Debt-to-equity deal to save Croatia's Dioki has failed - ministry

19 June 2012 16:51  [Source: ICIS news]

LONDON (ICIS)--Croatian government officials have failed in their attempt of saving Dioki Group from bankruptcy after they were unable to persuade major creditors to agree to a debt-to-equity restructuring deal, Croatia's economy ministry said on Tuesday.

Attempts at finding a strategic investor that would rescue the low density polyethylene (LDPE) producer had also proved unsuccessful, but the search would continue, it added.

In March, Dioki owner and entrepreneur Robert Jezic agreed to reduce his holding in the company to 1% so that creditors could have debts owed to them converted into ownership stakes, the ministry said.

However, some of the creditors, including Hypo Bank and Zagrebacka Bank, could not be convinced there was value in such a deal, according to deputy economy minister Tamara Obradovic Mazal.

Government officials remained in talks with one possible strategic investor that it was hoped would inject fresh capital into Dioki and relaunch its production, but that investor was anxious that there were obscured debt liabilities within the company's books, he added.

If a rescue deal can be put together, Dioki's 450 workers could receive wages for six months’ unpaid work from funds generated by the sale of part of the firm's property, the ministry said.

Dioki’s mothballed plants include a 90,000 tonne/year ethylene cracker in Zagreb and a 200,000 tonne/year vinyl chloride monomer (VCM) plant on the Adriatic island of Krk.

By: Will Conroy
+44 20 8652 3214

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