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Porsche strengthens finances, could seek bigger VW stake
Porsche Automobil Holding SE has secured a last-minute deal to refinance a 10 billion euro ($13.6 billion) loan for its takeover of Volkswagen AG, paving the way for a possible stake increase.
The fresh funds replace a loan that the maker of 911 sports cars took out to boost its stake in VW to a majority last year.
"It was basically spent to increase the stake above 50 percent," a Porsche spokesman said.
Now the market is eyeing the likelihood of Porsche, its finances strengthened, increasing its stake further in a bid to win outright control of Europe's biggest carmaker.
"The increased credit volume could be an indication that Porsche will increase its VW stake in the course of 2009, as mentioned before by the company," DZ Bank said, adding its net debt position was better than some market players had thought.
Porsche has said it could boost its VW voting stake to 75 percent this year if the economic conditions are right. Porsche has a stake of 50.76 percent now.
Volkswagen shares rose 2.5 percent to 219.47 euros by 1006 GMT while Porsche stock gained 1.4 percent, slightly lagging the 1.6 pecent gain by the DJ Stoxx European car sector index.
Nearly ran out of time
Facing a midnight deadline to line up the accord, Porsche struck the deal for two 12-month tranches at what it described in a statement on Wednesday as "market conditions."
One 6.7 billion euro tranche can be extended for an additional year.
"Porsche intends to pay down the smaller tranche fast and also aims for credit ratings, the results of which should be available in May 2009 at the latest," it said.
The lending consortium includes Barclays Capital, Commerzbank, LBBW, Deutsche Bank, UBS, Credit Suisse, Santander, BayernLB, BNP Paribas, Calyon, UniCredit/HVB, Helaba, Intesa, WestLB and DZ-Bank, it said.
As of late on Tuesday, Porsche was scrambling to raise the last 1.45 billion euros it needed to reach 10 billion, banking sources close to the deal said.
Porsche was initially seeking to raise 12.5 billion euros -- 10 billion euros to refinance the existing loan and a further 2.5 billion euros for general corporate purposes, but had to focus on the lower amount after a muted response to the deal.
It said on Wednesday the new credit framework lets it extend the borrowing volume to 12.5 billion "in the forthcoming weeks".
Difficult relations
The tense end to the deal was the latest twist in Porsche's fraught relationship with its closest banks, which are still hurting after sustaining losses last year when Porsche drew down the 10 billion euro loan at low rates to make financial investments.
Porsche had a shortfall on the 10 billion euro refinancing despite upping fees on the deal by 50 basis points to 250 bps for banks committing 1 billion euros and to 200 basis points for banks committing 500 million euros.
Porsche's five-year credit default swaps were priced at 525 basis points bid and 575 basis points offered on little or no trading, according to a trader.
The fresh funds replace a loan that the maker of 911 sports cars took out to boost its stake in VW to a majority last year.
"It was basically spent to increase the stake above 50 percent," a Porsche spokesman said.
Now the market is eyeing the likelihood of Porsche, its finances strengthened, increasing its stake further in a bid to win outright control of Europe's biggest carmaker.
"The increased credit volume could be an indication that Porsche will increase its VW stake in the course of 2009, as mentioned before by the company," DZ Bank said, adding its net debt position was better than some market players had thought.
Porsche has said it could boost its VW voting stake to 75 percent this year if the economic conditions are right. Porsche has a stake of 50.76 percent now.
Volkswagen shares rose 2.5 percent to 219.47 euros by 1006 GMT while Porsche stock gained 1.4 percent, slightly lagging the 1.6 pecent gain by the DJ Stoxx European car sector index.
Nearly ran out of time
Facing a midnight deadline to line up the accord, Porsche struck the deal for two 12-month tranches at what it described in a statement on Wednesday as "market conditions."
One 6.7 billion euro tranche can be extended for an additional year.
"Porsche intends to pay down the smaller tranche fast and also aims for credit ratings, the results of which should be available in May 2009 at the latest," it said.
The lending consortium includes Barclays Capital, Commerzbank, LBBW, Deutsche Bank, UBS, Credit Suisse, Santander, BayernLB, BNP Paribas, Calyon, UniCredit/HVB, Helaba, Intesa, WestLB and DZ-Bank, it said.
As of late on Tuesday, Porsche was scrambling to raise the last 1.45 billion euros it needed to reach 10 billion, banking sources close to the deal said.
Porsche was initially seeking to raise 12.5 billion euros -- 10 billion euros to refinance the existing loan and a further 2.5 billion euros for general corporate purposes, but had to focus on the lower amount after a muted response to the deal.
It said on Wednesday the new credit framework lets it extend the borrowing volume to 12.5 billion "in the forthcoming weeks".
Difficult relations
The tense end to the deal was the latest twist in Porsche's fraught relationship with its closest banks, which are still hurting after sustaining losses last year when Porsche drew down the 10 billion euro loan at low rates to make financial investments.
Porsche had a shortfall on the 10 billion euro refinancing despite upping fees on the deal by 50 basis points to 250 bps for banks committing 1 billion euros and to 200 basis points for banks committing 500 million euros.
Porsche's five-year credit default swaps were priced at 525 basis points bid and 575 basis points offered on little or no trading, according to a trader.
