Porsche and Volkswagen once happily co-existed under the same corporate umbrella, but recent financial trouble at Porsche has found the two German automakers at odds. VW floated Porsche a $983.8 million loan late last year, with the deadline for repayment on that loan quickly approaching. In lieu of that repayment VW has reportedly offered Porsche an ultimatum, causing a rift between the two companies.
According to a report published by Der Spiegel magazine, VW has pressed Porsche to accept a deal that would see VW taking a 49 percent stake in the German sports car maker for between $4.2 billion and $5.6 billion. If Porsche refuses the offer, VW will reportedly uphold the September repayment of its $983.8 million loan.
Porsche , clearly unhappy with the demand, has spoken out against the VW offer. “We will not accept extortion. … Ultimatums do not belong in the 21st century,” Porsche said in a statement.
A VW spokesman responded by telling Automotive News “there is no ultimatum.”
VW may not be calling the offer an ultimatum, but there is likely a similar deal on the table. Thanks to its failed attempt to takeover VW, Porsche has racked up more than $12 billion in debt, causing a cash shortfall of at least $3.5 billion. A government bailout is looking less likely by the day, leaving Porsche with few options.
However, an investment deal with Qatar could give Porsche enough cash to repay VW by the September deadline. A deal between the two could be announced by next month, saving Porsche just before the bell. Stay tuned as we expect more on the Porsche-VW saga in the coming days.
