To show that it has the cash to cover all the costs related with the emissions scandal, Volkswagen intends to sign a 20 billion-euro bridge financing deal with 13 banks.
The company already set aside around 8.7 billion euros for fines and for fixing the cars that are fitted with the illegal software, but the costs to cover all the expenses that will come are been forecasted to reach much higher figures. Some financial analysts are even saying that the German automaker should prepare for a 40-billion-dollar bill on a long term. Therefore, Volkswagen is starting to secure some of the forthcoming costs by signing a 20 billion-euro bridge financing deal with about 13 banks on Friday, according to people familiar with the matter.
The banks, led by Citigroup Inc. and UniCredit SpA, will each grant a loan of either 1.5 billion euros or 2.5 billion euros, said the sources, who asked not to be identified because the negotiations are confidential. They also said VW could have raised as much as 29 billion euros and financing bridge could be turned later into bonds for repayment.
VW does not currently need the extra money, but is intending to get those funds to be certain that it can cope with the financial implications of the scandal. Negotiations are to be concluded by the end of the year, people familiar with the matter told Bloomberg last month. Reuters recently reported that the talks had concluded.
On the “fixing the diesel cars” front, Volkswagen is finally near to start the recalls, as the German regulators are close to approving Volkswagen’s solutions for the three diesel engines affected by the illegal device. This is a crucial proposal that needs to be approved by the authorities, as around 8.5 million diesel vehicles in Europe are waiting for a solution.