BayWa AG Announces Capital Increase and Asset Sale to Overcome Cash Crunch

German conglomerate BayWa AG has announced a strategy to address its financial difficulties. This strategy includes a capital increase with consideration and the divestiture of selected major assets, particularly abroad. The company aims to complete the capital increase by the beginning of the second quarter of 2025 and to finalize its organizational restructuring by the end of 2027.

According to an updated draft restructuring report mentioned in a statement published on Saturday, the Munich-based firm anticipates that these steps will significantly enhance its equity ratio and restore normal profitability upon the completion of the restructuring. BayWa is currently focusing on four main business sectors: Agri Trade and Service, Construction, Energy, and Agricultural Equipment. Following cash flow issues experienced earlier this year, the company is working to convince creditors and other stakeholders of the viability of its restructuring plan.

The liquidity crisis has further worsened due to rising financing costs and challenges in the renewable energy projects sector. BayWa had previously borrowed more than €5 billion ($5.29 billion) to finance a series of acquisitions. Financial pressures have led to changes in BayWa's leadership. CEO Marcus Pöllinger left at the end of October, and CFO Andreas Helber is planned to depart in March. Additionally, in November, the German financial regulatory authority BaFin mandated an audit of BayWa's 2023 accounts due to concerns that the company may have misrepresented its financial condition and associated risks.