The shares of the German battery manufacturer Varta, which is majority owned by the group of Austrian investor Michael Tojner, recorded massive losses in morning trading on the Frankfurt Stock Exchange. In the first few minutes of trading, the shares initially fell by 80 percent to 2.10 euros – a record low. At around 9.30 a.m., the shares were still down 77 percent at 2.66 euros. Before the weekend, the shares had been above 10 euros.
- Read more: Tojner’s Varta plans radical restructuring with debt restructuring
The troubled company from Ellwangen, Germany, plans to file a pre-insolvency restructuring procedure with the Stuttgart District Court shortly – probably on Monday – as Varta announced on Sunday evening.
The debt burden of almost 500 million euros must be significantly reduced, and fresh capital of almost 100 million euros is needed, said CEO Michael Ostermann, who was brought on board to carry out the restructuring. One of two competing proposals is a joint capital injection from major shareholder Tojner and sports car manufacturer and Varta customer Porsche. The other comes from the creditors.
Which of the two solutions will be used is still open, said Ostermann, who joined Varta in May. “In the end, it is important to me that we have a good solution for Varta.”
“The latest developments are making the situation for shareholders even worse,” said analyst Michael Punzet of DZ Bank, commenting on the developments at the battery company. “The planned financial repositioning of Varta AG is clearly at the expense of existing shareholders and creditors.”
Although this could be a first step to secure jobs and the continued existence of the company, said Punzeit, the proposed capital cut would lead to a “compensation-free exit of the shareholders”. The expert therefore reduced the fair value of the shares to 0 euros.
The analysis house Warburg Research has also lowered the price target for Varta shares to 0 euros in view of the impending capital cut and left the rating at “sell”. Analyst Robert-Jan van der Horst referred to the restructuring plan, which ultimately results in a total loss for the existing shareholders. According to Varta, the creditors are only prepared to give up a large part of their claims if the company’s share capital is reduced to zero euros.
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