Porsche seeks fresh government loan

By James Wilson

(Frankfurt) Porsche yesterday said it would ask for a €1.75bn ($2.48bn) loan from the German government’s economic stimulus programme to secure the final amount of refinancing it needs.

The application to KfW, the German state-owned development bank, is the second to be made by Porsche as the sports car maker seeks to secure €12.5bn of credit lines after its expensive attempt to take over Volkswagen. Porsche abandoned the VW takeover attempt, agreeing instead to explore options to merge or integrate the two companies.

A loan to Porsche would come from a €40bn fund that KfW is using to provide corporate financing as part of Berlin’s stimulus programme. It is designed to provide access for financially sound companies to credit if other banks withdraw funding.

Given its size and usual ability to get funding, Porsche would not usually have access to any credit provided by KfW.

The economics ministry said last month that Porsche’s initial request, for a sum said only to be in excess of €300m, could not be granted for the time being. The loan application had been “reshaped”, a person familiar with its content said.

The request – which could be discussed next week – is bound to attract a high degree of political scrutiny, not least because the amount that Porsche is seeking is way beyond the usual maximum of €300m offered to companies under the scheme. It would need to be approved at a higher level than loans regularly made under the scheme.

Porsche said any funding granted by KfW would be at market rates and denied it would amount to state aid.

Talks were continuing with other banks about alternatives to a KfW loan, the carmaker said yesterday.

Porsche built up €9bn of net debt as it attempted to secure VW using options. It announced €10bn of bank refinancing in March and later obtained €750m from a Japanese bank. This week it acknowledged that obtaining the rest of the €12.5bn of refinancing being sought was taking longer than anticipated.

“We are working on it,” the company said, as it attempted to reassure VW employees about its financial soundness. VW’s powerful works council has said it is concerned about a lack of transparency at Porsche, which owns more than 50 per cent of VW.

Porsche’s application comes as a host of German companies seek various forms of government help to overcome financial difficulties, including Arcandor, the retailer.