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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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