The Baywa restructuring has huge dimensions. The case is not limited to a few major banks that are worried about their billion-euro loans. Germany's largest agricultural trading group, which is in financial difficulties, could also become a heavy burden for many farmers and cooperative banks. This is because the Munich-based SDax member has traditionally been closely linked to the cooperative sector. With over 23,000 employees worldwide and total assets of more than 12 billion euros, the group of companies in Germany and Austria is de facto systemically relevant for the agricultural sector.

Baywa supplies agricultural businesses with fertilisers and commercial vehicles such as tractors, among other things. It is also a buyer of agricultural products. Baywa's insolvency would have devastating consequences for the sector.

Meanwhile, nervousness about the Baywa crisis is growing among the cooperative primary banks in Bavaria. The 184 Volksbanken and Raiffeisenbanken in Germany's largest federal state in terms of area, whose customers include farmers, are also Baywa's largest single shareholder. The financial network of primary banks is dominated by Bayerische Raiffeisen-Beteiligungs AG, which holds 33.8% of the share capital. Due to the fall in the share price, the value of this strategic stake in Baywa has shrunk by two-thirds, or around 400 million euros, to just 183 million euros since the end of 2022. Baywa's insolvency would result in a total loss.

Many farmers are not only customers, but also shareholders of Baywa, explained the Deutsche Schutzvereinigung für Wertpapierbesitz.

Baywa's largest creditor banks include the cooperative DZ Bank, the Landesbank LBBW and HypoVereinsbank, which belongs to the Italian Unicredit. Together with other financial institutions, they granted Baywa a syndicated loan in September 2021, which most recently totalled 2 billion euros. It is not entirely clear how much Baywa has drawn down so far. In its 2023 annual report published at the end of March, the Group put the carrying amount of this loan at 1.4 billion euros as at the end of the year. Almost three years ago, Baywa replaced mainly bilateral bank loans with this syndicated loan, which was a first for the company. The syndicated loan runs until 2025.

With a total of 4.3 billion euros, bank loans make up the lion's share of the group's total financial debt of 5.4 billion euros (as of the end of 2023). By the end of March, financial liabilities had grown to 5.6 billion euros. Baywa has been recording high losses since mid-2023 because the interest burden has actually exploded due to increased market interest rates. In the first three months of this year alone, this amounted to 97 million euros. In 2023, it was 362 million euros - 160 million euros more than in 2022. The adjusted net debt accounts for more than six times the operating result (Ebitda). Baywa broke its target (factor 3 to 4.5). It is unclear whether this target value is also anchored in the syndicated loan (loan conditions, covenants).

But the dimension of Baywa's debts is much larger. The mountain of debt is growing. At the end of 2023, the group's total sales amounted to 10.8 billion euros. At that time, debt capital corresponded to 86.3% of the liabilities side of the balance sheet. At the end of March, total debt grew to 11.4 billion euros (87.8% of total assets). Financial debt accounts for around half of total sales.

The other half includes several other positions. These include „trade payables and related relationships“. This item amounted to 1.9 billion euros at the end of March. The leasing debts currently total 1 billion euros.

Against this background, the cooperative banker Gregor Scheller is trying to prevent the worst at Baywa. The anchor shareholder appointed the 66-year-old as chairman of the Baywa supervisory board. The outgoing president of the Bavarian Cooperative Association (GVB) has been chief supervisor there since May. This means that he controls Baywa CEO Marcus Pöllinger, who declared the company, which was groaning under debt, a few days ago in an ad hoc warning that it was in need of restructuring with a „tense financing situation“. The rescue measures initiated by CEO and CFO Andreas Helber are apparently no longer sufficient to stabilize the company financially. This means that their previous annual forecast is also indirectly in jeopardy.

A restructuring report from the management consultancy Roland Berger, which was commissioned to do so, should now provide clarity for the creditor banks and the group management as to whether Baywa can survive or not. The report is not expected to be available until August 8th, when the highly loss-making Baywa Group plans to publish its half-year figures according to its previous plan. It could be that she will even postpone the announcement of the figures for the past quarter. A report of this type requires four to six weeks under time pressure. This means that a certified result can possibly be expected at the end of August/beginning of September. A remediation coordinator brought in-house will help speed up the analysis. This rescue operation is intended to help prevent bankruptcy.