- Varta is anticipated to regain its normal course by the year's end.
The timeline for Varta battery company's restructuring process is becoming more transparent. A contract needs to be drafted and presented to the bankruptcy court, as stated by a Varta representative. For this to happen, all parties involved must agree, and approval from the Federal Cartel Office is necessary. This process could take several weeks. It's predicted that several additional months will be required to finalize the restructuring strategy. It's hoped that the process will be completed by the end of this year.
Varta revealed an agreement with creditors and financiers over the weekend. Central aspects of the restructuring plan involve debt reduction and new funds, such as those provided by sports car manufacturer Porsche. If all goes well, the plan should provide financial security for Varta AG until the end of 2027. There are also plans to reduce administrative staff.
Varta initiated pre-insolvency restructuring procedures in July. In its bid to remain afloat, the company also aims to dissolve its original shareholders. The value of Varta's shares plummeted after the announcement last month. The company, situated in Ellwangen, Swabia, currently employs around 4,000 people.
Problems have been accumulating for some time
The battery giant has been in turmoil for a while due to various factors. Demand for small lithium-ion button cells, for example for headphones, is highly unpredictable. In addition, the company has complained about cheap competition from China. To add to their woes, the company's computer systems were hacked in February, causing production disruptions for weeks. However, management blunders are also under suspicion.
In the first nine months of 2023, Varta generated around 554 million euros in revenue. However, due to the hacker attack, current business figures are unavailable. Quarterly figures for 2024 are scheduled for August 30, while the 2023 financial report is expected to be released at the end of October.
The crisis at Varta battery company has led to the need for a restructuring plan, which is expected to take several weeks to draft and receive approval from the Federal Cartel Office. Upon successful completion, the plan aims to provide financial security for Varta AG until the end of 2027, but the company has been facing multiple challenges for some time now, including unpredictable demand for small lithium-ion button cells, cheap competition from China, and a hacking incident that disrupted production for weeks.
