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

19 June 2012 18:00  [Source: ICIS news]

LONDON (ICIS)--Croatian government officials have failed to persuade major creditors of troubled Dioki Group to agree to a debt-to-equity restructuring deal, Croatias economy ministry said on Tuesday.

Attempts at finding a strategic investor that would provide an alternative means of ensuring the low density polyethylene (LDPE) producer does not slide into bankruptcy 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-Alpe-Adria-Bank and Zagrebacka Banka, 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, she 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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