The restructuring plan for the struggling Swabian battery manufacturer Varta is in place. Porsche wants to invest 30 million euros and thus contribute to the rescue. After lengthy negotiations, major shareholder Michael Tojner, the car manufacturer and most of the creditors agreed on a compromise on how Varta should be relieved of its debts and provided with fresh capital.
The banks are waiving 285 million euros, so that liabilities will initially fall to 200 million euros, as the group announced in Ellwangen on Saturday. At the same time, shareholders are losing their stake. Chief Financial Officer Marc Hundsdorf spoke of a decisive breakthrough. The new owners of Varta will be Tojner and Porsche, who will provide a capital injection totaling 60 million euros. A further 60 million will come from creditors in the form of senior secured loans. A third shareholder could come on board later.
“We are in advanced talks with other investors who would like to join us,” Varta CEO Michael Ostermann told the Reuters news agency. Tojner said: “With today’s agreement, we have taken a first important step together that secures the stability of Varta AG and paves the way for a new start.” The Austrian investor currently holds a good 50 percent of Varta. The capped old and new loans totaling 260 million euros have a term until the end of 2027.
Porsche needs the batteries for its hybrid sports car
For Volkswagen subsidiary Porsche, Varta’s entry is primarily about gaining access to lithium-ion cells, which are used in the hybrid drive of the 911 Carrera GTS. Porsche even wants to take a clear majority in this division, called V4Drive. The carmaker is building a second plant for the cells in Nördlingen, Bavaria, and will make it available to the joint company. Porsche wants to “make an important contribution to maintaining key technologies in Germany,” said CFO Lutz Meschke.
In July, Varta boss Michael Ostermann announced a radical restructuring under the StaRUG restructuring law. After costly bad investments, the company is no longer able to service its mountain of debt. According to Ostermann, the workforce is not threatened with major operational cuts: “We want to grow, both with battery storage for photovoltaic systems and with button cells for Apple headphones. We are currently even looking for staff there,” he said. Varta will hold on to all locations in Germany. There will only be a moderate reduction in jobs in administration.
Since Monday, owners and creditors have been wrangling over a solution. Two proposals have been on the table since July – one from Tojner and Porsche, another from the creditors. In return for partially waiving their loans, the banks that provide fresh money will receive 36 percent of the profits to be distributed and any proceeds from the resale. But they will probably need a lot of patience for this. Legally, Tojner and Porsche each hold 50 percent – but Tojner will lose economic control.
Despite the threat of total loss, Varta shares were still worth a good 160 million euros on Friday. Small shareholders and speculative investors were hoping that they would at least be given the right to participate in a capital increase. But they were left empty-handed, and Varta was delisted from the stock exchange. “We tried everything to get the small shareholders on board – but that is not legally possible in this situation,” said Ostermann. Due to the lack of audited annual financial statements, Varta could not produce a prospectus, which would be necessary for a broad capital increase.
