More info:Reports:Porsche deeper in debt than thought
The financial woes of Germany's Porsche are bigger than previously thought, media are reporting. The sports car maker is some 14 billion euros ($20 billion) in debt, about 5 billion more than Porsche had earlier said.
According to media reports, Porsche was on the brink of insolvency when the struggle between the sports car maker and Volkswagen finally came to a head.
Focus has reported that Porsche would have been insolvent within two weeks had VW not pushed through with its takeover ambitions. Ironically, the maker of iconic sports car like the 911 had initially wanted to gain control over Volkswagen ? and it was the financial burden of that very takeover bid that pushed the sports car maker to the edge.
Porsche had always said its debt level was at around nine billion euros ($13 billion), yet on Saturday the newsmagazines Focus and Der Spiegel both reported that marathon talks between Porsche and VW revealed that in fact, Porsche has run up debts of as much as 14 billion euros.
With one major difference: VW is a successful company, which produces lots of attractive, high quality cars that sell very well, and has the means to compensate for those debts without having to fall on their knees before the government (and the public) to beg for some cash.Ooops. Yeah, that's GM levels of stupidity right there...
Porsche used to be the Porsche half of the family, VW the Piech side. The two sides hate each other.. Hence, with Piech in control who knows.VW is being and has always been run by the Porsche family (mainly Ferdinand Piech). Lets not forget that, they are car people and wouldn't just ruin Porsche out of some random marketing plan.
The original plan, maybe.^But it was a really stupid move from Porsche
Yeah, but Piech's beef is with the Porsche family. Remember, he started out at Porsche, and e.g. pushed the 917 through against the disapproval of Porsche family members etc., and apparently only moved to Audi because of the "no family running the business"-rule established in the 70ies - I don't think he'd take it out on the company itself.Porsche used to be the Porsche half of the family, VW the Piech side. The two sides hate each other.. Hence, with Piech in control who knows.
And tell us why would VW want to buy their own shares? If Porsche were to firesale their shares, they would still be able to reduce their debt to a healthy level. VW is probably overvalued by a factor 4 to 5, so if Porsche were to sell their shares they should be able to recoup ?10bn. This of course would not have been in the interest of the Porsche owner families.I'm starting to think Porsche shouldn't be bailed out but be allowed to fail instead. Rather than VW having to take on huge debt for it's own shares which Porsche bought at a premium it could just hoover them up at the Porsche fire sale.
Considering the number of shares Porsche would have to sell the market value is going to drop, thus providing VW an opportunity to buy them back relatively cheaply. It also reduced the risk of this whole debacle being played out again in the future.And tell us why would VW want to buy their own shares
Well obviously they're not going to buy back the full Porsche stake, more than a single digit buy back isn't going to happen. I don't think a couple of % increase for Lower Saxony will worry VW too much, they already have power disproportionate to their share of the ownership.If they buy back shares, they will have to reduce the amount of issued shares. So Lower Saxony will end up with 40% of the shares as biggest single shareholder. Besides the reduced capital base will also increase borrowing costs and will likely trigger renegotiations on existing debt. So basically your idea is utter nonsense.