It was not immediately clear why exactly Osimpex called it quits, but business daily Finance speculates that banks refused to accept the provision in the sales agreement that the state could buy back the company for a euro after five years if Osimpex failed to honour its commitments.

"After the agreement was initialled, Osimpex got additional conditions for the takeover of Peko and did not get bank approval, nor could it extend its offer alone," Osimpex director Željko Biloš said in a written statement.

The decision means Osimpex is giving up on buying Peko, at least under the current conditions, STA was told by Consensus, Osimpex's PR agency.

It is unclear what the news will mean for Peko, whose future hinged on the deal according to statements by officials involved in the transaction.

Under the deal, Osimpex was to buy Peko for EUR 2m and provide an additional EUR 6m in fresh capital. The first round of a capital increase, worth EUR 2m, had already been confirmed.

Peko director Janez Sajovic told the STA he was not the one capable of finding a solution. "The state is the one that needs to do something," he said.

Sajovic said in April that Peko was close to insolvency and needed money immediately.

The state-owned SOD fund, which was in charge of talks with Osimpex, said it regretted the decision.

"The existing shareholders did everything we could," reads a statement from SOD, which says the fund will strive to "resolve the situation".