(Bloomberg) -- Embattled German battery-maker Varta AG has adjusted its restructuring plan to help win the support of a key group of lenders, paving the way for its approval.
A “large proportion” of holders of its €250 million ($278 million) in promissory notes — also called Schuldschein — have expressed interest in the improved deal, the company said in a statement Tuesday. A group of Schuldschein lenders, including US hedge fund Whitebox, had resisted Varta’s original restructuring plan and submitted a rival deal, Bloomberg previously reported.
That group is now supportive of the new restructuring plan, according to a person familiar with the matter. The shift improves the likelihood of Varta’s restructuring plan being approved by a court, as part of a German restructuring process known as StaRUG.
The support of the Schuldschein lenders “will make the StaRUG procedure much smoother and it will accelerate the procedure,” Chief Executive Officer Michael Ostermann said in an interview. “Hopefully we will be able to provide the plan to the court at the beginning of October and maybe leave the StaRUG procedure in 2025.”
Varta was forced into negotiations with lenders after it struggled with higher financing costs and weaker demand for its batteries, which are used for hearing aids and wireless headphones. Under its rescue plan, sportscar maker Porsche AG and a group of loan lenders will take stakes in Varta, diluting majority shareholder Michael Tojner to 32%.
A group of loan holders also agreed in principle to provide the company with a bridge loan of as much as €30 million to help finance it during the restructuring process, Varta said in its statement.
As part of the amended plan, €25 million in claims from the Schuldschein lenders will be elevated to the same rank as the €235 million syndicated loan, Varta said. The company also modified the planned level of the haircut, envisaging a debt reduction of around €255 million versus €285 million in the August plan.
Varta clarified that the tweaked plan will not include any option for minority shareholders — many of them private individuals — to provide new money to protect their investments. The current rescue deal plans to cut Varta’s share capital to zero.
“When we have a new Varta with new shareholders and new financing in place, then the discussion can be re-opened,” said Ostermann. “But at the end of the day it is not the decision of the management — it will be the shareholders who will make the decision on how to proceed.”
(Updates with details on lender group from paragraph 2, comments on shareholders in last paragraph.)
©2024 Bloomberg L.P.
