Shares of the diversified German trading group BayWa plummeted as much as 35% on Monday after the company commissioned an external inquiry into whether it can restructure its finances.
The Munich-based trader of farming supplies and produce, which has been grappling with rising borrowing costs, late on Friday referred to its “tense financing situation” and said it needed restructuring.
According to BayWa’s quarterly report released on May 8, the group had long-term bank debts of 3.1 billion euros ($3.38 billion) at the end of March, plus short-term liabilities of almost 2.5 billion.
The shares were down 34.9% at 0739 GMT, on course for their worst day yet. They have also fallen by 52.78% so far this year.
Last year, BayWa said it planned to sell its solar business, as the European renewable energy sector faces pressure from overcapacity in solar modules and low-price Chinese competitors.
A restructuring report is usually required by creditors and is the prerequisite for them to grant further loans or to extend them. The sharp drop in BayWa’s stock price reflects the market’s concerns about the company’s ability to manage its financing situation.
The announcement of the external inquiry and the “tense financing situation” has raised doubts among investors about BayWa’s financial stability and its ability to navigate the current challenges facing the agricultural and renewable energy sectors.