Battery company in crisis
Debt cut and Porsche entry to save Varta
Porsche is helping Varta by taking over its subsidiary. (Archive image) Photo
© Stefan Puchner/dpa
Varta seems to have found a way to ensure the battery company’s survival. There is now a restructuring plan. An important customer is on board as an investor.
If everything goes as planned, the restructuring concept is said to ensure the financing of Varta AG until the end of 2027. The company from Ellwangen in Swabia spoke of a “significant milestone”. The concept will “significantly reduce the group’s debt and provide it with fresh liquidity”.
Complete reduction of share capital
First, a debt cut and the extension of loans are intended to reduce the current liabilities from almost half a billion euros to 200 million euros. Then the share capital of Varta AG is to be reduced to zero euros. The effect: the current shareholders will leave and the group will lose its stock exchange listing.
Immediately following the capital reduction, a company controlled by Varta majority shareholder Michael Tojner (MT InvestCo) and an investment company of sports car manufacturer Porsche are to join as new shareholders, each with 30 million euros. Part of Tojner’s investment will be real estate that Varta is currently renting.
After completion of all capital measures, MT InvestCo and Porsche will each hold 32 percent of Varta, and the other financiers together will hold 36 percent. Legally, according to the announcement, the shares in Varta AG will initially be held by MT InvestCo and Porsche at 50 percent each, “with care being taken in the design to ensure that neither MT InvestCo nor Porsche nor both of them together have control.”
Varta battery in the Porsche 911 Carrera
Porsche had previously announced that it wanted to take over a majority stake in Varta’s car battery subsidiary V4Drive Battery. Porsche also expressed its willingness to participate “with other partners” in the financial restructuring of Varta AG, it said. Porsche’s investment would amount to 30 million euros. In the company V4Drive Battery, Varta is bundling its business for large-format lithium-ion round cells, which are used in the hybrid drive of the Porsche 911 Carrera GTS.
Plans presented a few weeks ago
The agreement presented on Saturday concretizes what Varta announced almost a month ago. At the time, the company announced that it would file a restructuring plan with the Stuttgart District Court under the Corporate Stabilization and Restructuring Act (StaRUG). The old shareholders were to be forced out and creditors were to give up a large part of their money and claims.
Majority shareholder Tojner explained at the time: “We have to take this step to give Varta a future, to secure almost 4,000 jobs and to maintain the company as an economic factor in the region and, above all, as a technology carrier for Europe.”
When asked, the spokesperson clarified that there would probably be a moderate reduction in jobs in administration. On the other hand, workers would be sought in the commercial sector. What this ultimately means for the number of employees cannot yet be foreseen. As early as spring 2023, Varta had announced that it would cut around 800 jobs worldwide as a result of a cost-cutting program – around 390 of them in Germany.
Hacker attack and capped sales targets for 2024
The battery company has been in crisis for some time. For example, demand for lithium-ion button cells for headphones fluctuates greatly. Recently, Varta complained about cheap competition from China and ongoing problems in the supply chain. In addition, hackers attacked Varta’s computer systems in February and brought production to a standstill for weeks.
In mid-April, Varta had to admit that its own restructuring concept was no longer sufficient to return to a profitable growth path by the end of 2026 as planned. In June, Varta cut its sales target for 2024 due to weak demand. Sales should now settle at between 820 million and 870 million euros in the current year. Until then, the management board had been aiming for at least 900 million euros.
In the first nine months of 2023, Varta had sales of around 554 million euros. There are no more recent business figures due to the hacker attack. Information on the first quarter of 2024 is expected on August 30, and the 2023 annual report at the end of October.