Varta's Porsche-led rescue would leave investors empty-handed
By Alexander Hübner and Ludwig Burger
July 22, 202411:59 AM GMT+2Updated 2 days ago
Shares plunge as much as 80%
Turnaround plans foresee equity wipe-out
CEO says Varta needs double digit mln eur sum in fresh fundingCEO Ostermann says significant debt relief also a must
MUNICH, July 22 (Reuters) - Varta (VAR1.DE)
, opens new tab stock plunged as much as 80% to a record low on Monday after the German battery maker said restructuring options to avert insolvency, potentially with the help of Porsche (P911_p.DE)
, opens new tab, would leave shareholders with nothing.
The stock was down by two thirds at 0850 GMT on Monday, following a statement on Sunday that two remaining turnaround proposals would result in a delisting, with shareholders - except Austrian majority owner Michael Tojner - receiving no compensation.
Varta needs significant relief on its debt of close to 500 million euros ($544 million) plus fresh funding worth a "high double-digit" million euro amount, CEO Michael Ostermann, who joined in May, told Reuters.
"I came on board to rescue Varta. This is something close to my heart," Ostermann said.
Potential new investors, including Tojner and sportscar maker Porsche (P911_p.DE)
, opens new tab, would inject capital under one of the scenarios, the company added in its statement.
Varta has suffered from bad investment bets in its traditional field of small batteries for consumer electronics but an expensive foray into V4Drive-branded batteries for hybrid sportscars that did not catch on has accelerated the group's decline.
Varta said it would notify the relevant courts of an overhaul in accordance with Germany's corporate stabilisation and restructuring act.
Varta, which had a market value of 440 million euros ($479 million) before Monday's nosedive, said earlier this month it was in talks with Porsche over a potential investment that could result in the carmaker becoming a majority owner of Varta's V4Drive business.
Porsche confirmed on Sunday that it had been in talks to take a majority stake in V4Drive to preserve a key German-made technology but financial support for the entire Varta group was now also on the cards under certain conditions.
Varta said in April it might not meet targets set under its restructuring plan and was exploring recapitalisation options that should help it return to "profitable growth" by the end of 2026.
Varta said it hoped to quickly decide on one of the two scenarios.
It said it was unlikely that either proposal would garner the necessary majority at a general meeting of shareholders, adding the proposed restructuring, if accepted by courts, would allow it to realise this without investor approval.
($1 = 0.9194 euros)