Porsche to Acquire Major Stake in Varta
Varta, the struggling German battery manufacturer, has secured a crucial lifeline by partnering with luxury carmaker Porsche. As part of a new agreement, Porsche will acquire a 32% stake in Varta by injecting €60 million into the company. This strategic move not only helps Varta alleviate its financial troubles but also grants Porsche access to high-performance batteries essential for its hybrid and electric vehicles.
Key Players Invest to Stabilize Varta
In addition to Porsche’s investment, Varta’s majority owner, Michael Tojner, has agreed to match the €60 million injection, maintaining his 32% stake in the company. The remaining 36% of Varta will be owned by existing lenders who have committed to providing €60 million in senior secured loans by December 2027. These loans will take precedence in repayment should the company face bankruptcy, further stabilizing Varta’s financial standing.
Debt Reduction and Controversial Moves
As part of the restructuring, Varta will significantly reduce its debt from €485 million to €200 million. However, this will involve stripping the value from its shares and delisting them, a move that has sparked discontent among equity investors who feel excluded from the decision-making process. Despite this, the company views the debt reduction as a vital step towards long-term stability.
Porsche Strengthens Its Battery Supply Chain
Porsche’s investment in Varta extends beyond financial support; the carmaker also plans to take a majority stake in V4Drive Battery GmbH, a division of Varta focused on lithium-ion battery production. This move aligns with Porsche’s strategy to secure key technologies within Germany and enhance its supply chain for high-performance battery cells used in its hybrid and electric vehicles. The construction of a new battery production facility in Nördlingen, Germany, will continue as part of this expansion.
Varta Looks to the Future with Renewed Optimism
After facing a challenging year marked by volatile customer orders, supply chain disruptions, and a cyber attack, Varta had previously downgraded its profit forecast for 2024. However, following the deal with Porsche, the company’s outlook has brightened. Varta’s CFO, Marc Hundsdorf, expressed confidence that the new measures will stabilize the company’s finances and ensure long-term liquidity, marking a hopeful turn for the embattled battery maker.
SOURCE: Ref Image from Electrive
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