Varta, the German battery manufacturer, is in financial turmoil and is considering restructuring its debt of almost 500 million euros.
The company, known for its consumer batteries, vehicle batteries and energy storage systems, is looking for solutions to avoid insolvency.
Car manufacturer Porsche may inject fresh capital to support Varta.
A difficult economic context
Varta, founded over a century ago, is facing a series of economic challenges.
High raw material and energy prices, semiconductor supply problems, and increased competition from Asian manufacturers have severely impacted the company.
Since the beginning of 2021, Varta shares have lost almost all their value, plummeting by almost 70% on the Frankfurt Stock Exchange.
In 2022, Uniper experienced a similar situation following the reduction in Russian gas imports.
As for Siemens, another flagship of German industry, management finally managed to turn around its troubled subsidiary Siemens Gamesa.
Restructuring strategy
To overcome this crisis, Varta plans to restructure its debt.
Michael Giesswein, one of the group’s executives, has announced that this measure is intended to reduce debt to a manageable level.
This restructuring could involve a capital reduction to zero, resulting in the loss of value of existing shares and the end of the listing.
Varta is discussing these options with its creditors, who are open to the idea provided fresh capital is injected.
Porsche to the rescue
Among potential investors, Porsche has expressed interest.
Since the beginning of July, the automaker has been studying the acquisition of Varta’s “V4Drive” division, which specializes in lithium-ion batteries.
Porsche has said it wants to keep this key technology in Germany.
A Porsche spokesman confirmed that the company could also participate in a broader financial reorganization of Varta.
A challenge for German industry
Varta’s situation is emblematic of the challenges facing the German battery industry.
International competition and economic fluctuations create an unstable environment.
Porsche’s potential involvement could not only save Varta, but also strengthen Germany’s position in the battery sector, which is crucial to the future of energy and automotive technologies.
The prospect of Porsche taking a stake in Varta offers a glimmer of hope.
However, the road to financial stabilization will be a complex one, requiring bold measures and substantial investment.
