German battery manufacturer Varta has confirmed a restructuring agreement with creditors, with Porsche stepping in to save the struggling company. The deal will reduce Varta’s debt from 485 million euros to 200 million euros initially. Varta, known for making batteries for automotive, industrial, and consumer markets, had been seeking a compromise between Michael Tojner, creditors, and Porsche to secure fresh capital and alleviate its debt.
Under the terms of the agreement, Michael Tojner and Porsche will become the new owners of Varta, injecting 60 million euros into the company. An additional 60 million euros will come from creditors as senior secured loans, with the possibility of a third investor joining the rescue effort later on. Varta CEO Michael Ostermann stated that they are in advanced discussions with other investors interested in participating in the restructuring.
Porsche’s involvement in Varta’s rescue will provide the carmaker access to high-performance batteries for its hybrid and electric sports cars. The partnership will also see Porsche taking a majority stake in Varta’s V4Drive Battery division through a capital increase mainly through a contribution in kind. Lutz Meschke, deputy chairman of the executive board at Porsche AG, highlighted the importance of maintaining key technologies in Germany through this investment.
Back in July, Varta had announced a radical pre-insolvency restructuring due to its mounting debt from costly investments. With the recent agreement in place, the company’s financing and liquidity have been stabilized for the long term, according to Varta CFO Marc Hundsdorf. While job cuts are expected, Ostermann emphasized that there is no immediate threat of major layoffs and that the focus is on growing the company with new initiatives.
Varta plans to maintain all its manufacturing sites in Germany, with only “moderate” job reductions in administrative roles. Ostermann expressed confidence in putting Varta on a profitable growth trajectory, particularly in battery storage for photovoltaic systems and button cells for Apple headphones. However, existing shareholders will not benefit from the restructuring as Varta will be delisted from the stock exchange. Ostermann mentioned that efforts were made to involve small shareholders in the process, but it was not legally viable in the circumstances.
