Porsche's controlling familes meet to chart car maker's future

ERJ staff report (AN)

Munich, Germany -- Porsche's controlling families met on Sunday to decide the future of the heavily indebted holding company that owns the sports car maker, German newspapers reported.

Members of the Porsche and Piech families gathered in Salzburg, Austria, to settle their differences over how to deal with 9 billion euros of debts run up in a failed attempt to take over Volkswagen.

Two options were on the table to reduce Porsche's debt burden -- a merger with VW or selling a stake in Porsche to the Gulf state of Qatar.

Volkswagen Chairman Ferdinand Piech, a part owner of Porsche who holds a blocking minority together with his brother, aims to force a merger with cash-rich VW, press reports say.

His cousin Wolfgang Porsche favors selling Qatar a stake in Porsche Automobil Holding, the company that controls the Porsche car business and the families' 51 percent stake in VW, plus a further 25 percent in VW share options.

Germany's Der Spiegel reported that Volkswagen has sweetened its bid to purchase almost half of Porsche and is prepared to offer considerably more than 4 billion euros ($5.58 billion).

Wiedeking's view

The weekly magazine wrote on Saturday that Porsche CEO Wendelin Wiedeking still considered the amount insufficient for a 49.9 percent stake in the healthy car business.

Wiedeking prefers to reduce Porsche's debt with the aid of Sheikh Hamad bin Khalifa al-Thani, ruler of the natural gas-rich Qatar.

Der Spiegel wrote the sheikh has stated his willingness, via an investor agreement, to offer 7 billion euros for both a stake of just over 25 percent in the listed holding company and its cash-settled options in VW stock.

The rival Porsche and Piech clans will hold a supervisory board meeting on July 23 to decide which option to take.

German newspapers reported that because of a contractual agreement between the two factions not to split their votes at board meetings, the families would meet in advance to decide. Sunday's meeting in Salzburg was aimed at finding an agreed solution.

Volkswagen reportedly originally bid between 3 billion and 4 billion euros for a Porsche stake, in a deal that would reverse the balance of power following Wiedeking's ambitious attempt to acquire 75 percent of VW's voting stock.

In the process, the Porsche holding company racked up about 9 billion euros of net debt by the end of January, trying to swallow its much bigger rival VW before the financial crisis turned the tables on the would-be predator.

Now that its gamble to take over VW has backfired, Porsche is fighting for influence in a potential union with the world's No.3 car company and its stable of brands spanning Bugatti and Lamborghini to the Volkswagen Golf.

Reuters contributed to this report.

From Automotive News (A Crain publication)