Porsche SE, maker of the 911 sports car, turned to new banks to help refinance a ¤10 billion ($13.5 billion) loan needed to buy Volkswagen AG stock. Former lenders Merrill Lynch and ABN Amro didn’t take part.
The credit crunch and recession meant banks took longer to sign up for the facility, which replaces one coming due this month, Porsche said today. It has yet to finalise terms for an extra ¤2.5 billion required to boost working capital.
“In the wake of the extremely difficult global economic environment and the turbulence in the bond market, banks needed additional assessment, thus resulting in a need for extra time,” the Stuttgart-based company said in a statement.
The group of 15 banks providing the loan includes some that weren’t involved in previous credits, Porsche said. The carmaker needs funds as it seeks to extend a stake in VW to 75 per cent in order to deepen ties to its biggest supplier and bring the larger company’s cash flow into its books.
Porsche was little changed at ¤38.36 as of 10.06 am in Frankfurt.
The stock has declined 27 per cent this year, valuing the company at ¤6.72 billion. Volkswagen was trading up 3.4 per cent at ¤221.40. It has lost 12 per cent this year and has a market value of ¤69 billion.
“The loan extension won’t be enough to let Porsche raise its stake in Volkswagen,” said Heiko Moehringer, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “It’s already tapped some of the credit line and needs the buffer to weather the downturn.”
More From This Section
The credit line will be guaranteed by a group of banks comprising Barclays Capital, Commerzbank, LBBW, Deutsche Bank, UBS, Credit Suisse, Santander, BayernLB, BNP Paribas, Calyon, UniCredit/HVB, Helaba, Intesa, WestLB and DZ-Bank.
The senior lenders on the previous facility included Merrill Lynch & Co., since bought by Bank of America Corp., and ABN Amro Holding NV, now part of Royal Bank of Scotland Group Plc. Neither bank was immediately available for comment.
Porsche said the loan will come in two tranches spanning 12 months, with 6.7 billion euros of the total extendable for a further year. The company said it aims to pay down the smaller tranche quickly and is applying for credit ratings that should be determined by May.
The carmaker also has a “a framework contract” to increase the loan to 12.5 billion euros in coming weeks.
Porsche has been accumulating shares of Wolfsburg, Germany-based Volkswagen since 2005 and owned 50.8 percent of Europe’s biggest auto manufacturer as of Jan. 5.
“The renewal of the credit line is a relief for short- term funding concerns,” Arndt Ellinghorst, an analyst with Credit Suisse in London, said in a note. Porsche should stick with its current VW stake while the issue of Lower Saxony’s blocking minority holding in the company is unresolved, he said.
To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net.