Forget Chrysler and GM, Porsche could go bankrupt

[Dan Chambers]

... without mussing your hair.

That's an unnecessary safety feature for some of us.

[John Straub]

Porsche turns to Middle East

--------------------------------------------------------------------------------

from the web:

"A Qatari rescue of indebted Porsche – faltering under a €9bn debt load and urgently needing to deleverage – looks set to emerge, as a spokesman for the German sports car maker has confirmed today that it is in exclusive negotiations with the Qatar Investment Authority.

The cash-constrained environment of recent times has led to cash-rich sovereign wealth funds being painted as potential saviours of struggling companies. But the truth is that difficult restructuring deals needing active involvement are not really a sovereign fund’s bag. Why then is QIA looking at Porsche?

Buying a stake in Porsche in its hour of need would most likely give QIA an attractive shareholding in Volkswagen, Europe’s biggest automaker. Porsche already owns 51% of VW and has expensive options on a further 24% stake.

A cash injection from QIA would allow Porsche to exercise these options, which expire on June 19. A Qatari investment could also help put Porsche on a more stable financial footing, so that merger talks with VW can resume.

Boosted by Qatari money, the company will be in a stronger position than the cap-in-hand role it had been playing to VW in recent months. From QIA’s perspective, the integration of the two companies becomes more probable than if it simply bought Porsche’s remaining options in VW.

In a more benign financial environment QIA might not have had the opportunity to invest in Porsche, given the company’s private ownership, plus the fact that it would have been more likely to be able to refinance its debt – and not forgetting the 20% blocking stake the German state of Lower Saxony owns in VW.

Porsche’s debt-load and the personalities involved, particularly VW chairman Ferdinand Piech, of course present risks for the Qataris. But bearing in mind the rewards on offer – Porsche’s shareholding in VW has been staggeringly profitable for the smaller company – the risks are probably worth it"

And More:


Porsche in talks to sell 25% stake to Qatar, paper reports


Automotive News Europe
June 9, 2009 08:16 CET
UPDATED: June 9 10:15 CET


FRANKFURT (Reuters) -- Porsche Automobil Holding SE is in talks to sell a stake of up to 25 percent in its holding company to the Gulf state of Qatar, the Financial Times reported on Tuesday, citing people familiar with the talks.



Porsche spokesman Albrecht Bamler confirmed to Bloomberg on Tuesday that the parties are talking about a potential investment in the German sports car maker. Bamler did not say how large the stake would be and declined to say when a deal might be reached. He said the atmosphere of the talks is "good."

The FT reported that Porsche CEO Wendelin Wiedeking has met with the state's Qatar Investment Authority (QIA), which is already looking through Porsche's books, and a deal could be announced within weeks.

Any deal would come as part of a capital increase of up to 4.5 billion euros ($6.2 billion), in which Porsche and the Piech family owners would also participate, it said.

QIA was unavailable for comment and Porsche declined to comment, the newspaper said.

VW shares for sale?

German weekly Focus reported over the weekend that Porsche could either sell a stake in its holding to QIA or its options for 24 percent of shares in Volkswagen AG.

Qatar's prime minister, Youssef Kamal, told Reuters on May 30 Qatar was considering taking a stake in debt-laden Porsche or other German auto companies after Porsche scaled down its bid for VW.

Porsche originally sought to build its voting stake up to 75 percent in order to take over full control of VW via a so-called domination agreement, but the sports car maker had to give up on its plans early last month.

Huge debt

In the course of Porsche's share purchases, it accumulated a mountain of debt that it could not refinance as planned using VW's own cash pile and is now looking for a way to bail itself out by merging with financially solid Volkswagen.

In March, Porsche tried to get 12.5 billion euros in fresh credit. It needed 10 billion euros to refinance loans and sought an additional 2.5 billion.

But it has only managed to secure 10.75 billion euros so far and has now asked the German government for a 1.75 billion loan via state bank KfW.

[Amail]

I think the math is off by a zero or two...

A billion dollars is one thousand million.
A trillion dollars is one million million.
The current US debt is around $11 trillion.

So, we need to distribute $40 trillion to 40 million retirees? That's a lot of cabbage!

If he meant to say that the $40 billion should be distributed among 40 million retirees, that's a cool grand a piece. Would be a nice windfall, but hardly enough to retire, buy a new US car, and pay off their mortgage.

Here is the most recent great idea I have seen:

This from an article in the St. Petersburg Times Newspaper on Sunday.

The Business Section asked readers for ideas on "How Would You Fix the Economy?"

I think this guy nailed it!


Dear Mr. President,

Please find below my suggestion for fixing America's economy. Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan. You can call it the Patriotic Retirement Plan:

There are about 40 million people over 50 in the work force. - Pay them $1 million apiece severance for early retirement with the following stipulations:

1) They MUST retire. Forty million job openings - Unemployment fixed.

2) They MUST buy a new American CAR. Forty million cars ordered - Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage - Housing Crisis fixed.

It can't get any easier than that!

P.S. If more money is needed, have all members in Congress and their constituents pay their taxes...

[MR LIPP]

It's bailout math. Nobody sweats 2 or 3 zeros anymore.

http://www.truveo.com/Bailout-math/id/4183883887
http://www.youtube.com/watch?v=rLprXHbn ... re=related
Really fun videos to explain how it works.