The spinning off of the "healthy core" would enable the preservation of most of the jobs as the two newly created companies, Merkur trgovina and Merkur nepremičnine, would become solvent in the short and long-term, according to the management.

"The only alternative to this solution is the company's bankruptcy, which would mean a discontinuation of the business and the loss of all jobs," Merkur officials said as they had proposed the new restructuring plan.

They also underscored that the creditors too would benefit from the solution as the terms of repayment would be better than in the case of receivership for the whole company. Over 90% of the creditors agreed with the plan.

The renewed restructuring was backed by creditors holding a combined EUR 134m in claims that had already been part of the previous procedure, as well as the holders of EUR 155m in secured claims that emerged since the launch of the previous debt restructuring, which means holders of a total of almost EUR 290m.

Merkur asked for a renewed debt restructuring in late December after being unable to pay the EUR 18.3m worth third instalment to creditors holding unsecured claims under the previous court-mandated debt restructuring plan, without this impacting too heavily on the company's current operations.

The company generated an operating loss of EUR 73m on sales revenue of EUR 163m in the first nine months of 2013. Operations had been affected by falling consumption, investment deprecation as well as a loss of wholesale deals due to banks' failure to secure a EUR 16m loan planned in the previous restructuring plan.

September 2013 data put Merkur's assets at EUR 214m and liabilities at EUR 448m. While covered losses amounted to EUR 257m, capital stock only stood at a little below EUR 4m.

The new restructuring plan envisages for part of assets and liabilities to be transferred to the new companies. For Merkur nepremičnine a conversion of at least EUR 46.5m of claims is envisaged.

The claims that would be transferred to the new companies and would not be converted into equity, would be repaid in full in 12 years at a 1% annual interest rate with a two-year moratorium.

The core company Merkur, which would go into receivership, would keep EUR 117m claims and EUR 54m assets, with ordinary claims to be paid at 12% under this procedure.

The two new companies are planned to be incorporated in mid-2014. The process is to entail staff cuts; trade unions' data indicate 120 jobs will be slashed in February, the bulk at a storehouse in Celje.

Since the court-mandated debt restructuring started at Merkur in August 2011, the headcount had been reduced by 843 to 1,729 at the end of September.

The company run up high debts following a highly-leveraged management buyout in 2007. Its former CEO Bine Kordež is serving prison time of six years and five months for defrauding the company.