The agricultural trader Baywa does business worldwide – and has overreached itself. The company is important for farmers and food supplies in several countries. Now first aid is on the way.
The Baywa conglomerate, which is groaning under billions in debt, is being supported by creditor banks and major shareholders with a short-term financial injection of over half a billion euros. This is intended to ensure that the conglomerate, which is important for farmers and food supplies, especially in southern Germany, remains liquid. As Baywa announced, the aid package has several components, mostly loans totaling almost 400 million euros.
The most important creditor banks are providing a bridging loan of 272 million euros, limited to the end of September and with an extension option until the end of December. Baywa’s main shareholders are the holding companies of the cooperatives in Bavaria and Austria: Bayerische Raiffeisen Beteiligung (BRB) and Raiffeisen Agrar Invest (RAIG) are contributing shareholder loans of 125 million euros. On the other hand, Baywa is selling its own 45 percent share in BRB to DZ-Bank and BRB for 120 million euros. In addition, grain and a smaller share in the company are being sold to Austria for a total of 30 million euros.
Over five billion euros in financial debt
Baywa, which emerged from the cooperative movement and has around 24,000 employees worldwide, 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 the weak global economy. Due to the rapid increase in loan interest rates, Baywa’s interest burden has tripled from 2021 to 2023 to 362 million euros. This year also started expensively: In the first quarter of this year alone, Baywa paid 97 million euros in loan interest to the banks.
Long-term restructuring is pending
Baywa has now been helped out of its financial difficulties in the short term, but that does not mean a long-term solution. In mid-September, the management consultancy Roland Berger, brought on board by the board of directors, is expected to present its restructuring report. Given the billions in debt, it is not expected that Baywa will suggest that everything should continue as before. In all probability, the consultants will recommend that Baywa sell shares in the company in order to get back on more stable footing.
The legacy of expansion on credit
The debts of the S-Dax group are largely due to the term of office of the former CEO Klaus Josef Lutz, who recently denied responsibility in an interview with the “Süddeutsche Zeitung”. The president of the Bavarian Association of Chambers of Industry and Commerce sat in the Baywa CEO’s chair until spring 2023. Under his aegis, the company, once limited to agricultural trading, transformed into a conglomerate with a global presence.
Active in 50 countries
On the one hand, Lutz built up the new business area of renewable energies. Baywa re is planning and is currently building solar and wind parks in a number of countries as an important investment. At the same time, Lutz also expanded the agricultural business considerably. Since Baywa is now active in 50 countries, a collapse would cause unrest on the agricultural market around the world.
Not everyone knows Baywa, but many know its apples
Even many consumers who are not familiar with the company name Baywa know the company’s products: In New Zealand, under Lutz’s aegis, Baywa became the majority shareholder of the apple producer Turners & Growers (T&G), which operates plantations on every continent and sells its fruit in 60 countries. The two T&G apple varieties “Envy” and “Jazz” can also be found frequently on German supermarket shelves.
Source: Stern
