VW bond sale not preparing for more takeovers-sources

Wed Jun 12, 2013 9:41am EDT

* VW completes sale of 1.2 bln euros of convertible bonds

* No plans for acquisitions-sources

* Bond sale "to ensure group's financial stability"-CFO (Adds sources, detail, background)

By Jan Schwartz and Andreas Cremer

BERLIN, June 12 (Reuters) - Volkswagen AG's second bond sale in seven months aims to bolster finances strained by takeovers, rather than readying the group for further acquisitions, sources close to the German automaker said on Wednesday.

Europe's largest car maker said on Tuesday it will sell up to 1.2 billion euros ($1.6 billion) in bonds that will convert into shares, following a similar issue VW placed last November. The sale was completed on Wednesday.

"There is no concrete project" planned on acquisitions, one of the sources said on condition he not be identified because the matter is confidential.

NordLB analyst Frank Schwope also saw the convertible sale as related to the group's financing requirements. "Capital resources are key to VW, they're filling their coffers," he said. "Acquisitions are not on the cards, they've got their hands full with their 12 brands."

Wolfsburg-based VW is in the process of buying out shareholders of truckmaker MAN SE after taking control of the company and last year completed the purchase of sportscar manufacturer Porsche.

The maker of the Golf hatchback also plans to build seven more factories in China and is rolling out a costly engineering system to plants around the world to facilitate assembly of small and medium-sized cars.

Net liquidity in the company's core automotive business plunged by a third in the space of a year to 10.6 billion euros in March.

"It's part of VW's strategy to ensure financial stability and soundness of the group at all times," finance chief Hans Dieter Poetsch said on Tuesday. "Our aim is to maintain the favourable liquidity position, the strong capital structure and our good (credit) rating."

The new mandatory convertible notes have a coupon of 5.5 percent and were offered at an issue price of 105.64 percent of their principal amount.

Upon maturity on Nov. 9, 2015, the notes will be converted into preferred shares without voting rights from Volkswagen's existing conditional capital.

VW investor Qatar Holding LLC has agreed to buy new mandatory convertible notes, VW said, without specifying the amount.

JP Morgan will act as bookrunner of the transaction. ($1 = 0.7533 euros) (Editing by David Holmes)