Porsche board okays VW merge
The supervisory board of indebted automotive holding Porsche SE signed off on a contract to merge with its majority-owned, cash-rich subsidiary Volkswagen by 2011, Porsche said on Friday.
"The next milestone is the 49.9% investment of Volkswagen in Porsche AG by the end of 2009," the company said in a statement, adding the VW board had already approved the deal as expected in a meeting late on Thursday.
Volkswagen is acquiring a stake in Porsche AG just as the iconic sports car maker is entering a new growth phase with the launch of its fourth model line, the four-door Panamera grand tourer.
Porsche AG's listed parent Porsche SE first needed to create the preconditions for a deal when it successfully restructured last week billion of euros in bank debt.
"Porsche SE's existing credit line of 10.75 billion euros was replaced with a new credit line of as much as 8.5 billion euros," it said on Friday, confirming a Reuters report.
Previous management at Porsche had argued the sale of a near majority in its operating business to Volkswagen would allow creditors to immediately call their 10.5 billion euro loan.
Porsche paid a symbolic dividend after withdrawing 1 billion euros from retained earnings to offset a massive fiscal year loss.