Varta stock falls as rescue plans leave shareholders with nothing

Munich, Germany

German battery maker Varta’s stock fell on Monday after it said that plans to restructure in order to prevent insolvency would wipe out current shareholders’ stakes. The stock hit 80 percent lower in the first move of the week after battery maker Varta said on Sunday that two out of the remaining four turnaround proposals would result in its delisting, and stated that existing shareholders will only be compensated Tojner, an Austrian businessman.

Varta added that “besides, certain creditor groups are to attain substantial debt cut-off as well as deferral of the rest of the claims; Moreover, potential new investors Tojner as well as Porsche are to invest by one of these conceptions.

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Varta had to decide to implement a restructuring under the Act on Mitigating the Effects of Corporate Frauds and Cross-Boarder Restructuring due to insolvent businesses in Germany since such a loss would reduce the share capital, it said. Current subsidiary Varta with a market capitalisation figure of 440 Million Euros (USD 479 Million) it had begun talks to be acquired by Porsche where Porsche may become the new majority stakeholder in Varta’s V4Drive business.

Thus, based on Sunday’s proclamation, Porsche can also directly invest into Varta as well. Porsche confirmed that both companies were in a continuing discussion of the acquisition of more than 50% of V4Drive through a potential increase in the company’s capital, which is dependent on Varta AG to obtain sound financial position.

Varta admitted in April that it could miss goals set as part of the restructuring plan it had unveiled and is considering the ways of recapitalisation to reach ‘profitable growth’ by 2026 end. The company pointed at the desire for receiving the speedy decision between the two restructuring variants and stated that the debt capital or the mixture of the debt and equity in the ‘high double-digit’ millions of Euros range are essential.