(Bloomberg) -- Varta AG’s largest creditor group is offering the ailing German battery-maker fresh debt financing and proposing a new capital raise, as the lenders demand a greater role in ongoing restructuring talks.
Holders of Varta’s promissory notes — or Schuldschein debt — put forward a plan to inject €100 million ($110 million) in super senior or convertible debt, according to a person familiar with the matter, as part of its proposal to restructure the battery-maker’s debt. The lenders are also suggesting a rights issue of up to €200 million, with the proceeds used to repay current debt at a haircut of about 50%, the person added.
Spokespeople for Varta and the Schuldschein lenders’ advisers didn’t immediately respond to requests for comment.
Varta has been looking to come up with a solution to implement a court process known as a StaRUG. This relatively new German restructuring tool allows struggling companies to slash their debt even if there are dissenting creditor groups.
The firm’s stakeholders, including potential investor Porsche AG, have been in negotiations over a compromise that satisfies most parties, after a group of senior lenders and Porsche presented competing plans.
Shut Out
However, the holders of the €250 million Schuldschein debt say that they have been unlawfully shut out of current negotiations and will sue management for damages they may incur, the person said. The group remains open to discussing a joint proposal with all stakeholders, the person added.
Under the proposal of the Schuldschein lenders, which include US-headquartered hedge fund Whitebox, ordinary shareholders would be able to participate in a rights issue, in theory allowing them to protect their stake in the company, while they would be wiped out in the other proposals.
Varta, majority-owned by Austrian tycoon Michael Tojner, has been forced into negotiations with creditors after a slowdown in key markets and higher financing costs put pressure on liquidity.
--With assistance from Libby Cherry.
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