Porsche’s decision to support Varta will allow the luxury car maker to have access to high-performance batteries for its hybrid and electric cars.
Struggling firm Varta has reached an agreement with creditors to secure fresh capital and alleviate its debt, notably by accepting the support of car manufacturer Porsche.
According to new proposals, Porsche will take a 32% stake in Varta after injecting €60m into the company.
The same cut will also be acquired by current majority owner Michael Tojner, who has agreed to invest €60m.
Existing lenders, who will own the remaining 36% of Varta, have agreed to pay €60m by December 2027 in senior secured loans.
This type of debt must be repaid before other loans in the case of company bankruptcy.
Separately, in a statement on Saturday, Varta said that company debt would be initially reduced from €485m to €200m.
In order to do this, shares will be stripped of their value and delisted, an unpopular move among equity investors. According to Bloomberg, some stakeholders feel aggrieved that they were left out of discussions.
Supporting German battery production
Porsche’s decision to support Varta will allow it to access high-performance batteries for its hybrid and electric cars.
As well as investing in the entire group, Porsche announced that it would take a majority stake in V4Drive Battery GmbH – a division within Varta that focuses on the production of lithium-ion batteries.
“Varta and Porsche are already working closely together on the topic of high-performance battery cells,” said Lutz Meschke, Porsche’s chief financial officer.
“With the planned majority takeover of V4Drive, we aim to drive the company forward and that would make an important contribution to keeping key technologies in Germany.”
The construction of a further battery production facility in Nördlingen, Germany, will continue as planned, Porsche added in its statement.
Varta’s financial woes
In June, Varta downgraded its full-year profit forecast for 2024 after a series of setbacks including volatile customer orders, supply chain problems, and a cyber attack.
“The reason for the adjustment is a further significant deterioration in the market environment for energy storage systems, especially in the second quarter of the current year,” the firm said at the time.
After securing the recent deal with Porsche, Varta’s tone was more upbeat.
“With the implementation of the measures agreed today, the group’s financing and liquidity have now been sustainably stabilised and secured in the long term,” said Varta’s chief financial officer Marc Hundsdorf, cited by Reuters.
