Porsche Becomes Co-Owner of German Battery Manufacturer Varta

The German battery manufacturer Varta reached a restructuring agreement with its creditors over the weekend, with the sports car manufacturer Porsche entering its ownership structure in an effort to save its struggling business.

The agreement, reached after a day of intense negotiations, will reduce Varta’s debt from 485 million to 200 million euros, the company reported. This battery manufacturer for the global automotive, industrial, and consumer markets worked on an agreement between its main shareholder Michaela Tojnera, creditors, and Porsche to reduce indebtedness and secure fresh capital.

According to the agreement, Tojner and Porsche will be the new owners of Varta and will jointly secure a recapitalization of 60 million euros. An additional 60 million euros will come from creditors as senior secured loans, the company announced, adding that a third investor could join later.

– We are in advanced talks with other investors who would like to join us – said Varta’s CEO Michael Ostermann.

By helping to rescue Varta, Porsche will secure access to high-performance batteries for hybrid and electric sports cars. The German car manufacturer announced that it will take a majority stake in Varta’s V4Drive Battery business by participating in the capital increase through asset contributions.

– With the planned majority acquisition of V4Drive, we would make an important contribution to retaining key technologies in Germany – emphasized the Vice Chairman of the Executive Board at Porsche AG Lutz Meschke.

In July, Ostermann announced a radical pre-insolvency restructuring of Varta due to debt that the company could not service after costly investments. “With the implementation of the measures agreed upon today, the financing and liquidity of the group are now sustainably stabilized and secured in the long term,” stated Varta’s CFO Marc Hundsdorf.

Ostermann noted that there is no direct threat of significant job cuts.

– We want to grow in the area of batteries for photovoltaic systems and round batteries for Apple headphones, and we are currently looking for employees in those businesses – he said. Varta will thus retain all its production sites in Germany, with only a “moderate” reduction in the number of employees in administration.

However, existing shareholders will be left empty-handed, as Varta will be delisted from the stock exchange after the restructuring.

– We tried everything to win over minority shareholders – but that is not legally possible in this situation – said Ostermann.