Porsche board okays merger contract with Volkswagen
FRANKFURT (Reuters) - The supervisory board of indebted automotive holding Porsche SE (PSHG_p.DE) signed off on a contract to merge with its majority-owned, cash-rich subsidiary Volkswagen (VOWG.DE) by 2011, Porsche said on Friday.
"The next milestone is the 49.9 percent investment of Volkswagen in Porsche AG by the end of 2009," the company said in a statement, adding the VW board had already approved the deal as expected in a meeting late on Thursday.
Volkswagen is acquiring a stake in Porsche AG just as the iconic sports car maker is entering a new growth phase with the launch of its fourth model line, the four-door Panamera grand tourer.
Porsche AG's listed parent Porsche SE first needed to create the preconditions for a deal when it successfully restructured last week billion of euros in bank debt.
"Porsche SE's existing credit line of 10.75 billion euros was replaced with a new credit line of as much as 8.5 billion euros," it said on Friday, confirming a Reuters report.
Previous management at Porsche had argued the sale of a near majority in its operating business to Volkswagen would allow creditors to immediately call their 10.5 billion euro loan.
Porsche paid a symbolic dividend after withdrawing 1 billion euros from retained earnings to offset a massive fiscal year loss.
(Reporting by Christiaan Hetzner)
