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Dow Jones News Wire recently reported Porsche Automobile Holding
SE (ETR:PAH3) recently stated that it is in advanced talks over selling its
options on Volkswagen AG (VOW.XE) shares - which could yield EUR1 billion in
cash - and expects to book a related pretax loss of up to EUR5 billion in its
current fiscal year.
In a statement, Porsche said it is in talks with
"one or several investors" over a possible sale of the options, just
six days after Chief Executive Wendelin Wiedeking left and cleared the way for
a merger with Volkswagen AG. The cash-inflow is expected to be more than EUR1
billion. Amongst these investors is especially Qatar Holding LLC with whom
talks about an investment in Porsche SE also (are) under way," the
Stuttgart-based automaker said.
Porsche's fiscal year ends July 31. Porsche reaped
windfall profits over the valuations of the options since 2005 when they
started building up their stake. But when Porsche net debt ballooned in
tightening credit markets, investors were increasingly questioning Porsche's
ability to exercise these options.
Porsche is discussing the sale of its
"cash-settled" options, where the owner doesn't receive the actual
share when exercising the option, but instead receives the difference between
the share's cash value and the price when the option is exercised.
Porsche said that the devaluation of the options or the
consolidation of Volkswagen wouldn't affect the company's actual cash flow -
but would show up as a paper loss.
It said the planned sale would lead to "an inflow of
cash, currently serving as cash collateral for the options structure, in a
substantial amount."
Porsche is Volkswagen's majority shareholder with a stake
of almost 51% and controls a complex set of stock options to hike its stake in
the Wolfsburg-based automaker by another 20%. It previously had booked billions
of euros in paper profits on those options.
But Porsche's growing debt pile forced it to abandon its
plan to gain control over its much larger peer.
Porsche's core sports-car operations now are set to be
integrated into Volkswagen as the company's 10th brand along with name plates
such as Audi and Skoda.
Porsche said Wolfgang Leimgruber is succeeding Michael
Macht as executive board member responsible for production at Porsche AG, the
company's sports-car operations.
Macht last week replaced Wiedeking as chief executive of
Porsche AG.
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