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(Bloomberg) — Porsche AG is acquiring a stake in Varta AG, according to people familiar with the matter, as the troubled battery maker evaluates features to restructure its debt.
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The German luxury carmaker intends to acquire a majority stake in Varta’s electric mobility battery unit, as well as a minority stake in the organization as a whole, said the sources, who asked not to be identified because the matter is private. Porsche demonstrated that it is in a position to play a greater role in the restructuring of Varta “so that this key generation remains in Germany”.
Porsche is pursuing its own battery strategy to complement the projects of its parent company Volkswagen AG. This includes building high-performance cells through its Cellforce business, while the manufacturer also detailed plans last year for a 3. 3 billion euro ($3. 6 billion) site in which they are monetary and strategic partners.
Varta is recently considering two currency restructuring proposals with creditors and potential investors, the company said in a statement on Sunday. These include Porsche, a company controlled by Austrian businessman and majority shareholder Michael Tojner, as well as other interested parties, he said.
Any potential restructuring project for Varta aims to inject a “high, double-digit amount” of new budget into the company, the company said. Both proposals would involve a write-off of Varta’s shares and some groups of creditors would also see a “significant” cut in their debt, he said.
Varta’s shares fell 80% early Monday in Frankfurt and 63% as of 11:34 a. m. The latest move reduced the company’s valuation by €350 million. Varta’s origins date back more than 130 years and can be traced back to battery functional tests on a bloodless expedition to the North Pole in the 19th century. It currently employs about 4,200 people.
The battery maker is in talks with creditors after failing to recover from a debt restructuring last year. The company is facing a drop in demand in its main markets and the impact of a cyberattack in February.
Potential Deals
One possible proposal to stabilize Varta is a new investment of one hundred million euros, depending on resources, which would benefit existing shareholders. The majority owner, Tojner, has shown that he risks squandering his current stake in Varta.
Banks would lose part of their claims (more than €485 million) as part of the bailout, the sources said, adding that Swiss company Montana Tech Components, run by Tojner, is also preparing monetary support.
Varta is also a proposed restructuring agreement through existing creditors, according to another user familiar with the negotiations. Under the plan, lenders would have the option to participate in any new debt or equity financing, the user said.
According to a spokesman, discussions for a bailout deal are at a complex stage.
Earlier this month, Porsche and Varta announced a cooperation in the electric mobility subsidiary, which produces lithium-ion cells that can be used in electric cars, which will see their shares rise.
Porsche is hired through Herter
The German newspaper Frankfurter Allgemeine Zeitung was the first to report on Porsche’s potentially most important role in Varta.
–With Mónica Raymunt.
(Updated with majority shareholder in paragraph 9, Varta in paragraph 11)
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