The badly hit battery company Varta wants to force the existing shareholders out of the company in the fight for survival. In addition, creditors should forego a large part of their money and their claims – resistance to the company’s plans is already forming among them.
Varta announced on Sunday evening in Ellwangen that it would shortly notify the responsible Stuttgart district court of a restructuring project in accordance with the Corporate Stabilization and Restructuring Act (StaRUG). This is intended to sustainably avert a possible insolvency of Varta. Varta shares only cost a record low 2.10 euros on Xetra this morning – 80 percent less than on Friday evening.
Bitter news for shareholders
While the announcement emphasized the security of jobs and the protection of creditors’ interests, it contained bitter news for the existing shareholders: Both restructuring proposals presented to the company provide for a simplified reduction of the company’s share capital to zero euros – combined with a subsequent capital increase with exclusion of subscription rights and issuing new shares.
According to Varta’s assessment, the existing shareholders are unlikely to agree to the loss of their entire share package without compensation and the complete expulsion from the company with the required majority of 75 percent of the existing share capital. That is why the Corporate Stabilization and Restructuring Act (StaRUG) should come into effect.
This stipulates that individual shareholders or creditors no longer have any rights in order not to endanger the existence of an operationally viable company. A haircut is also to be carried out, which, according to the announcement, the creditors would only agree to if the equity capital was reduced to zero.
Discussions also with Porsche
Varta has financial needs in the high double-digit million euro range. The participation of financial creditors and investors is also planned for coverage. Negotiations are currently underway with, among others, the previous majority owner Michael Tojner (58), who is also chairman of the supervisory board, and the Sports car manufacturer Porsche AG, which is part of the Volkswagen Group
. He had only announced at the beginning of the month that he wanted to buy Varta’s electric car battery business.
According to information from financial circles, large creditors are skeptical about the plan outlined today because they would be excluded from the planned capital increase. The possibility of giving fresh money after the capital cut and thus continuing to have a stake in the company would remain reserved for the previous majority shareholder and Porsche. This contradicts fair equal treatment.
However, according to large creditors, this is a prerequisite for the StaRUG procedure to have any chance of success. According to the district information, the proposals made by the major creditors, which have been available for some time, have not yet been sufficiently appreciated. And this despite the fact that Varta boss Michael Ostermann assured in a conversation with the Reuters news agency on Sunday that he wanted to examine both proposals for the benefit of Varta.
The liabilities that Varta owes to large institutional lenders such as banks and hedge funds are reportedly a syndicated loan and promissory notes totaling almost half a billion euros. Creditor representatives are therefore hoping to be more closely involved in the planned rescue steps.
Varta was listed on the stock exchange in 2017 for 17.50 euros. The paper was in demand on the stock exchange for a long time. At the beginning of 2021, the price rose to 181.30 euros before it fell rapidly again. On Friday, the share cost 10.32 euros at the close of trading on Xetra. The company’s market value was almost 440 million euros. A little more than half of the shares are owned by Montana Tech Components, which in turn belongs to the chairman of the supervisory board, Michael Tojner.