VW seals US$21b bridging loan
Print Edition
Volkswagen has agreed the terms of a 20-billion-euro (US$21 billion) bridging loan with banks to help shoulder the costs of its emissions scandal, three people familiar with the matter said yesterday.
Europe’s largest automaker is under pressure to strengthen its finances, with analysts expecting it will have to pay out tens of billions of euros to cover fines, lawsuits and vehicle refits after it admitted to cheating US diesel emissions tests and to falsifying carbon dioxide emissions.
The biggest corporate scandal in the German company’s 78-year history has forced out its long-time CEO, wiped billions of euros off its stock market value and hammered its bonds — making it much more expensive for the company to borrow money through its traditionally preferred route of the debt market.
The sources said VW hoped its bonds would have returned to more normal levels by next spring, allowing it to issue debt and repay the bridging loan.
The loan and subsequent bond placements will likely cost VW about 150 million euros in coupon payments and fees, one of the sources said, adding to the company’s financial burden as a result of the scandal.
More than two months after VW’s cheating became public, the company is still trying to identify those responsible and organize refits for around 11 million vehicles worldwide.
Regulators and prosecutors around the world are also still conducting investigations, with the company’s Porsche brand confirming yesterday that its Italian offices had been searched by prosecutors as part of their inquiry into VW.
VW’s new CEO has said the firm will need to make massive cost cuts, but the company’s majority shareholder spoke out yesterday in favor of protecting jobs.
“Jobs are a very valuable asset,” Wolfgang Porsche, chairman of family-owned Porsche Automobil Holding SE, told a gathering of 20,000 workers at VW’s main plant in Wolfsburg.
“This asset mustn’t be squandered,” said Porsche, a member of the VW supervisory board’s influential steering committee.
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