Court approves Auga Group's restructuring plan

 After the shareholders and creditors of Auga Group, one of the largest organic food producers in the Baltic States, which is experiencing financial difficulties, approved the company's restructuring plan in August, it was approved by the Vilnius Regional Court on 2 September.

„Having assessed the content of the restructuring plan and its compliance with the legal regulation, the approval of the creditors' meeting of the submitted plan and other data on the company presented in the case, the court has decided that the plan is in compliance with the legal regulation, therefore, it should be approved with a 4-year restructuring period," the court's spokeswoman, Lina Nemeikaitė, told BNS.    

According to her, the restructuring plan was approved by the creditors at a re-meeting on 18 August, with the four-year term starting from the court order.

5% of the group's creditors voted against the plan, while the shareholders approved it on 12 August.

BNS wrote that Kęstutis Juščius, Chairman of the Group's Board of Directors, said earlier that the restructuring plan has convinced the vast majority of creditors and their support is just the beginning; the four-year action plan will allow the company to fully settle its liabilities by 2029, restore financial stability and ensure the company's long-term viability. 

According to the company, the plan includes increased creditor involvement – the largest creditors will be able to delegate their representatives to an independent board and participate in the creditors' committee.

„One of the main objectives of the plan – is to strengthen „Auga Group“'s core agricultural activities. In order to assess the realistic possibilities of paying creditors, it is planned to divest some businesses and assets," the group said. 

According to the company, the dairy segment is to be separated and developed through the establishment of the Sustainable Dairy Farms Fund, which will bring together ten farms managed by an independent manager.

According to the company, the planned changes will increase the dairy herd by at least 50% to 5,000 cattle. The business is expected to increase in value and the fund will be able to be realised profitably by the end of 2028, generating around EUR 40 million.

Part of the crop farming business is planned to be merged into a separate Crop Fund. Currently, „Auga Group“ through 10 subsidiaries in the Raseiniai-Jurbarkas region leases about 11,500 ha of land – these will be consolidated and prepared for sale. 

In addition, the Group's companies, which own about 2,800 ha of land, are to be sold. The market value of these assets is estimated at around €21.8 million and the proceeds will be used to cover liabilities, including those of green bond holders.

The Group also intends to sell the mushroom business, which is developed by the Group's company „Baltic Champs“.

By the end of 2029, „Auga Group“ expects to have fully settled its financial liabilities, which amount to EUR 83.4 million. 

BNS previously wrote that „Auga Group“ posted an audited net loss of €32.4 million last year – almost double the 2023 figure (€18.4 million), with revenue up 10.6% to €85.6 million (77.4 million).

In addition, the group's auditors have expressed doubts about the company's and the group's ability to continue as a going concern.

The court opened restructuring proceedings against the company on 6 January.

K. Juščius has said that the restructuring was initiated following financial challenges caused by inflation and rising production costs, volatile prices of organic raw materials.