Porsche will re-submit an application for a EUR1.75bn (US$2.43bn) loan to the state-owned KfW development bank, the company said.
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The bank rejected the loan application last week because Porsche had failed to show its funding problems stemmed from the economic crisis and that all other means had been exhausted, Bloomberg News reported citing two people familiar with the talks.
Porsche amassed a EUR9bn debt as it built up a 51% stake in Volkswagen. The sports car maker is also in talks with Qatar about the Gulf emirate buying a stake of up to 25% in the company which could be worth as much as EUR2.5bn. A decision on that is expected from the Qatar authorities within the next few weeks.
Porsche told Bloomberg that it would improve its application to the bank which has said it wants the Stuttgart-based carmaker to be more specific about what the loan will be used for and how it will be repaid.
“A KfW loan would be vital for Porsche,” said Willi Diez, head of Germany’s Institute for Automobile Industry, a state-funded think tank. “They’ll do what they can to pull it in.”
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By GlobalDataPorsche applied for the loan from KfW after failing to reach an agreement with commercial banks on obtaining funds necessary to run its operations. The final decision on the loan rests with a government steering committee.
It’s uncertain when the committee will meet, Steffen Moritz, a spokesman for the economy ministry, said today.
The KfW rejection is “a huge psychological blow” for Porsche that “makes people question who will give Porsche money in the current recession,” said Gary Jenkins, head of credit research at Evolution Securities Ltd. in London. “The whole world knows they need cash and it’s not a good starting point for negotiations.”
