It was confirmed today by Porsche that it has received a 700 million Euro ($980 million) aid from VW although it insisted that it could take care of its own financial dilemmas. A spokesman for the company has said that even though there are reports that Porsche is going insolvent, he insists that that is not going to happen.
This is with reference to reports concerning Porsche's supposed takeover of VW which has stalled and has turned into a proposal of a merger with VW instead. Last weekend VW reportedly said that it loaned the money to Porsche, its largest stakeholder, an unexpected turn after Porsche plan to take over VW did not materialize.
The German carmaker, which owns 51 percent of voting stake in Volkswagen, said that the loan will mature by the end of September 2009. Accumulating 9 billion Euros in debt, the carmaker was pressured to forgo its desire to takeover VW. Reports say that the loan was extended by VW to assist Porsche's financial standing early this year and Porsche has put up Porsche Holding GmbH as guarantee for the loan.
The collateral in question is owned by the Porsche and Piech families, who also control Porsche Automobil Holding SE. The latter had difficulty raising 12.5 billion Euros in loans to cover the cost of refinancing its outstanding obligations.
However, eventually, Porsche succeeded to come up with 10 billion Euros and, according to them, has also come up with an additional 750 million Euros over the weekend. However, it is still looking for a 1.75 billion Euro in loans. After the takeover plan was put aside, now the company is seeking a merger with Volkswagen.
Meetings in high places are transpiring although nothing is definite yet nor does anything really has a time table attached to it. The original plan of the partners was to create a merger by June this year.