US hedge fund Whitebox Advisors is endorsing a new restructuring plan for struggling German battery manufacturer Varta that could allow ordinary shareholders to inject fresh capital into the business, according to a report by Bloomberg citing unnamed sources familiar with the situation.
The development comes as Varta seeks to renegotiate its debt with lenders.
Whitebox, which holds a stake in Varta’s €250m ($275m) promissory notes — known as Schuldschein debt — has proposed the restructuring option as part of a coalition of Schuldschein investors, according to anonymous sources. Varta is currently negotiating with stakeholders, including potential investor Porsche, to find a solution that accommodates the interests of most parties after competing plans were presented by senior lenders and Porsche.
The proposed plan from the Schuldschein lenders would enable ordinary shareholders to participate in a capital increase as part of Varta’s debt restructuring. This approach aims to allow shareholders to maintain their equity stakes in the company. However, other restructuring options are still under consideration, and no final agreement has been reached.
Varta, which is majority-owned by Austrian entrepreneur Michael Tojner, has been forced into debt negotiations due to slowing market conditions and increased financing costs impacting its liquidity. The company, once hailed as one of Germany’s most successful initial public offerings, has seen its stock price decline following news that it might reduce its registered share capital to zero as part of the restructuring process.
Recently, Varta’s shares have shown some recovery after a group of shareholders highlighted a more favourable proposal from an unnamed creditor group. This group argues that without provisions for ordinary equity investors, the restructuring could result in unfair expropriation of shareholder interests.
Varta is also exploring the use of the StaRUG, a new German restructuring tool that allows companies to reduce their debt without requiring unanimous consent from all creditor groups.
