Munich's BayWa Sheds Stake in RWA for €176 Million: A Sign of Capacity Shrinkage
Adjusting the Sickly Sheep
Baywa heads towards Austrian Market for Commercial and Agricultural Business
In a bid to recuperate from its financial woes, the embattled agricultural corporation BayWa, based in Munich, has begun to streamline its web of partnerships, starting with its long-standing collaboration with Austrian agricultural and commodity cooperatives. This could pave the way for BayWa to fully sever its cross-investments with Austrian counterparts, causing ripples in the ownership structure and BayWa's board of directors.
In a move announced at the beginning of the year, BayWa is offloading its 47.5% stake in RWA Raiffeisen Ware Austria AG to a subsidiary of the co-op RWA Raiffeisen Ware Austria Handel and Asset Management eGen, which already owns 50% of the warehouse company nestled in Lower Austria near Vienna. The deal values the stake at €176 million, of which €26 million will be used to pay off part of a loan owed to RWA.
A Reciprocal Response
The revelation signifies a fraying of a 25-year strategic alliance between the two commodity organizations. Analysts claim there are minimal synergies in the cooperation between BayWa and RWA. The buyout of BayWa's stake in RWA poses a significant challenge for the cooperatives in Austria, given their operational struggles and the ongoing BayWa crisis, which allegedly has resulted in around €200 million in debt owed to some Austrian financial institutions affiliated with the Raiffeisen banks. BayWa's overall financial debt stands at an alarming €5.4 billion.
A Shuffle for the Top
As long as Austria’s commodity and credit cooperatives hold a considerable stake in BayWa, they should still be able to send representatives to BayWa's pinnacle management. However, this could change in the near future amidst BayWa's drastic overhaul.
No changes have been made to the board of directors at Baywa, although changes might be imminent. After BayWa’s misstep, CEO Marcus Poellinger stepped down after only 19 months in office. Long-time CFO Andreas Helber will be departing the company by the end of March 2024. In early November, restructuring expert Michael Baur, appointed by banks and BayWa's cooperative owners, has effectively taken charge of the company.
Baywa Eyes Capital Boost
BayWa's mounting losses are eroding its core. To counteract this, the company intends to raise €150 million in fresh capital via the issuance of new shares with subscription rights by 2025, with the major cooperative shareholders reportedly pledging to secure this volume.
BayWa owes money to around 300 financial lenders, including the cooperative DZ Bank, LBBW, and HypoVereinsbank, a subsidiary of Unicredit. These banks have agreed to extend their moratorium on collecting interest from BayWa until the end of April 2025, due to increased interest expenses stemming from the rising market interest rates. The financial results have been in the red since mid-2023.
By 2027, Baur aims to complete the restructuring of BayWa. Potential subsidiaries that might be on the selling block include Baywa r.e., the troubled renewable energy subsidiary, and New Zealand's apple orchard operator Turners & Growers.
Insights:
- Financial Restructuring: Core banks and major shareholders agreed to a revised financing concept and restructuring plan extending through 2028. This follows a February 2025 revelation of a €435M financing shortfall at subsidiary BayWa r.e. The court will review the adjusted restructuring plan, which includes liquidity provisions praised by Chief Restructuring Officer Michael Baur as evidence of stakeholder confidence. A critical court discussion and creditor vote is scheduled for May 15, 2025, in Munich, with Dr. Hubert Ampferl serving as restructuring officer.
- New CEO: Frank Hiller spearheads BayWa's focus on core agricultural and energy businesses, emphasizing improved financial stability.
- Subsidiary Developments: BayWa r.e. has secured lender-backed restructuring through 2027 under the "r.e.power" program, aiming for earnings recovery with advisory support from Noerr and Boston Consulting Group. The transformation concentrates on competitive positioning in renewables (solar, wind).
- Workforce: 1,300 job cuts are planned, with over half already executed. 15 of 26 targeted closures have been finalized.
[1] [2] [3] [4] [5] Source: Frankfurt Stock Exchange, BayWa AG press releases, various newspaper articles from April 2023 to March 2024
- The financial repercussions of BayWa's debt crisis have extended to the Austrian industry, as debt owed to some Austrian financial institutions affiliated with the Raiffeisen banks surpassed €200 million.
- The repercussions of BayWa's financial crisis have significantly affected the ownership structure and BayWa's board of directors, potentially leading to changes in the near future.
- BayWa's strategy to counteract its mounting losses includes raising €150 million in fresh capital through the issuance of new shares by 2025, with major cooperative shareholders reportedly pledging to secure this volume.
- In the agricultural and commodity industry, the sale of BayWa's stake in RWA Raiffeisen Ware Austria AG to a subsidiary of the co-op RWA Raiffeisen Ware Austria Handel and Asset Management eGen for €176 million signifies a fraying of a 25-year strategic alliance between two commodity organizations, BayWa and RWA.
