Varta Considers Restructuring with Potential Porsche Investment

German battery maker Varta announced on Sunday that it is exploring two restructuring scenarios, potentially leading to luxury sportscar manufacturer Porsche acquiring a stake in the company.

In a statement, Varta revealed that the two scenarios involve potential new investors, including its existing Austrian majority shareholder Michael Tojner and Porsche, as well as financial creditors. The company has decided to inform the relevant courts about an overhaul in line with Germany's corporate stabilization and restructuring act. Without such measures, Varta warned it would face losses consuming its share capital.

Varta, valued at 440 million euros ($479 million), had previously disclosed talks with Porsche regarding a potential investment that could see the carmaker becoming a majority owner of Varta's V4Drive business. Sunday's statement suggests that Porsche might take a direct stake in Varta itself.

Porsche confirmed the negotiations, aiming to acquire a majority stake in V4Drive through a possible capital increase. "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 stated.

In April, Varta acknowledged the possibility of not meeting targets set under its restructuring plan and began exploring recapitalization options to achieve "profitable growth" by the end of 2026.

Varta aims to swiftly decide on which restructuring scenario to implement, noting that they involve debt capital or a mix of debt and equity in a high double-digit million euro amount to fund restructuring measures. Both proposals would reduce the group's share capital to zero, resulting in the exit of existing shareholders, except Tojner, without compensation and the delisting of its shares.

The company also mentioned a significant debt haircut for certain creditor groups and the deferral of remaining claims. Varta admitted it is unlikely that either proposal would gain the necessary majority at a general meeting of shareholders but noted that court-approved restructuring could bypass the need for investor approval.