- Varta to be stabilized by year-end
The future of struggling battery giant Varta is expected to be resolved by the end of the year, according to majority shareholder Michael Tojner. "We hope to have a solution by the end of August or early September," Tojner told the "Frankfurter Allgemeine Zeitung". This result would then have to go through the procedure according to the Unternehmensstabilisierungs- und -restrukturierungsgesetz (StaRUG). "That would take another two to three months. My goal is to have Varta stabilized by the end of the year and to have a real prospect for the future."
The battery company filed for insolvency proceedings in July. In its fight for survival, Varta aims to squeeze out the old shareholders and have creditors waive a large part of their claims. The value of Varta's shares plummeted after the announcement. The company, based in Schwäbisch Gmünd, currently employs around 4,000 people.
Porsche as a savior?
To secure production by 2027, the company needs around 100 million euros in fresh money and a debt cut, according to earlier statements by CEO Michael Ostermann. Varta owes large creditors such as banks and hedge funds around half a billion euros. There are currently two rescue proposals on the table: one from Tojner and Stuttgart-based sports car maker Porsche, and another from four hedge funds that have bought Varta's loans from banks.
Negotiations are currently underway, which Tojner describes as professional but also tough. All parties involved want to avoid insolvency. "We are speaking with banks, creditors, other investors, and also the funds. And we hope to reach a result with which everyone can live," said the 58-year-old, who is also chairman of Varta's supervisory board.
The crisis has been brewing for some time
Regarding the joint proposal with Porsche, he only said vaguely: "A part of the new equity would come from us, the rest from banks and Porsche. But we would also undertake the commitment to subscribe to additional money if necessary for the restructuring." Now one has to see which package is the best. Varta needs equity above all: "Too much new debt would, in my view, overburden the company, and in two years we would be in the same situation again. The company must be stabilized, it must be able to research again - and must not be drained."
The battery company has been in crisis for some time 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. To make matters worse, hackers attacked the company's computer systems in February, paralyzing production for weeks. But management errors are also suspected.
Other potential investors might be interested in Varta's turnaround plan, given its strategic position in the battery market. To avoid a lengthy legal battle, it would be beneficial for Varta to find a mutually acceptable solution with its creditors.
