Porsche commits capital to Varta's restructuring effort

German battery maker Varta announced in a statement that it had agreed to a restructuring agreement with its creditors, bringing in sports car manufacturer Porsche to save the business.

After days of intense bargaining, the deal would reduce Varta's debt from 485 million euros ($534.86 million) to 200 million euros, said the company.

Varta, which produces batteries for global automakers, industry, and consumers, had been trying to find a compromise with major shareholder Michael Tojner, creditors, and Porsche in a bid to ease its debts and secure fresh capital.

Under the agreement, Tojner and Porsche will be the new owners of Varta and will jointly provide a capital injection of 60 million euros.

Another 60 million euros will come from the creditors in the form of senior secured loans, the company said, adding that a third investor could also jump on board at a later date.

"We are in advanced discussions with other investors who would like to join us," Varta CEO Michael Ostermann told Reuters.

By contributing to Varta's rescue, Porsche will ensure its supplies of high-performance batteries used in its hybrid and electric sports cars.

The German carmaker also announced on Saturday that it would take a majority stake in Varta's V4Drive Battery division via a capital increase, mainly through a contribution in kind.

"With the planned majority takeover of V4Drive, we ... would make an important contribution to keeping key technologies in Germany," said Lutz Meschke, deputy chairman of the executive board at Porsche AG.

In July, Ostermann announced a radical pre-insolvency restructuring for Varta, which had debt it could not service following costly investments.

"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 CFO Marc Hundsdorf.

According to Ostermann, there is no acute threat of major job losses.

"We want to grow, both with battery storage for photovoltaic systems and with button cells for Apple headphones. We are currently looking for staff there," he said.

Varta will keep all its manufacturing sites in Germany, with only "moderate" job cuts in administration. "We will put Varta back on a profitable growth path," he told Reuters.

However, current shareholders will walk empty-handed since, in the wake of restructuring, Varta will be taken off the stock exchange.

"We tried everything to get the small shareholders on board - but that is not legally possible in this situation," said Ostermann.