Battery Maker Varta Seeks Restructuring as Porsche Considers Investment

Struggling battery manufacturer Varta is exploring restructuring options through pre-insolvency reorganization proceedings, with a possible investment from Porsche under consideration.

According to the Frankfurter Allgemeine Zeitung (FAZ), Porsche is contemplating acquiring a stake not only in Varta’s V4Drive division but also potentially in the parent company, Varta AG. “The fact that the sports car manufacturer now apparently also wants to get involved with the parent company shows the dramatic situation of Varta AG,” the FAZ reported. Porsche emphasized that “only the high-performance cell is important” to their interests.

In a statement to Reuters, Porsche indicated that its involvement could extend to a financial restructuring of Varta AG, contingent on the company achieving a solid financial footing. “The prerequisite for this is a sound financial basis for Varta AG. Under certain circumstances, we could therefore imagine participating in a financial restructuring of Varta AG as a whole. Discussions on this are still ongoing,” Porsche said.

Austrian investor Michael Tojner, who holds a majority stake in Varta through the Swiss holding company Montana Tech Components, is reportedly supportive of this plan. Another proposal involves creditors agreeing to a “haircut,” which would involve partial debt cancellation to restore financial stability. However, Varta noted that creditors are only prepared to agree to this if the company’s share capital is reduced to zero and fresh capital is injected.

Varta has informed the Stuttgart District Court of its restructuring plans under the German Corporate Stabilization and Restructuring Act (StaRUG), aiming to avoid insolvency. The company expressed doubts that either proposed plan would secure the necessary majority at a shareholder meeting, but confirmed it will update the courts on the planned restructuring.

Varta introduced the V4Drive cell for electric vehicles in 2021 and initially aimed to begin mass production by the end of 2023. However, the company paused its automotive sector plans in late 2022, pending binding customer commitments. Porsche’s potential investment could significantly support Varta, which estimates needing a “high double-digit” million euro amount to secure a positive continuation forecast and avoid insolvency. Tojner is expected to contribute around half of this amount, though Porsche’s exact share is yet to be determined.