T&G Global: Can Debt Troubles Be Harvested Away?

The horticultural giant T&G Global (NZSE:TGG) finds itself at a crossroads. With its majority shareholder, Germany's BayWa AG, pursuing a global restructuring and debt reduction plan, T&G is under pressure to navigate its own financial challenges while weighing strategic options that could redefine its future. Let's dig into the numbers and assess whether this company can turn its debt-laden balance sheet into a ripe opportunity—or if it's a risk-laden gamble.

The Strategic Crossroads: Sale or Stagnation?

BayWa, which holds a 74% stake, has placed T&G on the block as part of its shift toward focusing on core markets. This has sparked a scramble among buyers. Australian private equity firms like ROC Partners and Macquarie Asset Management are reportedly circling, eyeing T&G's prized apple division, which contributes two-thirds of its $1.3 billion annual revenue and generates over $44 million in operating profit.

The company's shares have already reacted: rising from $1.50 to $1.90 as speculation around a sale heats up. But investors must ask: Does a potential sale address T&G's deeper financial struggles, or is it a Band-Aid on a bullet wound?

The Debt Dilemma: Can T&G's Orchard Bear the Load?

Let's start with the balance sheet. T&G's net debt has surged from $246.7 million in 2023 to $367.9 million in 2025, a 49% jump in just two years. Meanwhile, its EBITDA, while positive again at $38.94 million in 2025, remains far below the $63.4 million peak in 2022. This paints a worrisome picture:

The red flag? Interest coverage is murky. While EBITDA has stabilized, the company's negative net income (-$16.03 million in 2025) suggests interest and tax expenses are outpacing operating profits. With ROIC at -6.96%—well below its 5.15% WACC—T&G is failing to generate returns that justify its cost of capital. This isn't just a liquidity concern; it's a sign of structural inefficiency.

The Silver Lining: A Sale Could Trim the Orchard

Here's where the potential sale comes in. If T&G is sold—or parts of it are spun off—the proceeds could slash debt and unlock trapped value. Take ROC Partners, which already owns Freshmax Group and NZ Rural Land Company. A breakup could let ROC cherry-pick T&G's apple division, while leaving less profitable operations behind. Similarly, Macquarie's Fresh Produce Group acquisition suggests it sees synergies in consolidating T&G's global distribution network.

But there's a catch: valuation vs. reality. T&G's market cap is $220–236 million, but its debt alone is $367 million. A buyer would need to either pay a premium to cover the debt (unlikely) or demand debt forgiveness, restructuring terms, or asset sales. If the sale process falters, T&G could face a liquidity crunch, especially if EBITDA falters again.

Investment Thesis: Buy the Gloom, Sell the Hype

Bull Case (Hold/Speculate):
- A sale completes, unlocking shareholder value.
- Buyers inject capital to reduce debt or refinance loans.
- T&G's premium apple brands (Envy, Jazz) retain global demand.

Bear Case (Avoid):
- No buyer emerges, leaving T&G to grapple with debt on its own.
- EBITDA stagnates, and interest costs rise with higher borrowing rates.
- Share price collapses once speculation fades.

The Bottom Line:
T&G is a high-risk, high-reward play. The July 2025 information memorandum will be pivotal. If the sale process attracts credible bids, the stock could climb further. But until then, wait for confirmation.

Action:
- Hold shares only if you're a risk-taker with a long-term horizon.
- Avoid chasing the hype until a buyer is named and terms are clear.
- Watch debt-to-EBITDA trends—if the ratio worsens, run.

In the orchard of corporate finance, T&G is pruning its branches to survive. But until the harvest of a deal ripens, this stock remains a gamble for all but the most daring investors.

Disclaimer: This analysis is for informational purposes only. Always consult a financial advisor before making investment decisions.