By Alexander Hubner and Emma Victoria Farr
FRANKFURT (Reuters) – German battery maker Varta said on Saturday it had reached a restructuring agreement with its creditors, calling on sports carmaker Porsche to step in to rescue the troubled company.
The company said the deal, reached after days of intense negotiations, would reduce Varta’s debt from 485 million euros ($534.86 million) to 200 million euros initially.
Varta, which makes batteries for the global automotive, industrial and consumer markets, was looking for a compromise between major shareholder Michael Tojner, creditors and Porsche to reduce its debt and secure fresh capital.
Under the agreement, Tojner and Porsche will become the new owners of Varta and together provide a capital injection of €60 million.
The company said an additional €60 million would come from creditors as first secured loans, adding that a third investor could join later.
“We are in advanced discussions with other investors who would like to join us,” Varta Chief Executive Michael Osterman told Reuters.
By helping Porsche save Varta, the company will secure access to high-performance batteries for its hybrid and electric sports cars.
The German automaker also announced on Saturday that it will acquire a majority stake in Varta’s V4Drive battery division through a capital increase primarily through an in-kind contribution.
“With the planned acquisition of a majority stake in V4Drive, we will make an important contribution to keeping key technologies in Germany,” said Lutz Meschke, Deputy Chairman of the Executive Board of Porsche AG.
In July, Osterman announced a radical restructuring of pre-bankruptcy Varta, which was struggling with debt it could not service after making costly investments.
“With the implementation of the measures agreed today, the Group’s financing and liquidity are now stable and secure for the long term,” said Mark Hundsdorf, Chief Financial Officer of Varta.
moderate job cuts
There is no imminent threat of major job cuts, Osterman said.
“We want to grow, whether through battery storage for photovoltaic systems or through button cells for Apple Inc. (NASDAQ:AAPL) headphones. We are currently looking for employees there,” he said.
Varta will keep all of its manufacturing sites in Germany, with “moderate” job cuts in management. “We will put Varta back on a path of profitable growth,” he told Reuters.
However, existing shareholders will exit the market empty-handed, as Varta will be delisted from the stock exchange after the restructuring.
“We have tried everything we can to get small shareholders involved, but it is not legally possible in this situation,” Osterman said.
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