Sports car maker Porsche SE aims to use a capital increase and the sale of a stake to Qatar to cut its net debt that has ballooned to more than 10 billion euros ($14.05 billion), two sources close to Porsche told Reuters on Wednesday.
They said Qatar and the two families that control Porsche were poised to pump around 5 billion euros into the company via a capital injection, helping offset debts which have risen from 9 billion at the end of January.
Qatar would get voting shares in Porsche through the capital increase, while the families would receive voting shares as well as non-voting preferred shares in the company.
The capital hike plan is part of a concept drawn up by Porsche Chief Executive Wendelin Wiedeking to untangle the debt mess of Porsche and bolster its position in merger talks with Volkswagen after efforts to seize control the fellow Germancarmaker failed.
The plan also includes Qatar taking over Porsche's derivative contracts that control around 20 percent of Volkswagen's voting shares, the sources said.
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The total package would provide around 10 billion euros in relief for Porsche's stretched balance sheet and reduce its net debt to a manageable level, the sources said.
But it remains unclear whether Ferdinand Piech, a co-owner of Porsche and chairman of Volkswagen, supports the plan. He has been pushing a rival idea for VW to buy a minority stake in Porsche's healthy Porsche AG sports car business.
Porsche labor leader Uwe Hueck demanded the owners keep the sports car business, citing Piech's vow to Porsche shareholders in 1993 that as long as I live Porsche will stay independent.
BOARD MEETINGS LOOM
The Porsche and Piech families -- which control all the voting shares at Porsche SE -- have been at loggerheads for months over how to resolve the company's debt woes and the role Volkswagen would play in the whole deal.
Porsche now owns nearly 51 percent of VW -- Europe's biggest carmaker with a comfortable cash cushion -- but had to abandon plans to take full control of its much larger peer as its debt mounted just as global car markets collapsed.
Porsche shares fell as much as 7.4 percent but recovered to trade down just 0.8 percent by 1346 GMT (9:46 a.m. EDT), lagging a 3.6 percent gain in the DJ Stoxx European car sector index <.SXAP>.
Five-year credit default spreads on Porsche debt tightened about 30 basis points to 319 basis points on hopes a deal to ease its debt burden was nearer.
Volkswagen common stock rose 5.4 percent while its more liquid preferred shares firmed 1.5 percent.
Porsche declined to comment.
Porsche's supervisory board meets on July 23 and was originally due to discuss the possible sale of a stake to Qatar as well as Volkswagen's plans to acquire a 49.9 percent stake in Porsche AG, sources have told Reuters.
Germany's Bild newspaper, citing company sources, reported the agenda would now only address the possible deal with Qatar and not VW's proposal to take a stake in Porsche AG.
Bild said the VW plan would now be discussed as a point of information rather than something that needed to be decided.
Volkswagen said its supervisory board would hold an extraordinary meeting as well on July 23 in Porsche's home town of Stuttgart.
A source had told Reuters last week that Porsche Chairman Wolfgang Porsche called the extraordinary supervisory board meeting for July 23 to discuss a possible stake sale to Qatar worth over 5 billion euros.
(Editing by David Cowell)