Croatian retail giant Fortenova says it is close to ditching Russian owner

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Croatian tycoon Pavao Vujnovac is anticipated to realize a majority share of the retail big Fortenova, one of many greatest firms within the Balkans, which has struggled for greater than a yr to do away with its massive Russian shareholder.

The Fortenova saga has highlighted the problem European firms face after they attempt to half methods with Russian house owners following the nation’s full-scale invasion of Ukraine and western sanctions.

The group owns the Konzum grocery store and is the nation’s greatest non-public employer with 45,000 workers and annual income of greater than €5bn. Russia’s state-owned Sberbank held a 42 per cent stake in Fortenova however the closely sanctioned group mentioned final yr it had offered that to Saif Alketbi, an investor from the United Arab Emirates.

Nevertheless, Alketbi’s buy, which had the monetary backing of Russia’s state-owned Gazprombank and got here hours earlier than an EU-mandated deadline, has been disputed each by Fortenova’s administration and Croatia’s authorities. They declare he has ties to a Kremlin-connected businessman, which Alketbi denies.

The stake is held by way of a automobile referred to as SBK ART which has been sanctioned by the European Council, which mentioned Sberbank retained “efficient management” — a declare the financial institution denies.

Fortenova on Wednesday mentioned Vujnovac has supplied to purchase out different shareholders by way of his firm OpenPass — which already owns roughly a 3rd of the retailer — and pay as much as €660mn to extend his stake to not less than 54 per cent.

Discussions over the advanced proposal, which has the approval of Fortenova’s board, didn’t embody SBK ART and its disputed proprietor Alketbi given the sanctions on the previous. Due to these sanctions, cash from the deal can be held in an escrow account and launched solely as soon as they’re lifted.

Fortenova chief government Fabris Peruško advised the Monetary Instances he expects OpenPass would take management of the group inside just a few months, including it could ultimately personal it outright.

“With the warfare in Ukraine . . . [the] sanctioned Russian shareholding considerably restricted our operations and additional improvement, rendering a long-term and sustainable refinancing virtually unattainable. This example is now lastly about to vary,” he mentioned. “Reaching the settlement with OpenPass, which has agreed to underwrite the whole quantity of the transaction if essential, is a key turning level that opens a brand new chapter for us.”

OpenPass, Vujnovac, Sberbank and Alketbi didn’t instantly reply to requests for remark.

Nevertheless, a spokesperson for Alketbi advised the FT earlier this yr that he owns the stake in Fortenova and would problem SBK ART’s sanctions in court docket.

“Mr Alketbi purchased SBK ART and owns it,” they mentioned. “Sberbank will not be, repeat not, the proprietor. This stake will not be in Russian arms, nor beneath Russian management or affect . . . SBK ART was wrongly sanctioned on the initiative of Croatia.”

Alketbi additionally claimed in a separate assertion earlier this yr that he had supplied to purchase the whole firm, not simply Sberbank’s stake. “I first determined to put money into the corporate again in October 2022 as a result of I imagine within the power and potential of the Fortenova Group.”

The official EU and Croatian view that Fortenova nonetheless has a Russian proprietor is problematic for the corporate, because it creates an impediment for refinancing which may push the group into its second default in lower than a decade.

US-based HPS Funding Companions agreed to underwrite a €1.2bn bond package deal in September to supply bridge financing as the corporate tried to resolve the possession problem. Nevertheless, Peruško warned that except the corporate reaches a long-term financing deal by the point the bonds mature in November 2024, it may change into nugatory.