Battery Manufacturer Stumbles: A Haircut at Varta

Creditors and Austrian shareholder Michael Tojner have agreed on a restructuring concept that will see the value reduced from €485 million to €200 million, the company said in a statement on Saturday. At the same time, Tojner, in collaboration with sports car maker Porsche, is injecting new capital of up to €60 million.

The remaining shareholders will be left empty-handed, as the company's capital will be set to zero, as the German company's announcement shows. Varta's new owners will be former major shareholder Tojner and the Porsche Group, which has already been rumored to join. Another €60 million will come from creditors in the form of senior secured loans. Those banks that provide new loans will receive 36 percent of potential future distributions.

“Despite the current economic challenges, the company offers great potential to make battery cell research and production in Europe more independent of Asian suppliers. Together with Porsche, we want to contribute to this. With today’s agreement, we have taken an important first step together, which will ensure the stability of VARTA AG and pave the way for a new start,” said Tojner, commenting on the capital injection.

Other investors “want to get in”

After Tojner and Porsche, a third shareholder could come in. “We are in advanced discussions with other investors who would like to join us,” Varta CEO Michael Ostermann told Reuters.
Varta’s bankruptcy is currently off the table with the concept of restructuring, a company spokesperson said in response to APA’s request. However, the so-called pre-insolvency procedure is still in effect. In July, Ostermann announced a radical restructuring in accordance with the German StaRUG restructuring law. After bad and expensive investments, the company was no longer able to service its debt mountain.
The compromise does not threaten the company with any major operational cuts. “We want to grow, whether through battery storage for photovoltaic systems or through button cells for Apple headphones, and we are currently looking for employees there,” Ostermann said, according to Reuters. Varta will keep all sites in Germany. There are only “moderate” job cuts in management. “We will put Varta back on a profitable growth path.”