Porsche denies reports of 14 million euros debt

Posted: July 25, 2009 in Porsche, Volkswagen

German sports car manufacturer Porsche denied reports that the company is in worse financial situation than previously thought, after German news magazine Focus reported debts of up to 14 billion euros (20 billion dollars).

The revised figures reportedly emerged during marathon talks hammering out a takeover bid by German carmaker Volkswagen AG (VW), which would make Porsche the 10th brand in a new global automotive giant.

Participants at the all-night negotiations also told Focus that Porsche would have faced insolvency in two weeks, had the deal with VW fallen through.

Porsche questioned the figure reported by Focus.

“At the half-year point we had a net debt of nine billion euros. Through tax payments, this has grown to around ten billion euros,” a Porsche spokesman said, adding, “No other figure is known to us.”

Porsche had wracked up the debt in an abortive attempt to buy VW, Europe’s biggest carmaker.

VW experts are to check Porsche’s balance sheets in coming days, Focus said, adding that this would determine the purchasing price for the luxury carmaker.

VW plans to acquire 49.9 per cent of Porsche by the end of the year, and the majority next year. The final details of the new merged VW-Porsche company are to be worked out in the coming months.

A law granting the German state of Lower Saxony a blocking minority in the Wolfsburg-based carmaker would also apply to Porsche, VW works council chief Bernd Osterloh told the Munich daily Sueddeutsche Zeitung.

The so-called Volkswagen law, previously struck down by the European Commission for infringing the free flow of capital, is to be re-examined by Brussels, the Sueddeutsche Zeitung further reported.

A spokesman for Internal Market and Services Commissioner Charlie McCreevy said the commission was debating whether to take the matter to the European Court of Justice for a second time, after Berlin passed an amendment cementing the legislation late last year. The ruling had been created in the 1960s to prevent a hostile takeover of VW.

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