VW will sell bonds worth 1.2 billion euro to be converted into shares, which will help the automaker’s finance arm.
“Proceeds will be used to strengthen the capital base of Volkswagen and to finance further growth – also in the Financial Services Division,” said the German carmaker.
VW’s bonds sale is not new for the automaker as it placed a similar issue in November 2012. The company said that they have a 5.5% coupon and that it will be offered at an issue price of 105.64% of their principal amount. On November 2015, upon maturity, the notes will be turned into preferred shares and the existing VW conditional capital will have no voting rights.
In November 2012 VW sold 2.5 billion euro in convertible bonds in order to boost liquidity after the company bought Porsche and Ducati brands. VW had liquidities of more than €21 billion in September 2011, but a year later liquidities amounted to €9.1 billion. Buying the remaining 50.1% of Porsche sports cars in August cost it nearly €7 billion in equity and debt, while buying Ducati in July required nearly 750 million.