IVICA TODORIC The top man at Agrokor, a potential stakeholder in Adriatica.net Croatia's largest tour operator, the tourism industry group Adriatica.net, will be salvaged after all. The bailout plan, which is to be made public over the coming two weeks, includes the entry of new partners into the ownership structure of Adriatica.net, who will recapitalise the tottering tourism industry group with some 40 million euro. Nacional has gained exclusive insight a few days ago as to who would make up the eight-member group of future co-owners of Adriatica.net.

They are Agrokor, Jolly - projekti, Saponia, Croatia osiguranje, Adriatic Croatia International Club (ACI), Croatia Airlines, Jadrolinija and Zagrebacka Bank.
With the strong support of Croatia's political leadership the new partners will, with the helps of banks that will reprogram Adriatica.net's significant debts, salvage the company that has for almost a year now teetered on the brink of failure.

And while the past few months, simultaneous to ominous reports of an Adriatica.net bankruptcy, have also seen reports of a possible recapitalisation, i.e. a bailout of the company, it was only a week ago that the question of its survival was finally resolved in Zagreb.

Nacional has gained exclusive access to the agreement on the intentions of the new partners and current owners, signed by top management a few days ago in the strictest secrecy, from when a two-week deadline started in which the fate of Adriatica.net should be entirely resolved. Besides by in the entry of new partners, the bailout of Adriatica.net is also marked by some other key factors - above all the decision of the Zagrebacka and Raiffeisen banks, the company's chief creditors, to approve the recapitalisation and reprogramming of the debt.

The other key step was the strong support of Croatian Government, which gave its approval for some public sector companies to take a stake, like Croatia osiguranje, Croatia Airlines, ACI and Jadrolinija, which was agreed at a recent meeting between Prime Minister Jadranka Kosor, Minister Damir Bajs and the representatives of Adriatica.net.

The third interesting fact is that the chief actors atAdriatica.net to date, the Emporion company and Europapress Holding, will retain only minor stakes of one percent each in the new ownership structure. A secret deal signed in Zagreb last week saw all of the players agree that Adriatica.net be as soon as possible recapitalised with 37 million 5 hundred thousand euro, whish would secure the reprogramming of debts owed to banks, payments to current suppliers and allow the company to continue its operations.

Ivica Todoric's Agrokor would enter Adriatica.net with a 5 million euro stake, turning its claims against the company into its investment capital, and paying the difference in money, and by doing so gain an ownership stake of 13.07 percent. Saponia and Jolly would each invest 2.5 million euro, i.e. a joint stake of 5 million paid in money, giving them a 13.07 percent stake. Newspaper Slobodna Dalmacija would, like Agrokor get in with a 5 million euro stake, for the most part by turning its claims towards Adriatica.net into investment capital, paying the difference in money, which would give it an ownership stake of 13.07 percent.

The domestic insurer Croatia osiguranje, whose line of credit a few months ago helped along Adriatica.net's operations, would convert its claims of 5 million euro into a 13.07 percent stake in the ownership. The other new partners would enter likewise, ACI and Jadrolinija would directly pay 5 million euro apiece, and Zagrebacka Bank, which would convert debt into equity.

Domestic air carrier Croatia Airlines would invest 2.5 million euro by bringing its tourist agency Obzor putovanje into the package and a smaller stake in money, which would give it a 6.535 percent stake. In the new ownership structure the current co-owner, Emporion, owned by Marko Vojkovic, which has to date held 50 percent of the firm, would drop to a 1 percent stake, and the same would happen with the stake of newspaper publisher Europapress Holding, whose 25 percent stake would also drop to just 1 percent.

