"Auga group plans to sell Baltic Champs to a Latvian capital company

The financially distressed „Auga Group“, one of the largest organic food producers in the Baltics, which is undergoing restructuring, has signed a preliminary agreement for the sale of its shares in the mushroom company „Baltic Champs“ to the Latvian company „Global Champs“, which is part of the capital of the Mhitarjanai family.

The companies signed the preliminary agreement binding the parties on Thursday, „Nasdaq“ Vilnius Stock Exchange reported through „Auga group“.

The group said the deal will not only reduce its financial liabilities by almost EUR 5 million, but also cover accrued and unpaid interest. The final price of the sale is not yet known.

„The transaction will be completed and a definitive agreement for the sale of shares in „Baltic Champs“ will be concluded and the ownership of the shares in „Baltic Champs“ will pass to the buyer upon the approval and consent of a meeting of the bondholders to sell the pledged assets,“the statement said. 

In addition, it will be subject to the approval of the creditors, the permission of the Competition Council and the consent of the National Land Office for the acquisition of the land.

According to the restructuring plan approved by the court, the bulk of the proceeds from the sale of „Baltic Champs“ shares will be used to redeem private placement bonds issued by „Auga group“'s subsidiary management company, „AWG investment 1“, which have an aggregate nominal value of „€4.9m. 100% of the shares of „Baltic Champs“ are pledged as collateral for the bonds.

It is specified that the sale price of the shares will be calculated according to a formula set out in the agreement, consistent with the company's restructuring plan. The formula for the price of the „Baltic Champs“ shares will be higher than the amount needed to redeem the bonds in full and to pay interest to the bondholders.

„As the final price for the sale of the shares of „Baltic Champs“ will be determined at the time of closing, the decision on the use of the remaining part of the price will be made at a later stage, „ says „Auga group“.

The transaction is expected to have a positive impact on both the Group's cash flow and the reduction in its overall debt level, and will contribute to the Group's ability to ensure its business continuity, restore solvency, reduce its financial burden, and meet its obligations to its creditors.

BNS wrote that „AWG investment 1“ did not redeem the €4.984 million bond issue on time – on 10 November – and promised to do so by 5 December.

In January this year, it was announced that the bondholders had decided not to call for early redemption of the bonds. Kęstutis Juščius, Chairman of the Board of Directors of „Auga Group“, said at the time that the decision would allow the company to continue to operate in a timely and orderly manner in order to meet its obligations. 

As reported by BNS, following the approval of the company's restructuring plan by shareholders and creditors in August, the restructuring plan was approved by the Vilnius Regional Court on 2 September.

By the end of 2029, „Auga Group“ expects to have fully settled its financial obligations, reducing its debt from EUR 83.4 million to zero.