This major AA battery company is on the brink of bankruptcy. Porsche steps in to save the day

The Crisis of Varta AG: Threat of Bankruptcy Looms

The well-known German battery company Varta AG is on the brink of bankruptcy.
The company is facing a crisis and struggling to avoid failure.

On Monday, the stock price plummeted by 80% to 2.30 euros, hitting new all-time lows.
Investors quickly offloaded the stock following the company’s statements released on Sunday, indicating that the remaining two restructuring proposals would lead to the delisting of the company without any compensation for the shareholders, except for the Austrian majority owner Michael Tojner.

According to Varta’s announcement, the sports car manufacturer Porsche is considering injecting capital into the company to prevent bankruptcy.

Reasons Behind Varta’s Crisis

Varta is facing the repercussions of misguided investments in small consumer electronics batteries and a costly attempt to venture into V4Drive branded batteries for hybrid sports cars, which proved unsuccessful, exacerbating the group’s difficulties.

Prior to Monday’s collapse, the company had a market value of 440 million euros.

Porsche’s Involvement

Since early July, it has been known that Porsche is evaluating acquiring a majority stake in Varta’s subsidiary, V4Drive.
Porsche is among the few customers of V4Drive, with its batteries being used in the electrified 911 GTS T-Hybrid, but not in purely electric Porsches.

According to the Frankfurter Allgemeine Zeitung (FAZ), Porsche might acquire a stake not only in the production of the subsidiary Varta V4Drive but also in the parent company Varta AG.

“The fact that the sports car manufacturer now apparently wants to be involved in the parent company shows the dramatic situation of Varta AG,” as stated in the German newspaper.

Porsche stated, “Under certain circumstances, we could thus imagine participating in a financial restructuring of Varta AG as a whole.
Negotiations on this matter are still ongoing.” Michael Tojner, the Austrian company holding the majority stake in Varta through the Swiss holding Montana Tech Components, seems to favor this plan.

Another proposal comes from the creditors.
Varta mentions that another possibility could be “a haircut, an agreement between the debtor and its creditors that clears part of the debt to restore the company’s financial stability.”

It’s not yet clear which option Varta will choose.
On Sunday, the company informed the Stuttgart district court “at short notice about a restructuring project in accordance with the German law on the stabilization and restructuring of companies (StaRUG).” The goal is to prevent insolvency.