GERMANY: BayWa commissions restructuring opinion in response to strained financing situation
German energy, agriculture and construction group BayWa AG, parent company of BayWa r.e, has commissioned a restructuring opinion in the face of a sharp drop in its share price over the past 18 months.
The SDax-listed group’s share price plummeted from EUR 22.24 at the end of last week to EUR 16.42 as of early trading this morning (July 16) in the wake of the group’s announcement of the restructuring report on Friday, which it has commissioned in “response to a strained financing situation”.
It added: “Based on constructive talks with financing partners and the measures initiated, the board of Management is convinced that the financial situation can be sustainably strengthened. This way BayWa continues to pursue its course of consolidation.”
The group’s share price previously reached a high of over EUR 46 per share in early December 2022 but has fallen steeply since. Its parlous situation is seen as being in large part due to its heavy debt burden and higher interest rate charges, with the group sitting on around EUR 5.5bn in debt as of the end of 2023.
Creditors often require restructuring reports as a prerequisite for extending loans or providing additional liquidity.
BayWa’s biggest creditors are DZ Bank, LBBW and UniCredit, which have provided a EUR 2bn syndicated loan that matures in September 2025.
The group spiked a new EUR 250m bond issuance in April in the face of weak investor demand and announced it was cancelling its 2023 dividend in June, although it did successfully pay off a EUR 500m green bond last month.
It divested a 49% stake in renewables subsidiary BayWa r.e to Energy Infrastructure Partners in 2020.
The division put up for sale its solar trading business - which sells modules and inverters - in early 2023 with the hope of raising over EUR 2bn from the disposal, but has not yet found a buyer. It has in recent weeks enlisted consultant AlixPartners to compile a value creation report for the division, according to market sources.
The group’s renewable energies segment recorded revenue of EUR 904.2m and EBIT of -EUR 65.2m in Q1 2024, against EUR 1.5bn in revenue and EUR 53m in EBIT in Q1 2023, it reported on May 8, with the declined put down to “ongoing weak demand and the extreme drop in prices for solar modules.”
The European solar module industry is under pressure from a surplus of supply and competition from low-price Chinese rivals
In its project business, BayWa had sold project rights with a total output of 230 MW as of the end of March.
Further project sales (totalling 950 MW) and the sale of project rights (1.2 GW) are planned by the end of the year, it said.
In the US, the group has mandated Marathon Capital to divest a trio of pre-operational solar projects located in the PJM Interconnection and Illinois in recent weeks, as reported by NPM on July 9.
BayWa and AlixPartners were contacted for comment.
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