Porsche Stock Sale To Cut Debt To $2.1 Billion

From wire reports March 17, 2011

STUTTGART — Porsche Automobil Holding SE aims to cut debt to about 1.5 billion euros ($2.1 billion) with the proceeds from a 5 billion-euro stock sale.

Net debt at Porsche’s holding company increased to 6.34 billion euros as of Dec. 31 from 6.05 billion euros on July 31 because of tax repayments, Chief Financial Officer Hans Dieter Poetsch said in written remarks prepared for delivery at the company’s annual press conference in Stuttgart. Poetsch is also CFO at Volkswagen AG, which is in the process of taking over Porsche SE.

Orders at the Porsche AG car-making operations are “high” at the start of 2011 as demand for models such as the Cayenne SUV and Panamera sedan is “undiminished,” Matthias Mueller, the unit’s CEO, said in a statement.

Full-year revenue at Porsche may exceed last year’s record levels.

Porsche SE and VW Group agreed to combine in August 2009 after Porsche racked up more than 10 billion euros of debt in an unsuccessful attempt to gain control of VW. Wolfsburg-based Volkswagen now owns 49.9 percent of the Porsche AG carmaking operation.

Proceeds from the share sale, which Porsche aims to complete by May 30, will help pay back a 2.5 billion-euro bank loan expiring at the end of June.

The merger, originally scheduled for completion in the second half of 2011, has been put in doubt because of German legal obstacles. An investigation into share-price manipulation allegations will likely push the deal’s completion into 2012, Porsche said Feb. 24.

U.S.-based short sellers of VW stock have sued Porsche, claiming the carmaker secretly piled up VW shares and later caused the investors to lose more than $1 billion. At the same time, institutional investors in Germany are seeking 2.5 billion euros in damages over the matter.

Cutting debt “is a prerequisite for the merger,” Poetsch said. “Of course, we have not cleared all hurdles yet. However, we can underscore that Porsche assumes that it will be possible to successfully clarify the current uncertainties and that the merger will be able to go ahead, even if this is after 2011.”