Porsche 2008 Annual Report Download - page 228

To our shareholders The Company
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solidate Volkswagen as a subgroup. The necessary deconsolidation would would not affect the
liquidity situation, but it would have a sustainable effect on the consolidated financial statements of
Porsche SE. Volkswagen AG would again be accounted for as an associate in the consolidated
financial statements of Porsche SE. In accordance with current IFRS rulings, the investment would
be recognized in the balance sheet based on the quoted stock price of Volkswagen AG’s ordinary
shares at the time of deconsolidation. The currently observable quoted stock price of the ordinary
shares of Volkswagen AG would result in a significant deconsolidation loss.
The common target is the merger of Porsche SE with Volkswagen AG during 2011, provided the
legal prerequisites for the merger are fulfilled.
Should the merger not take place, the basic agreement provides that Porsche SE has a put option
for the remaining indirect 58% share in Porsche AG, and Volkswagen AG has a call option for this
share. As a modification to the basic agreement, it is planned in a first step for Volkswagen AG to
obtain 49.9% (instead of 42%) in Porsche AG in return for a cash contribution of €3.9 billion. The
percentages covered by the put and call options decrease respectively.
Once the details of the implementation agreements which stipulate the steps to be undertaken for
the merger of Porsche SE and Volkswagen AG have been clarified, Prof. Dr. Martin Winterkorn and
Hans Dieter Pötsch will take office as CEO and members of the executive board of Porsche SE
respectively. They will perform their new functions in addition to their current roles on the execu-
tive board of Volkswagen AG.
On 14 August 2009, Qatar Holding LLC signed an agreement to contribute €265 million to the
syndicated loan of up to €12.5 billion. In August Porsche SE also sold a significant portion of the
cash-settled hedging derivatives relating to the shares of Volkswagen AG. The sale released collat-
eral of around €1.4 billion that had been pledged in the course of hedging transactions. This im-
proved the Porsche group's liquidity considerably.
Qatar Holding LLC also acquired 10% of Porsche SE’s ordinary shares in August 2009.
Subsequent to the balance sheet date, Porsche SE began negotiations for the sale of cash-settled
stock options that were not yet intended for sale on 31 July 2009 on about 3% of the ordinary
shares of Volkswagen AG.
On 18 August 2009, Porsche SE signed a hold harmless agreement in favor of the Association of
German Banks (Bundesverband deutscher Banken e.V.) for any losses which that association might
suffer from measures pursuant to Art. 2 (2) of the statutes of the deposit guarantee fund agency
in favor of Volkswagen Bank GmbH. For internal purposes, Volkswagen AG in turn has agreed to
hold Porsche SE harmless from any obligations resulting therefrom.
In the course of criminal investigations by the state prosecutor into alleged market manipulation
and infringement of publication duties by former members of the executive board and (with regard
to alleged manipulation of the market) another officer of Porsche SE, the business premises of
Porsche SE and Porsche AG at their headquarters in Zuffenhausen were investigated on
20 August 2009. Both companies deny the public prosecutor’s allegations while cooperating with
investigations and providing their full support to the investigating officers in order to clarify the
matter as soon as possible.