By Alexander Hübner and Emma-Victoria Farr
FRANKFURT (Reuters) -German battery maker Varta said on Saturday it had reached a restructuring deal with its creditors, forcing sports car maker Porsche to bail out the ailing company.
The deal, reached after days of intensive negotiations, will initially reduce Varta’s debt from 485 million euros to 200 million euros, the company said.
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 ease its debts and secure new capital.
Under the agreement, Tojner and Porsche will become the new owners of Varta and together provide a capital injection of 60 million euros.
Another 60 million euros will come from creditors as senior secured loans, the company said, adding that a third investor could come on board later.
“We are in advanced discussions with other investors who want to join us,” Varta CEO Michael Ostermann told Reuters.
By helping to rescue Varta, Porsche will secure access to high-quality batteries for its hybrid and electric sports cars.
The German car manufacturer also announced on Saturday that it would acquire a majority stake in Varta’s V4Drive Battery division through a capital increase, mainly through a contribution in kind.
“With the planned majority acquisition of V4Drive, we would… make an important contribution to retaining key technologies in Germany,” said Lutz Meschke, Vice Chairman of the Board of Management of Porsche AG.
In July, Ostermann announced a radical pre-bankruptcy restructuring for Varta, which had debts it could not pay off after making expensive investments.
“With the implementation of the measures agreed today, the group’s financing and liquidity are now sustainably stabilized and secured in the long term,” said Marc Hundsdorf, CFO of Varta.
‘MODERATE’ JOB REDUCTION
Ostermann said there is no immediate threat of major job losses.
“We want to grow, both with battery storage for photovoltaic systems and with button cells for Apple (NASDAQ:) headphones. That’s where we are currently hiring,” he said.
Varta will keep all its production sites in Germany, with only “moderate” job cuts in administration. “We will put Varta back on a profitable growth path,” he told Reuters.
However, existing shareholders will come away empty-handed as Varta will be delisted after the restructuring.
“We have done everything we can to get the small shareholders on board, but that is not legally possible in this situation,” said Ostermann.
($1 = 0.9068 euros)
