The battery company Varta is fighting for survival. Now restructuring plans are a bitter pill for shareholders. With consequences: The share price is collapsing. Rescue could come from Stuttgart-Zuffenhausen.
The situation at the struggling battery company Varta is coming to a head. In the fight for survival, the company is now resorting to more drastic measures: the old shareholders are to be forced out of the company, creditors are to give up a large part of their money and their claims. Investors are also to come on board. This is to avert a possible insolvency of Varta, it was said.
In order to be able to put the plans into action, the Ellwangen-based company announced on Sunday that it would notify the responsible district court in Stuttgart of a restructuring plan in accordance with the Corporate Stabilization and Restructuring Act (StaRUG). A court spokesman confirmed on Monday that such a notification had been received.
Varta has been in crisis for some time
The battery company has been in crisis for some time now because business is no longer running smoothly. Demand for small lithium-ion button cells, for example for headphones, fluctuates greatly. Varta has also recently complained about cheap competition from China and ongoing problems in the supply chain. To make matters worse, hackers attacked Varta’s computer systems in February and paralyzed production for several weeks.
The share price has therefore been on a downward trend for some time. In June, Varta also scrapped its sales targets due to a lack of demand. The group had previously also had to admit that its own restructuring concept was no longer sufficient to return to a profitable growth path by the end of 2026 as planned.
Shareholders will go away empty-handed
Now new restructuring proposals are on the table. And they are tough, especially for shareholders: The proposals envisage firstly redeeming Varta shares without compensation. In a second step, the share capital will then be increased and new shares issued. Apart from possible new investors, however, all existing shareholders would be excluded from purchasing.
However, Varta believes that the existing shareholders are unlikely to agree with the necessary majority to the loss of their shareholding and to be completely pushed out of the company. Hence the procedure with the complicated name: Its purpose is to prevent an operationally viable company from going bankrupt. In doing so, the resistance of individual creditors, but also of shareholders, can be circumvented.
Probably due to fear of total failure, the share price plummeted on Monday. At times it fell by around 80 percent. The stock was only worth a few euros. By comparison: at the beginning of 2021, the price was at a high of more than 180 euros.
Rescue from Stuttgart-Zuffenhausen?
The procedure is intended to be the basis for the reorganization of Varta. To do this, the Swabians also need money in the high double-digit millions. The participation of financial creditors and investors is also planned to cover the costs, it was said.
Negotiations are currently underway – including with the previous majority owner Michael Tojner and the sports car manufacturer Porsche. It was only announced at the beginning of the month that the Volkswagen subsidiary was negotiating with Varta about taking over the electric car battery business. The two companies work closely together on high-performance battery cells.
The Zuffenhausen-based company confirmed negotiations: “The aim of our commitment would be to maintain this key technology in Germany,” it said. The prerequisite for this is a healthy financial basis for Varta: “Under certain circumstances, we could therefore imagine participating in a financial reorganization of Varta AG as a whole.” Varta’s cells are to be used in the 911 series.
Restructuring includes debt restructuring
There will also be a debt cut. The liabilities that Varta owes to large lenders such as banks and hedge funds are said to amount to almost half a billion euros. Creditors’ representatives are therefore hoping to be more closely involved in the planned rescue measures.
According to majority shareholder Tojner, the process is the only way to give the company a good perspective. “All alternatives were weighed up together with management, and the decision was not an easy one for anyone.” The most important goal was to reduce the debt burden. The capital is not enough to stabilize the current business. “We have to take this step to give Varta a future, to secure almost 4,000 jobs and to maintain the company as an economic factor in the region and, above all, as a technology carrier for Europe.”
Source: Stern
