(Bloomberg) -- BayWa AG’s lenders and shareholders are in advanced talks to provide the struggling German commodities company with €500 million ($546 million) of fresh financing that would give it more time to reach a full debt restructuring.
An agreement may be reached as early as this week, according to people familiar with the discussions. The potential deal would likely include about €250 million of debt from existing lenders and €250 million that’s mostly in the form of subordinated shareholder loans and asset sales to Baywa shareholders, the people said.
Munich-based BayWa, whose sprawling business includes units in agriculture, construction and energy, has been locked in negotiations with shareholders and lenders for months. The company, which accumulated more than €5 billion in debt after a spree of acquisitions, has faced pressure from its renewable energy business and the rapid rise in interest rates.
Any short-term deal would need to be followed up with a full restructuring that may include further asset sales, the people said, asking not to be identified because the talks are private. One option being discussed is a sale of a stake in its renewables company BayWa Re, which is 49% owned by Energy Infrastructure Partners.
BayWa’s debt burden includes a €2 billion syndicated bank loan, with lenders including DZ Bank AG, UniCredit’s German unit and Landesbank Baden-Wuerttemberg, according to data compiled by Bloomberg. The company’s management said in May that it negotiated a waiver from lenders after it breached loan terms.
A spokesperson from BayWa declined to comment, as did a representatives of Energy Infrastructure Partners, DZ Bank and UniCredit. A spokesperson for Landesbank Baden-Wuerttemberg were not immediately available to comment.
BayWa has faced challenges in refinancing its debt. It canceled a bond sale in April that didn’t attract enough orders.
Last month, BayWa said it commissioned a restructuring opinion due to a “strained financing situation,” which sent its shares and bonds tumbling. Among other debts, BayWa has a €100 million hybrid bond and €1 billion commercial paper program, according to the full-year accounts.
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