Porsche requests 1.75 billion Euros loan from German state bank KfW
By Andrew C., 30 Aug, 2010. 0 Comments
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It was reported that the ailing carmaker Porsche requested assistance from the German state bank KfW in the amount of 1.75 billion Euros. It is known that the carmaker has a 9 billion Euro debt left over from its previous failed attempt to takeover the entire VW group of companies. There are internal arrangements between Porsche's top officials and union officials that no public discussions of the company's debt is allowed since this might be detrimental to the German bank's decision to provide the needed assistance. The reported sale of some of its stakes to the Qatar Investment Authority is one of Porsche's strategies to ease its debt burden.
If the sale pushes through, the carmaker will most likely merge with VW. On the other hand, the car company is also confronted with the threat of the collapse of stock prices of VW, the consequence of which is that it will be forced to provide high-value cash payments to investors in the company. In spite of its financial dilemmas in addition to the global economic downturn, Porsche commits itself to returning pre-tax profits.
Some financial analysts, however, point to the fact that much of the company's gain was due to its speculation on the share price of VW. Records show that in the past nine months the carmaker's vehicle sales fell by 28 percent to 53,635 units. The Boxster and Cayman models were the hardest hit by the economic downturn. Porsche, however, recorded a turnover that fell only 15 percent to 4.6 billion Euros showing that high-end models were not as much affected. The company says that its profit margin just almost made it to the two digit level.
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