Porsche in financial trouble

Bram Hengeveld · Jun 5, 2009

Dutch news papers reported yesterday that also Porsche is in financial trouble. They are E1,750,000,000 short on funds and are now seeking support at the German government.

How on earth can a company that first wants to take over the entire Volkswagen Group a few months ago, get in trouble in such a short time.

Andrew Dawes · Jun 5, 2009

Yeah i was reading about this in the Financial Times a week ago. I'm quoting from a vague memory but basically they don't have enough money to actually exercise all the Options on Volkswagen Stock the own. So if they could exercise they would probably be okay but they don't have the cash and would need pretty large bridging finance because all of the profits are basically paper based at this point. But as with everything in this Global Financial Crisis .... its not the fact that they are making a loss, its that they can't get the credit finance they need to turn their paper profits into liquidity (cold hard cash).

Mind you their play for VW was probably a huge gamble which may seriously hurt.

Imagine the bank turning around tomorrow and asking you to pay back your house mortgage - you don't exactly have that kind of money lying around. Its not much different, except that they knew their debt was going to roll and they were gambling they'd find the money. That's my uninformed view.

Andrew Dawes · Jun 5, 2009

edit: try a quote

Travis · Jun 5, 2009

Evening Gents,

All of the Financial Times reports can be found here: http://search.ft.com/search?queryText=Porsche+&x=16&y=7&aje=true&dse=&dsz=

Andrew's synopses pretty much nails the current situation. Porsche being flushed with funds thanks to some deft work on the financial markets (not to mention the large profit margins on the cars it sells) has been steadily accumulating VW shares since 2005, which is said to be a move to protect ties to its largest supplier.

With a 51% share in VW Porsche has troubles raising the funds to cover its debts, thanks in part to the global slowdown. On top of this VW CEO Ferdinand Piech doesn't much care for Porsche CEO Wendelin Wiedeking and is playing hard ball over the proposed merger.

Radio Netherlands (yes, we get that here in Australia at night) succinctly states the current situation:

German sports car manufacturer Porsche is asking Germany's KFW state-owned banking group to bail it out to the tune of 1.75 billion euros. The company has been trying to find a financial backer for weeks.

Porsche got into difficulties after trying to take over Volkswagen, which is 15 times its size. The two companies are negotiating on a possible merger, but even if the attempt is successful, Porsche will not be out of trouble as the concern has debts of nine billion euros.

I hope Porsche can find a solution.

Cheers.

Kyle Evers · Jun 6, 2009

The day Porsche dies is the day we lose a legend of a manufacturer. Porsche is one of the few companies that deserves eternal life, I hope they get some help