Porsche Bites Off More VW Than It Can Chew
Porsche was recently in a share control battle with the shareholders of of VW not too many months ago.
But, all that diet of trying to swallow up warrants (options) and now having to ante up is putting Porsche at great risk of being swallowed up by their very own debts. And now, VW has offered to buy Porsche instead. The Piech and Porsche families which currently own all the controlling shares of Porsche may not be for much longer.
VW Beetle
The irony is that Porsche technically owns 51% of VW. But the options for the VW shares carry huge debts (about 5 billion Euros) which must be paid to the banks who hold them. Therefore Porsche needs to find enough cash for those warrants – otherwise the unthinkable might happen.
Another irony is that Porsche is on it’s most profitable run up in its history but could face bankruptcy if they debts amounting to 9 billion Euros.
Sources said that Qatar – an Arab Oil Principality will invest in Porsche and there is the possibility that by bankrolling the financially flailing company by paying off the warrants to the banks, Qatar could then own 20% of VW. An agreement could then be made with Porsche losing its independant status. Read more from Bloomberg.
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