The battery manufacturer is taking radical steps – and choosing a procedure that is intended to prevent an operationally viable company from going bankrupt. Porsche is also playing a role.
The badly hit battery company Varta wants to force the old shareholders out of the company in the fight for survival. In addition, creditors are to give up a large part of their money and their claims – resistance to the company’s plans is already forming among them.
On Sunday evening in Ellwangen, Varta announced that it would be submitting a restructuring plan to the responsible district court in Stuttgart in the near future in accordance with the Corporate Stabilization and Restructuring Act (StaRUG). This is intended to permanently avert a possible insolvency of Varta.
Bitter news for shareholders
While the announcement emphasized the safeguarding of jobs and the protection of creditors’ interests, it contained bitter news for existing shareholders: Both restructuring proposals submitted to the company provide for a simplified reduction of the company’s share capital to zero euros – combined with a subsequent capital increase with exclusion of subscription rights and the issue of new shares.
Since, in Varta’s estimation, the existing shareholders are unlikely to agree to the loss of their entire share package without compensation and to be completely forced out of the company with the required majority of 75 percent of the share capital present, the Corporate Stabilization and Restructuring Act (StaRUG) is to come into effect.
This stipulates that individual shareholders or creditors no longer have any rights in order not to endanger the existence of an operationally viable company. This would also involve a debt cut, which, according to the statement, the creditors would only agree to if the equity was reduced to zero.
Talks also with Porsche
Varta has a financial need in the high double-digit million euro range. The involvement of financial creditors and investors is also planned to cover this. Negotiations are currently underway with, among others, the previous majority owner Michael Tojner, who is also chairman of the supervisory board, and the sports car manufacturer Porsche AG, which belongs to the Volkswagen Group. The latter had only announced at the beginning of the month that it wanted to buy the electric car battery business from Varta.
According to information from financial circles, major creditors are skeptical about the plan outlined today, as they would be excluded from the planned capital increase. The possibility of providing fresh money after the capital cut and thus continuing to be involved in the company would remain reserved for the current majority shareholder and Porsche. This contradicts fair equal treatment.
However, according to major creditors, this is a prerequisite for the StaRUG procedure to have any chance of success. According to information from the circles, the proposals made by the major creditors, which have been available for some time, have not yet been sufficiently considered. And this despite Varta CEO Michael Ostermann asserting in a conversation with the Reuters news agency on Sunday that he wanted to examine both proposals for the benefit of Varta.
The liabilities that Varta owes to large institutional lenders such as banks and hedge funds are said to involve a syndicated loan and promissory notes totaling almost half a billion euros. Creditors’ representatives are therefore counting on being more closely involved in the planned rescue steps. Varta was listed on the stock exchange in 2017 for 17.50 euros. The stock was in demand on the stock exchange for a long time. At the beginning of 2021, the price rose to 181.30 euros before falling rapidly again. On Friday, the share cost 10.32 euros at the close of trading on Xetra. The company’s market value was thus almost 440 million euros. Just over half of the shares are owned by Montana Tech Components, which in turn belongs to the chairman of the supervisory board, Michael Tojner.
Source: Stern
