German car maker Porsche is struggling to raise €1.75bn (£1.54bn) to cover debts and unwind derivative positions stemming from its botched attempt to take over vastly-bigger Volkswagen.
Porsche’s shares fell 3.1pc in Frankfurt on Monday after it emerged that the company had obtained a €700bn loan from Volkswagen as long ago as March. A Porsche spokesman said the group is negotiating bridging finance with a variety of banks, including the state lender KfW.
It is understood that Porsche is also in talks with the Bank of Tokyo for a €750m loan, and is seeking help from the regional government of Baden-Wurttemberg.
The crisis is yet another headache for the German authorities as they put together a rescue deal this week for Opel, most likely with Fiat. Separately, the hotel and retail group Arcandor said it faced collapse without a €650m state bail-out. Arcandor’s share price fell 20pc. The company owns the Karstadt department stores, Quelle, and Thomas Cook. It employs 50,000 workers.
Porsche acquired a 51pc share of VW earlier this year after a series of derivatives deals that tripled Porsche’s debt to €9bn.
The takeover bid went badly wrong, forcing Porsche chief Ferdinand Piech to press instead for a merger of the two car makers on increasingly less favourable terms.
Porsche’s travails are largely due to financial acrobatics, not falling sales.
By Ambrose Evans-Pritchard
Last Updated: 9:41AM BST 26 May 2009
Source: The Telegraph