Important court hearing: this is the status of Varta

Published: 2024-11-25 11:32:10 ET VAR1.DE

STUTTGART (dpa-AFX) - The bad news has been piling up at battery group Varta recently. Observers have witnessed how the company is sliding further and further into crisis. A plan to restructure Varta has been in place since the summer. This will now be the subject of a court hearing in Stuttgart on Monday. An overview of the crisis at Varta - and the future of the long-established company:

The rise

Before the crisis, everything looked like a success story for the battery company based in Ellwangen, Swabia: Austrian Michael Tojner took the company public in 2017. With success. The development was primarily driven by the rapidly increasing demand for rechargeable lithium-ion batteries - for wireless headphones and smartwatches, for example. In 2019, Varta bought back the household batteries division. Revenue almost quadrupled within a few years. Millions were invested - and debt taken on - to expand production.

First cracks in the picture

The crisis began in 2022: Varta had clearly become too dependent on one of its main customers - Apple. At the time, the US company had installed the batteries in its wireless earbuds. When Apple looked for another supplier, the business came under pressure. Varta's CEO at the time, Herbert Schein, slashed sales and profit targets - and resigned shortly afterwards. In the period that followed, the global economic downturn and high inflation dealt a blow to consumer electronics and demand fell. This was compounded by competition from the Far East and supply chain problems. Even a foray into the e-car battery business was unsuccessful.

The big bang

As a result, Varta slid further and further into crisis. Employees had to go on short-time working and later hundreds of jobs were cut. To make matters worse, a hacker attack in spring brought production at the German sites to a standstill. Critics mainly blame management mistakes for the misery. Tojner was also self-critical: "We set the bar too high. We launched various projects, invested heavily and expanded production." To prevent bankruptcy, Varta filed for pre-insolvency restructuring proceedings in July.

The restructuring concept

In the summer, the Group agreed on a restructuring concept with key creditors. The concept essentially provides for two steps: Firstly, a debt haircut and the extension of loans are to reduce liabilities from almost half a billion euros to 230 million euros. In addition, the share capital of Varta AG is to be reduced to zero euros. The effect: shareholders will leave the company without compensation and the Group will lose its stock exchange listing.

Shares are then to be issued again - but only to one of Tojner's companies and the sports car manufacturer Porsche, which is part of the VW Group. Both companies are paying 30 million euros each. The creditors will provide 60 million as a loan.

What is happening today

The restructuring is being carried out in accordance with the Corporate Stabilization and

-Restructuring Act (StaRUG). This provides for a deadline,

at which the restructuring plan is presented and discussed with the affected creditor groups - including banks and shareholders, for example. A vote is then taken on whether to accept the plan.

According to Varta CEO Michael Ostermann, almost all those affected support the concept. However, a clear rejection is likely to come from the small investors. This is because they are threatened with expropriation. In a StaRUG procedure, the interests of shareholders can be overridden. According to the Varta management, there is no alternative to this step, but shareholder activists see it differently. It was only on Friday that the Schutzgemeinschaft der Kleinanleger (SdK) filed a complaint with the Federal Constitutional Court on the matter. They argue that the exclusion of subscription rights without compensation in the restructuring of the company violates the guarantee of ownership.

What happens next

Varta CEO Ostermann expects the proceedings to be concluded at the end of December in the best-case scenario, but more likely at the end of January. The shares will then also be derecognized and Varta will be delisted from the stock exchange. In addition, company figures for the 2023 financial year and several quarters of 2024 will then be published. However, it remains to be seen whether the shareholders' representatives will be successful with their resistance. This could delay the proceedings.

The (possible) future

And what will happen next for the company? Varta intends to maintain all of its German sites. The workforce of around 4,000 employees is also unlikely to change. However, according to Ostermann, there will be a shift: There are too many jobs in administration, which will be cut. However, employees are being sought in production.

Varta has already had to revise its turnover forecast downwards several times this year. The Swabians currently expect a profit of 750 to 800 million euros. Ostermann was nevertheless cautiously optimistic about the future of the Group. "Varta did not have an operational problem, but a debt problem," he said. The company is excellently positioned in the consumer goods market and is also doing well in the field of household appliances. Ostermann also expects growth again in the future in the energy storage business for photovoltaic systems./jwe/DP/zb

Go to the original article. Legal disclaimer Legal disclaimerContact us to request a correctionBack