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Xinhua News Agency, Beijing, August 18th. German Porsche AG announced on the 17th that it intends to acquire the majority shares of a subsidiary of German Varta AG that manufactures automotive power batteries, becoming a new shareholder of the battery manufacturer that is in financial crisis after its debt restructuring.

This is a Porsche electric car photographed at the Porsche outdoor exhibition area at the Munich International Motor Show in Germany on September 8, 2021. Photo by Xinhua News Agency reporter Lu Yang

Varta announced on the same day that it had reached an agreement with creditors on a preliminary plan for the company's debt restructuring. It plans to introduce an investment company under Porsche as a new shareholder, and together with Varta's current major investor Michael Teuner's company and MT Investment Company, it will control Varta in order to "significantly reduce the company's debt and inject fresh liquidity" to ensure that Varta has sufficient funds to invest in production by the end of 2027.

According to Deutsche Presse-Agentur, the above agreement will reduce Varta's debt burden from the current 485 million euros to around 200 million euros by means of debt reduction and loan extension. MT Investment and Porsche will invest a total of 60 million euros in exchange for 32% of Varta's shares respectively. Other investors will hold the remaining 36% of the shares.

On the same day, Porsche issued a statement from its headquarters in Stuttgart, Germany, saying that it was willing to participate in Varta's debt restructuring plan and planned to invest 30 million euros, including acquiring the majority of shares of V4Drive Battery Company, a subsidiary of Varta, by increasing capital. However, this acquisition plan still needs the approval of the relevant national antitrust authorities before it can be realized.

Varta is headquartered in Ellwangen, a city in southwestern Germany, and produces batteries for automobiles, industry and consumer products. Porsche's new hybrid model 911 Carrera GTS uses high-capacity lithium-ion battery packs produced by Varta. Due to high debt, Varta applied to the court in July this year to enter into financial restructuring procedures to avoid bankruptcy. According to the company, its business is distributed in more than 100 countries and regions, with annual global sales of more than 800 million euros. (Shen Min)