Battery manufacturer in crisis: Varta to be broken up

Battery Manufacturer's Creditors Push for Breakup of Varta

The future of Varta is uncertain. A breakup of the troubled battery manufacturer is drawing closer. The company's key creditors want to spin off the household battery business from the group.

The troubled battery manufacturer Varta is facing a profound restructuring. A group of major creditors wants to separate the household battery business from the company and transfer it to a new ownership structure. In the creditors' assessment, this is the most promising way to secure at least parts of the company.

The so-called ad hoc creditor group includes Deutsche Bank as well as financial investors RBC BlueBay, Blantyre and Whitebox. Several media outlets had previously reported on the plans.

Creditors See Funding Gap

The creditors justify their change of course by pointing to the strained financial situation of the company, which is based in Ellwangen, Baden-Württemberg. An independent analysis by consulting firm FTI found an operational liquidity requirement in the mid-double-digit million euro range — meaning a shortfall of funds for day-to-day operations. Beyond that, additional capital would be required to maintain ongoing business operations on a permanent basis.

According to the creditors, despite intensive discussions, no investor or other party has so far been found willing to provide the necessary funds. The group therefore now intends to exercise its contractual rights under the financing agreements from the 2024 restructuring. Implementation is, however, still subject to regulatory and other approvals.

Restructuring Apparently Insufficient

Varta had already found itself in an existential crisis in 2024. To avert insolvency, the company initiated stabilization proceedings in July of last year under the German Corporate Stabilization and Restructuring Act (StaRUG). In the course of the restructuring, the previous shareholders exited the company. In early April, Varta announced that the reorganization had been completed.

The creditors' plans that have now become known suggest, however, that the restructuring at the time was not sufficient.

Tojner Wants to Preserve Parts of the Company

Austrian entrepreneur and Varta co-shareholder Michael Tojner has said he wants to continue operating parts of the company. He told the Augsburger Allgemeine that this would only be possible through a further restructuring process and "tough cuts."

Tojner also criticized the approach taken by the financing banks. With the loss of major customer Apple, however, it had been clear, he said, "that Varta in its existing form cannot be continued and needs a further restructuring step."

According to his statements, his investment company intends to pursue the continuation of the Microbattery and Solutions business divisions.

Loss of Apple Puts Additional Strain on Varta

Apple cancelled its supply contract for button cell batteries for AirPods in May. The batteries are to be manufactured in China going forward. As a result, Varta's plant in Nördlingen, Bavaria, which employs around 350 people, will close in October.

Tojner also pointed to the difficult framework conditions for battery production in Europe. "High energy prices, high labor costs and other locational disadvantages make developing the battery business in Europe a major challenge compared to Asia," said Tojner.

IG Metall: "Livelihoods are at stake"

"This is a huge catastrophe," said Fabian Fink, Second Authorized Representative and Managing Director of IG Metall Aalen and Schwäbisch Gmünd, referring to the looming breakup. The news had hit him all at once.

"Jobs and livelihoods are at stake - including those of many families." Fink called on the company to quickly provide transparency and engage in talks with employee representatives. The workers needed to find out as soon as possible what the future held for them.