VH_Supra26
03-27-2009, 11:12 AM
by James Martinez
http://www.motorauthority.com/content/thumbs/2/0/2010_porsche_911_gt3_facelift_main630_02-0130-630x360.jpg
Banks were still cautious about lending Porsche money due to the carmaker’s declining sales
Porsche has managed to refinance an existing loan to source an additional $13.6 billion, securing the company's ability to takeover German auto giant Volkswagen AG. Currently, Porsche already holds over 50% of VW's stock but intends to eventually increase this stake to 75%.
The original loan was an integral part of this strategy, with Porsche staff confirming the reason for the funds was so that the company could "increase the stake [in VW] above 50%". With that goal now accomplished and Porsche’s stake now hovering at 50.76%, further financing being undertaken almost certainly means more of VW's equity will be heading into Porsche's portfolio.
The financing deal was reached at the last minute, and Porsche's original request for $17 billion in loans was refused by the banking consortium currently lending the money. Despite lingering tension between Porsche and its banking partners due to declining sales and the poor state of the auto industry, $13.5 billion in loans was still approved.
Earlier this year, a Porsche spokesman said the company would stick to its pledge to ensure that enough VW shares are left in the open market to allow investors to trade freely. Last October, shortages of VW stock on the market briefly drove VW’s share price above $1,300.
Despite Porsche’s new majority holding in VW, the existing VW Law and the resultant power of the state of Lower Saxony and the VW workers council means that its decision-making powers are limited to some degree, analyst Tim Urquhart told The Detroit News. Lower Saxony holds a 20.2% blocking minority in VW under a law that has been declared anti-competitive by European Union authorities.
All Content Copyright 2006-2008 Motor Authority
http://www.motorauthority.com/porsche-acquisition-of-vw-shares-akin-to-a-hostile-takeover.html
http://www.motorauthority.com/content/thumbs/2/0/2010_porsche_911_gt3_facelift_main630_02-0130-630x360.jpg
Banks were still cautious about lending Porsche money due to the carmaker’s declining sales
Porsche has managed to refinance an existing loan to source an additional $13.6 billion, securing the company's ability to takeover German auto giant Volkswagen AG. Currently, Porsche already holds over 50% of VW's stock but intends to eventually increase this stake to 75%.
The original loan was an integral part of this strategy, with Porsche staff confirming the reason for the funds was so that the company could "increase the stake [in VW] above 50%". With that goal now accomplished and Porsche’s stake now hovering at 50.76%, further financing being undertaken almost certainly means more of VW's equity will be heading into Porsche's portfolio.
The financing deal was reached at the last minute, and Porsche's original request for $17 billion in loans was refused by the banking consortium currently lending the money. Despite lingering tension between Porsche and its banking partners due to declining sales and the poor state of the auto industry, $13.5 billion in loans was still approved.
Earlier this year, a Porsche spokesman said the company would stick to its pledge to ensure that enough VW shares are left in the open market to allow investors to trade freely. Last October, shortages of VW stock on the market briefly drove VW’s share price above $1,300.
Despite Porsche’s new majority holding in VW, the existing VW Law and the resultant power of the state of Lower Saxony and the VW workers council means that its decision-making powers are limited to some degree, analyst Tim Urquhart told The Detroit News. Lower Saxony holds a 20.2% blocking minority in VW under a law that has been declared anti-competitive by European Union authorities.
All Content Copyright 2006-2008 Motor Authority
http://www.motorauthority.com/porsche-acquisition-of-vw-shares-akin-to-a-hostile-takeover.html