Baywa can restructure, but only with half a billion in additional support

On the German stock exchange, investors have reacted cautiously positively to an initial report on the future prospects of the financially troubled agro-group Baywa. BayWa's share price rose last week after the publication of a restructuring report on the future prospects of the group. 

The company's announcement was followed by a jump in the Frankfurt stock exchange: Baywa shares rose by more than 15 percent to around 12.70 euros. However, Baywa shares have lost more than 60 percent of their value over the past twelve months.

In the first version of their recommendations, the experts from management consultancy Roland Berger conclude that Baywa “can be restructured under certain circumstances and that its operational competitiveness and profitability can be restored in the medium term”. This means that this is only possible if there is also additional financing of half a billion euros (from the government, banks and shareholders?).

The possible restructuring includes “numerous operational cost-saving measures” and the sale of individual business units. CEO Marcus Pöllinger had already announced socially acceptable job cuts in June. The group employs around 25,000 people worldwide and its main area of activity is the trade in agricultural products. It did not disclose in the first report which parts of the company could or should be sold.

The report contains a first outline of a restructuring plan, which is essential for the survival of the company, which has been struggling with major financial problems since 2021. A net loss of 93 million euros in 2023 (on interest alone!) had already increased to 108 million euros at the beginning of this year. The company's debt burden now exceeds 5.5 billion euros.

According to Handelsblatt, Baywa would like to sell its majority stake in the green electricity subsidiary Baywa re to its Swiss co-shareholder EIP. This has not been confirmed by the company. It is still uncertain whether there will be personnel consequences for the management of Baywa.

Last month, BayWa reached a temporary agreement with its main banks and shareholders, whereby temporary bridge financing of 550 million euros was concluded. Now that a restructuring expert has been hired and the first report has been issued, banks and financiers are expected to be willing to provide further bridging.

As part of the restructuring, BayWa has appointed Michael Baur as Chief Restructuring Officer (CRO). Baur, an expert in corporate restructuring, will work with the Board of Directors to develop a strategy to reshape the company.