Bloomberg News

Porsche SE Seeks 3.5 Billion-Euro Credit Line to Pare Costs

October 12, 2011

(Updates with interest margin in second paragraph.)

Oct. 12 (Bloomberg) -- Porsche SE, the holding company that owns 51 percent of Volkswagen AG’s common shares, said it’s seeking a 3.5 billion-euro ($4.8 billion) credit line.

Part of the deal will be used to replace older loans, according to Frank Gaube, a spokesman for the Stuttgart, Germany-based automaker. The two-year loans are being offered to lenders with an interest margin of 170 basis points more than the euro interbank offered rate, according to bankers with knowledge of the deal.

The maker of the 911 sports car is seeking to pare its loan costs to capitalize on a rebound in spending on luxury brands, the bankers said. The new loans will replace the remainder of an 8.5 billion-euro deal agreed in November 2009 that cost Porsche 400 basis points more than Euribor, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

September deliveries increased 37.5 percent, Porsche AG said today. Third-quarter earnings may be reduced by about 1.6 billion euros because of the revaluation of the holding company’s remaining stake in its car-making operations, a person familiar with the matter said Sept. 9

Deutsche Bank AG and Landesbank Baden-Wuerttemberg are leading the new loan, which includes 2 billion euros of term financing, Gaube said in a telephone interview.

Porsche and VW abandoned plans to complete a merger by the end of this year as lawsuits left them unable to agree on Porsche’s value, they said Sept. 8. The two companies agreed to merge after Porsche racked up 10 billion euros in debt in its failed effort to gain control of Wolfsburg, Germany-based VW.

--with assistance from Patricia Kuo in London. Editors: Cecile Gutscher, Chad Thomas

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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