This should finally resolve the dire straits Adriatica.net has found itself in, having spent the past year in very tough circumstances, fighting for its bare existence. The bailout of Adriatica.net comes literally at the last moment - for a tourism industry company to et out of a crisis requires prompt work on preparing the upcoming peak tourist season, and a the same time there was a threat just a few days ago that the thousands of people employed by Adriatica.net could go on strike over unpaid wages, which would, besides the catastrophic short term and long term effects for the company have serious economic and political implications.DAMIR BAJS Tourism Minister is behind the plan to bail out Croatia's biggest tour operator

The announcements of the tourism industry unions bore serious testimony to the a possible Adriatica.net employee walkout, and it was only late last week, which coincides with the signing of the recapitalisation agreement, that the president of the Tourism Worker's Union Eduard Andric announced publicly that the employees of Adriatica.net had after all abandoned the idea of taking job action. Jadranka Kosor's Government was evidently aware of all this, and it recently gave its stamp of approval on the implementation of the plan to salvage Adriatica.net, in which companies controlled by Government will play a major role.

According to Nacional's sources, a meeting held less than a month ago at Government' residence in Banski dvori at which Jadranka Kosor and Damir Bajs were given a presentation by the two current owners of Adriatica.net in which they asked that the nation's leadership lend a helping hand in three segments - the first was that Government publicly declare its support for the consolidation of Adriatica.net. The second was that Government issue temporary guarantees to some of Adriatica.net's creditors.

The third was the request that Government support the idea that public sector companies linked to Adriatica.net's operations participate in the recapitalisation. Judging by what was signed a few days in the final agreement, even thought this has not been stated publicly to this day, Jadranka Kosor has evidently agreed to everything that was asked of her.

In return, Adriatica.net CEO Boris Teski, who came into the post in early June, presented his plan for the company's operations post-recapitalisation - he will seriously undertake a reorganisation of the firm's operations, the sale of inoperative assets and stakes in companies that do not fit into the new business model and an overall reduction of all of the company's operational expenses.

That should in the final tally, bring a measure of stability to Adriatica.net, a company that after its initial growth and numerous acquisitions last year fell into significant financial and strategic difficulties. These were for the most part the result of the global financial crisis that was very much felt in the tourism sector, but also of the excessively speedy and sometimes illogical growth of the company through numerous acquisitions that further exhausted the leading company and reduced overall liquidity.

An infamous role in all of this was played by long-time Adriatica.net CEO Marko Vojkovic, and by former executive vice president Ivor Vucelic, who has for years been a source of negative publicity; initially as the husband of fashion model Lana Pavic, and then as the former boyfriend of Ivana Hodak, murdered last year.

Vucelic's name was frequently associated with suspicious trips to Serbia and contacts with the Serbian criminal underground. As early as in December of last year Vucelic was removed from his top management position in Adriatica.net, and spent some time in the USA, only to have a report surface a few months ago that he was suing his former business partner Marko Vojkovic for a million euro for his - "successful management results."

And while it was assumed among domestic business people that Vucelic would continue to build on his "success as a manager" in the United States, as he was born there and holds US citizenship, Nacional's sources say that he got a new job in Croatia two weeks ago - with Generalturist. Over the past year, since Adriatica.net's operations hit a wall and the company came under public and media scrutiny, there has been a great deal of speculation concerning the company's future.

There were frequent rumours of a possible bankruptcy, which many opposed, as a filing for bankruptcy would see the value of the company drop significantly. Chief among those that opposed this were the firm's biggest creditors, the Zagrebacka and Raiffeisen banks, who wanted from the start that the firm be bailed out by a recapitalisation. For a time there was a rumour that Adriatica.net could be taken over by German tour operator TUI, and there were rumours that it could be taken over as a whole by Ivica Todoric's AgrokJOSIP STOJANOVIC Jolly projekti will split its 5 million share with Saponia or.

There had also been talk these past months of the idea that Slovenia's Mercator buy into the ownership structure, which would have been a kind of Slovenian retribution as the Slovenian public had previously taken it quite hard when the sale of Kompas to Adriatica.net went through. This past summer some media reported on the possible entry of the Adris Group, which the top people at Adriatica.net quickly denied.

Last week's signing of an agreement between a group of new partners in the end showed that the key role in resolving the problems of Adriatica.net would in the end fall to domestic firms and Croatian Government through companies it controls. The only thing that might give cause to a measure of doubt is that even several days after the signing the actors of the entire matter have not informed the public of the arrangement that was hammered out and the solution found for the tottering tourism industry group, so that the final outcome and confirmation of the bailout of Adriatica.net is to be expected within the coming week or so.