The restructuring concept for the ailing battery manufacturer Varta is in place. The sports car manufacturer Porsche wants to get in with 30 million euros and thus contribute to the rescue. After lengthy negotiations, major shareholder Michael Tojner (58), Porsche and most of the creditors agreed on a compromise on how Varta should be relieved of debt and provided with fresh capital.
Accordingly, the banks are waiving 285 million euros, so that the liabilities initially fall to 200 million euros, as the group announced on Saturday in Ellwangen. At the same time, the shareholders lose their stake. CFO Marc Hundsdorf spoke of a decisive breakthrough.
The new Varta owners will be Tojner and Porsche, who will provide a capital injection of a total of 60 million euros. Another 60 million come from creditors as senior secured loans. A third partner could come on board later. “We are in advanced discussions with other investors who would like to join us,” said Varta boss Michael Ostermann to the Reuters news agency.
Tojner said: “With today’s agreement, we have taken a first important step together, which will ensure the stability of Varta AG and pave the way for a new start.” The Austrian investor has so far held a good 50 percent of Varta. The capped old and the new ones Loans – a total of 260 million euros – have a term until the end of 2027. Read the portrait of the dazzling billionaire Tojner here
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Varta boss Michael Ostermann announced a radical restructuring in July in accordance with the StaRUG restructuring law. After costly bad investments, the company is no longer able to service its mountain of debt. “I am glad that we have achieved this important milestone. Now all of this has to be put into contracts,” he continued. “It could well take another three months until the StaRUG process is completed.” The shareholders are left empty-handed in this process.
StaRUG stands for Corporate Stabilization and Restructuring Act and is a pre-insolvency restructuring process that allows companies to survive insolvency can be averted if insolvency is imminent but the company is still solvent. The procedure is possible in Germany only since the Corona crisis in 2021.
Job cuts in administration
According to Ostermann, the workforce is not threatened with deep operational cuts: “We want to grow, both with battery storage for photovoltaic systems and with button cells for them Apple-Headphones. We are currently looking for staff there,” he said. Varta will hold on to all locations in Germany. There will only have to be “moderate” job cuts in administration. “We will get Varta back on a profitable growth path.”
Owners and creditors had been struggling to find a solution since Monday. Two proposals have been on the table since July – one from Tojner and Porsche, another from the creditors. According to the compromise, those banks that give fresh loans will receive 36 percent of possible future distributions. But you probably need a lot of patience for this.
Legally, Tojner and Porsche each hold 50 percent. With the continued existence of Varta, the Volkswagen subsidiary primarily wants to secure access to high-performance batteries for its hybrid and electric sports cars. Porsche even wants to take a clear majority in this division called “V4Drive”, as Ostermann confirmed.
Porsche wants majority in Varta subsidiary “V4Drive Battery”
Despite the impending total loss, Varta shares were still worth a good 160 million euros on Friday. Small shareholders and speculative investors were counting on the fact that they would at least have the right to take part in a capital increase. But they come away empty-handed and Varta is taken off the stock exchange.
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“We have tried everything to get the small shareholders on board – but that is not legally possible in this situation,” said Ostermann. Due to the lack of audited annual financial statements, Varta cannot prepare a prospectus that would be necessary for a broad capital increase.
According to participants, an alternative proposal from some promissory note creditors, which would have provided subscription rights for all shareholders, was therefore rejected as unimplementable. The subscribers to the promissory notes, including several hedge funds, are the ones with the most fire at Varta, with 250 million euros. But they are divided; some of them support the agreement. According to the StaRUG, individual creditors cannot block a restructuring.