Agency Report –
Munich – The highly indebted German agricultural and building materials group BayWa intends to press ahead with its reorganization after failing to reach an agreement with a major creditor, the Munich-based company said on Friday.
BayWa will initiate restructuring proceedings in a Munich court, although BayWa said it does not plan to reduce the company’s capital or force out shareholders.
According to BayWa, suppliers, customers, employees and subsidiaries will also not be directly affected by the proceedings, although the company is also in the midst of a broader reorganization.
BayWa, which emerged from the cooperative movement, is Germany’s largest agricultural trader. The group plays an important role in agriculture and food supply in southern and eastern Germany.
The 101-year-old company is also active as a service provider and trader in the construction and energy sectors.
As part of the reorganization, BayWa expects to downsize and sell off its major holdings outside of Germany. In addition, the workforce in Germany is facing large-scale job cuts, with 1,300 of the 8,000 full-time positions to be eliminated, a 16% reduction.
The credit restructuring proceedings under Germany’s StaRUG law are intended to help companies in crisis to restructure themselves without insolvency proceedings.
However, the law is feared by shareholders because it gives companies the opportunity to set their capital to zero and squeeze them out.
BayWa, however, said in a press release that this would not be the case: “A capital reduction and other measures under company law are not planned.”
The company had previously planned to raise around €150 million ($156 million) with new shares and it said that plan remains in place.
BaywWa’s credit restructuring process is mainly aimed at extending loan terms. Among other things, a syndicated loan with a framework of up to €2 billion would have expired this coming September.
The company said it has reached an agreement with most of its creditors on a restructuring roadmap including a financing concept until 2027.
“A few financial creditors have not yet agreed, so the company no longer expects to persuade these individual creditors to give their voluntary consent,” BayWa said.
One major creditor did not want to give its consent to voluntary restructuring, a source close to the deal told dpa.
At the end of the most recent quarter, BayWa reported debts of almost €5.3 billion, the legacy of rapid expansion on credit over the past decade.
By Carsten Hoefer
