Varta secures fresh cash to back its restructuring plans

German battery maker Varta AG has secured EUR 60 million ($65.77 million) in equity capital from major shareholder Austrian investor Michael Tojner and sports car manufacturer Porsche, making a major step in its restructuring process.

The embattled battery maker said on Monday that the contracts with the loan lenders and promissory note creditors have been signed, with the agreement subject to antitrust approval.

Varta expects to finalize its restructuring plan in October and then have it confirmed by the restructuring court by the end of 2024.

In addition, the German battery maker concluded a EUR 30 million short-term bridge facility agreement with some of the syndicated loan lenders, to secure financing until the conclusion of the restructuring proceedings.

Varta first announced a comprehensive restructuring concept in April 2023, which among other measures, involved a termination of 800 full-time jobs.

In June, it revised its revenue forcast for fiscal year 2024 due to a “significant deterioration” in the energy storage market environment. The Ellwangen-based company said it expects revenue between EUR 820 million and EUR 870 million, down from the previously forecasted EUR 900 million ($964 million). The earlier forecast was issued on August 11, 2023.

In July, Varta published a statement saying that it decided “to notify the competent local court of Stuttgart on short notice of a restructuring project in accordance with the German Corporate Stabilization and Restructuring Act (StaRUG).” The proceedings are intended to avert possible insolvency and can only be initiated if the company is not yet insolvent.

In August, Varta AG said it had reached a restructuring agreement with its creditors, bringing on Porsche as a majority stakeholder in the company’s car battery subsidiary V4Drive Battery GmbH. The agreement is expected to reduce Varta’s debt from EUR 485 million ($535 million) to EUR 200 million.