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March 25, 2010

GERMANY: VW readies EUR4bn rights issue

Volkswagen will launch the biggest ever rights issue in Germany next month. It is hoped that the 65 million shares offering will raise EUR4bn to help with VW's expansion plans as well as replenish available capital reserves following VW's raised stake in Porsche.

Volkswagen will launch the biggest ever rights issue in Germany next month. It is hoped that the 65 million shares offering will raise EUR4bn to help with VW’s expansion plans as well as replenish available capital reserves following VW’s raised stake in Porsche.

VW said the new shares would be fully entitled to dividend rights with the subscription period scheduled to begin at the end of this month. Trading in the rights would also start on March 31 and likely run until then close of business on April 9.

VW CFO Hans Dieter Poetsch said earlier this month he wanted to recoup the EUR4bn used to buy half of Porsche SE’s sports car unit at the end of last year.

Poetsch said in a statement the move represented “an important prerequisite for a continuously healthy financing structure” ahead of his plans to subsume heavily indebted Porsche SE into Volkswagen in 2011.

Volkswagen expects to announce the offer price tomorrow (March 26).

Pre-placement of the non-voting stock had already begun for institutional investors, it said, while existing shareholders can subscribe to the issue by the close of business on April 13.

Major shareholders, including Porsche SE, VW’s home German state of Lower Saxony and Qatar’s sovereign wealth fund, have all agreed to assign and transfer their subscription rights to the syndicate banks, VW said.

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