On Monday it launched a €5bnrights issue to cope with looming debt repayments
of the same amount this year, half in June, to cut net debt to about €1.5bn.
Porsche is not alone. Industrialist Schaeffler, which took control of
Continental in 2008 in another fit of pre-crisis exuberance, on Monday sold
€1.8bn of its shares in the tyremaker, also to slash acquisition debt.
Porsche had little alternative. Its planned merger with VW (which has a near
€19bn cash pile), remains riddled with uncertainty. On the cards since 2009,
the merger might be delayed until 2012. VW, which already owns half of
Porsche, has held back while the sports car maker faces legal wrangles over
taxes and allegations of share price manipulation (which Porsche denies).
Porsche investors seem to have been braced for the cash call, underwritten at
a 32 per cent discount to the previous close. After all, the shares had
previously traded at a 41 per cent discount to net asset value. They rose 7
per cent on Monday. Investors must now hope that the cash call will win over
VW shareholders so far leery of giving Porsche access to their group’s cash.
By taking up its rights, VW will in effect hand some of its cash pile to
Porsche. But after going that far, VW should resist the logic of
mitgefangen, mitgehangen (in for a penny, in for a pound). VW should avoid
merging with Porsche (given the risk of inheriting lawsuits), and instead
wait to exercise its call option on Porsche, giving it just the car
business. Some Schadenfreude, however, would be amply justified.
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