Porsche AG to Invest in Varta as Part of Financial Restructuring

By Adria Calatayud

Sports-car maker Porsche AG plans to invest in Varta and take a majority stake in one of its businesses as part of the German battery company's financial restructuring.

Porsche said it would acquire a majority stake in V4Drive Battery, Varta's business for large-format lithium-ion battery cells, which are used in the Porsche 911 Carrera GTS model. The carmaker plans to continue the construction of an expansion of Varta's site in Noerdlingen, Germany, that is scheduled to go into operation next year.

Varta separately said over the weekend that it reached an agreement with creditors and strategic investors on the key elements of its restructuring, including a debt haircut, a liquidity injection and a new shareholding structure.

Under the plan, Porsche and a company controlled by Varta's current majority shareholder, Michael Tojner, will each invest 30 million euros ($33.1 million) and take a 32% stake in the company. Existing lenders will provide a loan of 60 million euros and hold a stake of 36%, Varta said.

The restructuring will also result in Varta's delisting and reduce its existing debt to 200 million euros from 485 million euros. The company said existing and new debt will mature at the end of 2027.

Varta said the restructuring gives it long-term funding to execute its business plans and technology investments until the end of 2027.

The financial-rescue deal comes after the battery maker last month said it was in talks with Porsche and other potential investors to avoid a possible insolvency. The company struggled to return to profitability as it dealt with supply-chain problems, weakness in the battery-storage market and the fallout of a cyberattack.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

August 19, 2024 02:03 ET (06:03 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.