Help for crisis-ridden companies - Cooperatives and banks support Baywa
The heavily indebted conglomerate Baywa, groaning under billions in debt, is being supported by creditor banks and main shareholders with a short-term financial injection of over half a billion euros. This is to ensure that the mixed group, which is important for farmers and food supply, especially in southern Germany, remains liquid. According to Baywa's announcement, the aid package has several components, mostly loans totaling around 400 million euros.
The main creditor banks are providing a bridge loan of 272 million euros, valid until the end of September with an option to extend until the end of December. The main shareholders of Baywa are the participation companies of the cooperatives in Bavaria and Austria: the Bayerische Raiffeisen Beteiligung (BRB) and the Raiffeisen Agrar Invest (RAIG) are contributing shareholder loans of 125 million euros. On the other hand, Baywa is selling its own 45 percent stake in BRB to DZ Bank and BRB for 120 million euros. Additionally, the sale of grain and a smaller company stake for a total of 30 million euros to Austria is included.
Financial debts of over five billion euros
Baywa, which emerged from the cooperative movement, has short- and long-term financial debts of around 5.6 billion euros. The immediate trigger for the current crisis is the combination of interest rate increases and weak world economic conditions. Due to the rapid increase in interest rates, Baywa's interest burden has tripled from 2021 to 2023, amounting to 362 million euros. This year also started expensively: In the first quarter of this year alone, Baywa paid 97 million euros in interest to the banks.
Long-term restructuring is pending
Baywa has been temporarily relieved of its financial difficulties, but this does not mean a long-term solution. By mid-September, the company's restructuring report by the consulting firm Roland Berger, brought on board by the management, is expected. Given the billions in debt, it is not expected that the consultants will recommend that everything at Baywa continues as before. It is likely that the consultants will advise selling company shares to return to a more stable footing.
Legacy of expansion on credit
The debts of the S-Dax company mainly date back to the tenure of the former CEO Klaus Josef Lutz, who recently denied responsibility in an interview with the "Süddeutsche Zeitung". The president of the Bavarian Chamber of Industry and Commerce sat in the Baywa CEO's chair until the spring of 2023. Under his leadership, the company transformed from a purely agricultural trading company into a globally present mixed group.
Active in 50 countries
Lutz expanded the new business field of renewable energies on the one hand. Baywa r.e., a major participation, plans and operates solar and wind parks in several countries today. On the other hand, he significantly expanded the agricultural business. Since Baywa is now active in 50 countries, a collapse would cause unrest on the global agricultural market.
Baywa may not be a household name, but its apples are
Even many consumers who are not familiar with the name Baywa will know products of the company: Under Lutz's leadership, Baywa became the majority owner of the apple producer Turners & Growers (T&G) in New Zealand, which operates plantations on all continents and sells its fruits to 60 countries. The two T&G apple varieties "Envy" and "Jazz" are also frequently found in German supermarket shelves.
Cooperative shareholders are contributing to Baywa's financial rescue with shareholder loans totaling 125 million euros. To ensure the liquidity of Baywa, which is crucial for farmers and food supply in southern Germany, cooperative activities are being conducted among the main shareholders.
