German battery manufacturer Varta announced on Saturday that it has reached a restructuring agreement with its creditors, with sports car maker Porsche stepping in to rescue the struggling company. The agreement, which followed days of intense negotiations, will initially reduce Varta's debt from 485 million euros ($534.86 million) to 200 million euros, according to the company. Varta, which supplies batteries to the global automotive, industrial, and consumer markets, had been seeking a compromise among major shareholder Michael Tojner, creditors, and Porsche to alleviate its debt and secure new capital.
Under the terms of the agreement, Tojner and Porsche will become the new owners of Varta and will jointly inject 60 million euros of capital. Additionally, creditors will provide another 60 million euros in senior secured loans, with the possibility of a third investor joining later. "We are in advanced discussions with other investors who would like to join us," Varta CEO Michael Ostermann told Reuters. In aiding Varta's recovery, Porsche aims to secure access to high-performance batteries for its hybrid and electric sports cars. Porsche also announced that it will take a majority stake in Varta's V4Drive Battery division through a capital increase, primarily through a contribution in kind.
"With the planned majority takeover of V4Drive, we would make an important contribution to keeping key technologies in Germany," said Lutz Meschke, deputy chairman of the executive board at Porsche AG. In July, Ostermann had announced a radical pre-insolvency restructuring for Varta, which was burdened with unserviceable debt due to costly investments. "With the implementation of the measures agreed today, the group's financing and liquidity have now been sustainably stabilized and secured in the long term," said Varta CFO Marc Hundsdorf. Ostermann stated that there is no immediate threat of significant job cuts, emphasizing the company's intention to grow in battery storage for photovoltaic systems and button cells for Apple headphones.
Varta will maintain all its manufacturing sites in Germany, with only "moderate" job cuts in administration. "We will put Varta back on a profitable growth path," he told Reuters. However, existing shareholders will not benefit as Varta will be delisted from the stock exchange following the restructuring. "We tried everything to get the small shareholders on board - but that is not legally possible in this situation," Ostermann explained.
