According to sources, Volkswagen will sell assets if the company fails to pay back the 20-billion-euro loan that it secured thorough a bridge financing deal with 13 banks.
To cover the diesel scandal costs, Volkswagen signed 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, and VW could have raised as much as 29 billion euros and the credit line could be turned later into bonds for repayment. Under the terms, the company assured the lenders it would sell or list assets worth up to significantly more than 20 billion euros if it fails to find other sources of money, the people added. “No specific assets have been discussed,” one of the people said, while another person said a potential emergency rights issue was also an option.
It is unlikely for Volkswagen to give up on its Audi or Porsche brands, but divisions like VW’s MAN are expected to be at the top of the list of potential divestments, the people said. The MAN power engineering operations, whose products include ship engines, mini power plants, special gear units, propulsion components and testing systems may be valued at 4-5 billion euros in a potential deal. The division accounted for all of MAN’s 101 million euro nine-month operating group profit and for more than a quarter of its 9.98 billion in sales. “Volkswagen may also consider divesting luxury car brands Bentley and Lamborghini or motor bike brand Ducati, although these units don’t really move the needle,” one of the sources said.