Porsche to raise 5 bln euros for merger with VW image

Porsche SE’s supervisory board approved the sports-car maker’s plan to raise at least 5 billion euros ($7.1 billion) to “create the foundation of building an integrated car manufacturing group” with Volkswagen AG.

The management board will prepare for a capital increase that could include cash as well as “contribution in kind,” Stuttgart, Germany-based Porsche said in a statement today, without elaborating.

The maker of the 911 sports car is seeking ways to reduce 10 billion euros in debt after amassing a 51 percent stake in Volkswagen as well as options for an additional 20 percent of the Wolfsburg-based carmaker, Europe’s largest. Porsche’s supervisory board is holding a meeting now that was originally scheduled to take place tomorrow.

Proposals to be discussed in the meeting also include a plan for Qatar and Porsche’s family owners to participate in the planned 5 billion-euro share sale, people familiar with the talks said last week. Qatar may pay 2 billion euros for a stake, one of the people has said.

At the same time, Porsche may hand over the options that can be converted into a 20 percent stake in VW to Qatar for free or a nominal amount, the people have said.

Separately, Volkswagen may pay 4 billion euros for a 49 percent stake in Porsche’s operating company, according to the people. Volkswagen may then acquire the remaining stake within two years in a deal that would value the entire company at about 8 billion euros, according to one of the people.