(Bloomberg) -- German commodities group BayWa AG said the first draft of a report it commissioned found the company can be restructured under certain conditions, providing the basis for further negotiations over its €5 billion ($5.6 billion) debt load.
“Restructuring over a period of several years is the prerequisite for reorganisation,” it said in a statement. “The draft of the report considers numerous operating-level cost-cutting measures as necessary in restructuring and also envisions the sale of individual business divisions.”
Bloomberg News reported earlier that BayWa was set to circulate the draft. Shareholders and lenders are in discussions over a second round of bridge financing in the region of €200 million, people with knowledge of the matter had also said. An extension of a standstill on its debt from Sept. 30 to the end of the year is also under negotiation, according to the people, who asked not to be identified discussing private information.
BayWa, which has its origins in agricultural trading, has racked up a large debtload after an acquisition spree that left its businesses spanning construction, renewables and agriculture. The Munich-based firm had been struggling with higher interest rates and volatility in its renewables projects, before announcing it was facing strains on its liquidity in July.
The company said in its statement that talks with financing partners and key stakeholders on the restructuring concept as well as realigning funding are proceeding constructively. It didn’t elaborate.
A potential agreement would come on top of a €547 million package agreed in August with main bank lenders and shareholders Bayerische Raiffeisen-Beteiligungs AG and Raiffeisen Agrar Invest AG.
One potential hurdle will be coaxing investors in commercial paper, which mature in the near-term and would otherwise stand to be paid back, to agree to the standstill extension, some of the people said. The company had €632.4 million of a total €1 billion commercial paper program outstanding as of year-end 2023.
EIP Stake
While further restructuring of the business is envisaged, so far no formal sales processes have commenced for BayWa units, according to some of the people. Energy Infrastructure Partners, which already owns a 49% stake in renewables unit BayWa Re, is in early discussions to increase its stake in the unit to 80% or even 100%, separate people familiar with the matter said.
EIP declined to comment.
Other major company units include Cefetra, a global supplier of agriculture ingredients, whose revenue totaled €5.3 billion, accounting for about a fifth of BayWa’s overall sales.
A representative for BayWa declined to comment on the restructuring opinion and on possible unit sales.
BayWa’s debt includes a total €2 billion syndicated loan facility, as well as a hybrid bond. The €100 million perpetual bond is quoted at 43.2 cents, according to data compiled by Bloomberg.
--With assistance from Áine Quinn and Isis Almeida.
(Adds company statement)
©2024 Bloomberg L.P.
