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Merkur to Attempt New Restructuring to Avert Bankruptcy

Ljubljana/Naklo, 29 November (STA) - Markur, a big hardware retailer that has failed to achieve a full-fledged turnaround after three years of debt restructuring, plans to submit a new restructuring plan under new insolvency legislation in December to avert looming bankruptcy, Dnevnik reported on Friday.

Merkur has paid off some EUR 170m in liabilities over the past three years but it is still saddled with EUR 280m in debt, a vestige of a failed leveraged management buyout that has left the company at the verge of survival and landed former executives in jail.

Despite the deleveraging and a standstill agreement with banks, the company will be unable to pay back creditors EUR 21m by the end of the year as per the restructuring plan, as this would leave it with a fatal shortfall of current assets.

Dnevnik reports that the new restructuring plan, already presented to banks, would involve offloading the core company Merkur, its home appliances business Big Bang and the metals wholesale business Mersteel onto a new company complete with a "sustainable level of debt".

The remains of the old company, including a large chunk of debt, would enter bankruptcy.

Merkur would not confirm the details of the plan for the STA, but a spokesman said the solution being proposed would "allow the preservation of the majority of jobs...The only alternative is bankruptcy."

The restructuring plan would make Merkur the first major firm to try out the new insolvency legislation, which allows companies to enter bankruptcy protection in agreement with creditors.

Creditors holding at least 60% of total unsecured claims and 75% of senior secured claims must confirm such a plan, according to the new law.

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