revenues, which fell by 9.6 percent to 3.02 billion kunas (€400 million) in the first nine months of 2016.
jbh,es (AP, Reuters)