Minister: Djuro Djakovic group must find a strategic partner after bailout

NEWS 23.01.2020 14:40
Source: Ilustracija

The troubled Djuro Djakovic engineering group, which is about to receive a 150 million kuna (€20 million) government-backed loan, should make a restructuring plan and find a strategic partner to make its business sustainable in the long term, Economy Minister Darko Horvat said on Thursday.

Last week, the government decided to back bank guarantees for a €40 million loan intended to keep the company from filing for bankruptcy. The first half of the bailout will go towards paying the company’s debts in order to unblock its accounts by the end of January, and the remaining half will be used to finance the ongoing manufacturing projects.

“Part of the debt to suppliers will be paid, as will debts to the government, and the company will be able to buy goods and materials to complete three of its order contracts, which are expected to provide the company with additional liquidity totalling some 128 million kuna by late April,” Horvat said.

Horvat added that the company had to devise a restructuring plan, which would then have to be okayed by the European Commission and conform to EU state aid rules, and said that Djuro Djakovic has to find a strategic partner.

Based in the eastern Croatian city of Slavonski Brod, the company is one of Croatia’s largest engineering companies which makes industrial and infrastructure equipment, heavy machinery and vehicles such as locomotives. With some 850 workers across four daughter companies, it is considered a major employer in eastern part of the country.

The engineering group, in which the government is the largest single shareholder with a 38 percent stake, neared bankruptcy in December, when its accounts were frozen due to some 100 million kuna (€13.4 million) in unpaid bills to suppliers.

Last week, Prime Minister Andrej Plenkovic said that the government would back the loan to give it a lifeline, as its collapse would “affect the county’s economic and social situation.”

“With this decision, we are giving Djuro Djakovic a chance,” Plenkovic had said.

(€1 = 7.44 kuna)

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