German battery maker Varta said it is in talks with luxury carmaker Porsche AG and other potential investors as it seeks a financial-restructuring plan to avoid a possible insolvency.
The company said that creditors are demanding a reduction of its capital to zero and a fresh liquidity injection to accept an agreement to cancel part of its outstanding debt. This would result in existing Varta’s shares losing their value and in its stock-exchange listing being permanently canceled.
News of the financial-restructuring plan comes after a difficult period for Varta, which has struggled to return to profitability as it deals with supply-chain problems, weakness in the battery-storage market and the fallout of a cyberattack. The company in May hired Michael Ostermann as chief executive, pointing to his restructuring experience.
Varta is in talks with various potential investors, which include indirect majority shareholder Michael Tojner, Porsche AG and other interested parties, it said.
Earlier this month, Varta said it was in talks with Porsche regarding an investment in the German battery manufacturer’s subsidiary V4Drive Battery, which produces e-mobility lithium-ion batteries. The disclosure sent Varta’s shares sharply higher, but the stock has fallen 50% since the start of the year.
The company said it needs to make strategic investments to tap into growth opportunities and strengthen its operations and estimates its funding requirement to be in the high double-digit million euro range.
“The current debt situation is foreseeably blocking the Varta Group’s chances of positive business development. Without reducing our debt, we will not be able to make the necessary investments,” said Varta’s Chief Restructuring Officer Michael Giesswein.
The company also said it will delay the publication of its consolidated financial statements for 2023 until the second half of August 2024 at the earliest, as this will only be possible once the implementation of a financial restructuring has been secured.
Varta plans to convene a general shareholders’ meeting on short notice, it said.
