Wankende Baywa gets its first financial injection
Baywa is in a deep crisis with billions of Euros in debts. A major shareholder is stepping in to support. Will the financial injection alleviate the pressure from the massive debt pile?
The struggling agricultural conglomerate Baywa is being supported by a major shareholder. According to a report in the "Süddeutsche Zeitung" (SZ), the Bavarian Cooperative Banks are coming to the aid of the company and plan to make a short-term financial injection available. This is in the upper two-digit million range, it is said. A Baywa spokesperson declined to comment on the matter. The financing is intended to secure the liquidity of Baywa, while sanitation efforts continue. A sanitation report is currently being prepared.
The Bavarian Cooperative Banks are the largest shareholder of Baywa. The Bavarian Raiffeisen-Investment AG holds 33.8%, while the Raiffeisenbanks in Bavaria also hold a significant stake. The Austrian Raiffeisen Agriculture Invest, which is reportedly also involved in the financing, owns an additional 28.1% of the shares.
"From my perspective, the company is not over-indebted. But it could have a liquidity problem," Baywa's long-term CEO Klaus Josef Lutz had recently told the SZ. The problems lie in the operational business and not in excessive debt, so Lutz, who was ousted as CEO in January after a power struggle. "I am surprised and appalled at the current situation of Baywa," Lutz also said.
Critics claim that his expansionist drive led to the crisis. "We expanded, and every expansion involves risks. But the debts were always outweighed by higher assets," Lutz told the newspaper. In addition to the debt burden due to rising interest rates, there appear to be problems in the operational business. Two consecutive poor apple harvests have led to significant sales losses in the apple harvest business, according to an analysis from "ZDF Heute".
Baywa, with a €24 billion annual turnover, is in a deep crisis. The company had €5.5 billion in financial debts at the end of 2023 - and that's just the financial debts. The total debts, according to the "Boersen-Zeitung", had grown to €11.4 billion by the end of March. Financial debts account for roughly half of the total liabilities. The other half includes other positions - such as "obligations from deliveries and services and affiliations". The size of this post was €1.9 billion at the end of March.
The company had spoken of a "tight financing situation" not too long ago. Therefore, it had commissioned a sanitation report, which should clarify how to proceed. The goal of the report is a positive continuation forecast, which is the prerequisite for extending credits. In addition, the agricultural trader has brought on board a restructuring advisor, who is reportedly below the board level.
The financial injection from the Bavarian Cooperative Banks could potentially help alleviate Baywa's debt crisis in agriculture, contributing to securing the company's liquidity. The expansion strategies implemented by Baywa, under the leadership of former CEO Klaus Josef Lutz, have been cited as contributing factors to the current economic challenges in the company.
