Swiss Firm EIP Readies Bid to Boost Stake in BayWa Renewable Arm

(Bloomberg) — Swiss investor Energy Infrastructure Partners is preparing a bid to boost its stake in the renewables arm of BayWa AG in a deal that will offer the struggling German commodities firm a lifeline in its debt restructuring.   

EIP is planning to lift its shareholding in BayWa r.e. to 80% from 49% in an offer expected as early as next week, according to a person familiar with the matter. 

Under the offer, BayWa r.e. creditors would be completely repaid immediately, while EIP would refinance BayWa r.e.’s roughly €600 million ($656 million) in debt, offering existing lenders to participate, the person said. The offer would also see EIP injecting around €200 million in fresh capital.

As part of the deal, BayWa would receive tradeable debt instruments that would allow the group to benefit from future proceeds of BayWa r.e.’s Solar Trade unit or other future profits, the person said. Spokespeople for EIP and BayWa declined to comment.

Cash Squeeze

BayWa is trying to restructure a sprawling business that spans construction, agriculture and renewable energy, after it faced a cash squeeze in recent months. With a debtload of around €5 billion accumulated through a spree of acquisitions, the company was particularly vulnerable to the increase in financing costs, especially as earnings weakened. 

The company has negotiated a standstill agreement with the majority of its lenders until December, and secured an extra €500 million in short-term financing to give it time to come up with a bigger overhaul. The company said last month it was envisaging the sale of business divisions as part of its restructuring, as well as cost-cutting. 

If all goes to plan, lenders won’t need to take a haircut, according to separate people familiar with a draft restructuring opinion commissioned by the company. That includes holders of its Schuldschein loans, a type of bilateral loan often held by savings banks and pension funds, the people said.

BayWa’s renewables business has been a particular source of pressure, driving over €170 million of writedowns mentioned in its first-half report. The company has also struggled to sell its solar trading unit, for which it had originally hoped to reap €1.5 billion, in part due to the slump in the price of photovoltaic components. 

BayWa’s lenders include Deutsche Bank AG, Commerzbank AG and UniCredit SpA, according to data compiled by Bloomberg. No data is available to show how much each bank is exposed to BayWa. Spokespeople for all three banks declined to comment.

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