Porsche Nears Bankruptcy

Link:<http://www.forbes.com/2009/05/26/porsche-volkswagen-bankrupcty-markets-equity-automotive.html>

Porsche and Volkswagon are both having financial troubles, but large debts and hard-to-sell options means Porsche is having the hardest time. Shares of the German carmaker raced on Tuesday after the company accepted a loan of 700 million euros($972.5 million) from Volkswagon, the carmaker that owns 51% stake. Porsche denied being on the verge of bankruptcy as it struggled because of the increase in their stake in Volkswagon. Adding to its loan from Volkswagon, Porsche is apparently talking with banks to raise another 1.75 billion euros ($243.2 billion) in financing. Shares of Porsche fell 4.3%, or 1.88 euros($2.61), 41.88 euros($58.17) during midday training in Frankfurt. Porsche managed to refinance 10 billion euros ($13.9 billion) in loans from a large group of banks earlier this year, but the car company still needed to raise another 2.5 billion ($3.5 billion) more in loans, reports say. Porsche's plan to construct upwards an additional indirect stake of around 25% in Volkswagen, has left the company in a fatal bad situation. Porsche looks like it will be not be able to actually settle them and buy the stake- however buying this stake may cost around 11 billion euros ($15.3 billion), or 150 euros ($208.37) per share.