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Photograph: HINA/ Tomislav PAVLEK/ ds

The state-owned stake in the Jadran hotel company from Cirkvenica will not be sold but will be used as collateral for a loan the Petrokemija artificial fertiliser producer will take to repay its 200 million kuna debt to the PPD gas company, outgoing Economy Minister Tomislav Panenic said after a government session on Thursday, adding that the government could adopt a decision to that effect next week.

The state is the majority owner of the Crikvenica-based hotel company, with an 80% interest. Over the past 15 years it has attempted several times to sell its stake. Meanwhile, due to major debts, bankruptcy proceedings were launched against the company and have since been successfully completed, enabling Jadran to launch investments in the renovation of several accommodation facilities.

Caretaker Prime Minister Tihomir Oreskovic said at the government session today that the decision on the state stake in Jadran could be expected next week.

The media have reported that the government should offer the state's stake in Jadran as collateral to the Croatian Bank for Reconstruction and Development (HBOR) for a HRK 200 million loan to the Kutina-based Petrokemija company, to be used by that company to repay its debt to its gas suppliers.

"Petrokemija's level of indebtedness is very high and we have agreed with its management that the debt should not exceed a certain level and we will make sure it stays that way," Panenic said.

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