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Porsche on Wednesday revealed the legacy of its failed attempt to take over fellow German carmaker Volkswagen, saying it would incur a second successive multi-billion euro annual loss.
Hans Dieter Pà¶tsch, VW and Porsche chief financial officer, said that Porsche might have to drastically revalue its stake in VW if a shareholders' meeting next week agrees on special rights for Lower Saxony.
The state is home to VW's headquarters and is its second-largest shareholder with just over 20 per cent. It fought alongside VW to thwart Porsche's takeover attempt. The plan to grant the state a right to directly nominate two members of VW's supervisory board would legally end Porsche's control over VW. The sports car maker would need to mark to market its 51 per cent stake in VW in its current financial year to July 2010.
'These structural changes in the annual report of Porsche SE would, based on today's knowledge, lead to a loss in the range of a low, one-digit billion euro sum," Mr Pà¶tsch said. The stakebuilding in VW brought Porsche to the verge of bankruptcy and led to a €4.4bn ($6.6bn) pre-tax loss in its past financial year, following a €8.6bn profit the year before.
Analysts said that the volatile gains and losses of Porsche's bets with VW options made it look like a hedge fund in recent years. In terms of car sales, VW is 82 times the size of Porsche. The failed strategy triggered the end of Porsche's independence. The two carmakers struck a final agreement last week to sell a 49.9 per cent stake of Porsche's sports car business to VW by the end of the year, a move that will lead to a full integration of Porsche by 2011, making it VW's 10th marque.
The merger will be preceded by VW's raising more than €4bn of capital early next year and Porsche's raising €5bn in 2011. Martin Winterkorn, VW and Porsche chief executive, said that VW's planned acquisition of the sports car company's stake for €3.9bn would strengthen Porsche's finances.
Porsche revealed the scale of its crisis this summer, saying that its net debt surged to €11.4bn by the end of July, up from €3.1bn in the year before. Mr Pà¶tsch said that a fresh credit line of €8.5bn, agreed in principle with the banks to refinance a €10.8bn loan, would give further breathing space.
Hans Dieter Pà¶tsch, VW and Porsche chief financial officer, said that Porsche might have to drastically revalue its stake in VW if a shareholders' meeting next week agrees on special rights for Lower Saxony.
The state is home to VW's headquarters and is its second-largest shareholder with just over 20 per cent. It fought alongside VW to thwart Porsche's takeover attempt. The plan to grant the state a right to directly nominate two members of VW's supervisory board would legally end Porsche's control over VW. The sports car maker would need to mark to market its 51 per cent stake in VW in its current financial year to July 2010.
'These structural changes in the annual report of Porsche SE would, based on today's knowledge, lead to a loss in the range of a low, one-digit billion euro sum," Mr Pà¶tsch said. The stakebuilding in VW brought Porsche to the verge of bankruptcy and led to a €4.4bn ($6.6bn) pre-tax loss in its past financial year, following a €8.6bn profit the year before.
Analysts said that the volatile gains and losses of Porsche's bets with VW options made it look like a hedge fund in recent years. In terms of car sales, VW is 82 times the size of Porsche. The failed strategy triggered the end of Porsche's independence. The two carmakers struck a final agreement last week to sell a 49.9 per cent stake of Porsche's sports car business to VW by the end of the year, a move that will lead to a full integration of Porsche by 2011, making it VW's 10th marque.
The merger will be preceded by VW's raising more than €4bn of capital early next year and Porsche's raising €5bn in 2011. Martin Winterkorn, VW and Porsche chief executive, said that VW's planned acquisition of the sports car company's stake for €3.9bn would strengthen Porsche's finances.
Porsche revealed the scale of its crisis this summer, saying that its net debt surged to €11.4bn by the end of July, up from €3.1bn in the year before. Mr Pà¶tsch said that a fresh credit line of €8.5bn, agreed in principle with the banks to refinance a €10.8bn loan, would give further breathing space.
