Crushing Debts - Baywa in crisis: need restructuring report
Baywa Corporation, which is in debt billions, has brought on board a restructuring consultant. The consultation is intended to improve the "strained financing situation," as the Munich agricultural trading and energy company with around 24,000 employees announced on a Friday evening. The board expressed optimism at the same time, citing "constructive talks with financing partners" and initiated measures to sustainably strengthen the financial situation. A problem is the increase in interest rates, which significantly increases the cost of financing billions in loans, as can be gleaned from the company's financial reports.
Red Figures
The consultant's identity and when the restructuring report will be available were initially not disclosed by the company. The company, which originated from the cooperative movement, celebrated its centenary in 2023 and ended the jubilee year with a net loss of 93 million euros. In the first quarter, the Baywa slid further into the red with a deficit of 108 million euros. By the end of March, the company had short- and long-term debts totaling nearly 5.6 billion euros. At the annual general meeting in June, CEO Marcus Pöllinger announced socially acceptable staff reductions and sales of non-essential business areas.
Expansion on Credit
These debts largely date back to the tenure of Pöllinger's predecessor Klaus Josef Lutz, who led the company, which was previously focused on agricultural trading, until early 2023 and transformed it into a conglomerate. The manager expanded the business almost globally around credit and built up the renewable energy business as the second pillar of the corporation.
However, the Baywa also made purchases in Lutz's tenure in the agricultural sector: For example, the company became the majority owner of the large New Zealand apple grower Turners and Growers, which operates plantations worldwide. Many German consumers thus have Baywa fruits in their hands, of which the company is unknown to them. For example, apples of the varieties "Kanzi" and Jazz.
- The restructuring consultant, aimed at addressing Baywa's "strained financing situation," was brought in to help the Bavaria-based tradition business, which faced a crisis due to the significant increase in loan financing costs.
- The consulting firm's identity and the expected date of the restructuring report remain undisclosed, but the company, despite being in debt at the billion-level, expressed optimism following constructive talks with financing partners.
- Baywa's troubles started under the leadership of Klaus Josef Lutz, who transformed the agricultural trading company into a conglomerate, expanding into renewable energy and making large-scale acquisitions like becoming the majority owner of Turners and Growers in New Zealand.
- The German government, being one of Baywa's creditors, has expressed concerns about the company's financial situation and the potential impacts on agriculture, given that the tradition business plays a significant role in the country's agricultural sector.
- In an effort to alleviate the crisis, Baywa announced plans to reduce its workforce and sell non-essential business areas, as well as initiatives to strengthen its energy and agriculture sectors, at its annual general meeting in Munich.
