Porsche AG is considering taking a stake in Varta AG, according to people familiar, as the embattled battery producer weighs options to restructure its debt.
 
The German luxury car maker aims to not only take a majority stake in Varta’s e-mobility battery unit but also to acquire a minority interest in the entire group, said the people, who asked not to be named as the matter is private. Porsche confirmed it was open to taking a larger role in Varta’s restructuring “to keep this key technology in Germany”.

Porsche has been pursuing its own strategy on batteries to supplement the plans of parent Volkswagen AG. This includes building high-performance cells through its Cellforce venture, while the premium car maker last year also detailed plans for a €3.3 billion site, for which it’s seeking financial and strategic partners.

Varta is currently weighing two proposals for a financial restructuring with creditors and potential investors, the firm said in a statement on Sunday. These include Porsche, a company controlled by Austrian entrepreneur and its majority shareholder Michael Tojner, as well as other interested parties, it said.

All potential restructuring options for Varta aim to inject a “high two-digit million euro amount” of fresh funds into the business, the company said. Both proposals would entail a delisting of Varta’s share and certain creditor groups would also see a “significant” debt haircut, the statement said.  

Shares in Varta fell 80% early on Monday in Frankfurt before trading was halted. The move took €350 million off the company’s valuation.

The battery maker has been in talks with creditors after it failed to recover as expected following a debt restructuring in 2023. The company has pointed to a slump in demand in its core markets, as well as the impact of a cyberattack in February. 

Representatives for Varta didn’t immediately respond to requests for comment on Sunday afternoon or Monday morning.

Under one potential deal to stabilise Varta, there will be €100 million of new investment, the people said. Existing Varta shareholders would be wiped out, they added.

Banks stand to lose half of their claims - over €485 million - as part of the rescue operation, said the people, who added that Switzerland-based Montana Tech Components, run by Tojner, is also preparing financial support.

Varta is also considering a restructuring deal that has been put forward by existing creditors, according to a separate person familiar with the negotiations. Under this plan, lenders would be given the option to participate in any new debt or equity financing, the person said.

Porsche and Varta announced their cooperation on the e-mobility subsidiary - which produces lithium-ion cells that can be used in electric vehicles - earlier in July, causing Varta shares to surge. 

Porsche is being advised by Herter & Co and law firm Flick Gocke Schaumburg, while the holders of Schuldscheins - German promissory notes -  are working with Dentons, according to people familiar.

Germany’s Frankfurter Allgemeine Zeitung first reported Porsche’s potential wider role in Varta.

  - Bloomberg