Porsche 2009 Annual Report Download - page 41

After the Porsche business operations had
been transferred with legal effect to a (new) company
Porsche AG, Volkswagen AG made an investment in the
(new) company Porsche AG on 7 December 2009 via a
newly established intermediate holding company (Por-
sche Zwischenholding GmbH). Due to the rulings estab-
lished in the implementing agreements to the basic
agreement and in the articles of association of Porsche
Zwischenholding GmbH, Porsche SE lost control of this
company under IFRSs despite the fact that it holds the
majority of voting rights of 50.1 percent. Consequently,
the Porsche Zwischenholding GmbH group was decon-
solidated on 7 December 2009 and has been ac-
counted for at equity as a joint venture of Porsche SE
and Volkswagen AG since that date.
Basic agreement on the creation of an
integrated automotive group
As presented in the above section “Porsche
SE acts as a holding company” the first steps provided
for in the basic agreement on the creation of an inte-
grated automotive group were taken already at the
end of November/beginning of December 2009 by
means of the resolution adopted by Volkswagen AG’s
annual general meeting on the incorporation in Volks-
wagen AG’s articles of association of the State of
Lower Saxony’s right to appoint supervisory board
members and Volkswagen AG’s indirect investment in
Porsche AG.
Volkswagen AG’s annual general meeting on
3 December 2009 also adopted a resolution, as pro-
vided for by the basic agreement, confirming the
blocking minority of twenty percent stipulated by the
articles of association of Volkswagen AG and the au-
thorization to issue up to 135 million new preference
shares with subscription rights for all shareholders of
Volkswagen AG. Volkswagen AG then increased its
share capital by a notional amount of around 166.2
million euro in March 2010 by issuing approximately
65 million new preference shares, generating total net
issue proceeds of approximately 4.1 billion euro in
March and April.
For the first half of 2011 the basic agreement
provides for a capital increase to be performed at Por-
sche SE. The Porsche and Piëch families have entered
into a commitment towards Porsche SE within the
framework of the overall concept of the basic agree-
ment to subscribe – under certain circumstances – to
the new ordinary shares from this capital increase for a
total subscription price of an estimated 2.5 billion euro
assuming specific conditions are met.
Plans are to reach the final stage in creating an
integrated automotive group, namely the merger be-
tween Porsche SE and Volkswagen AG, after the capital
increase at Porsche SE.
From today's perspective it remains uncertain
whether the timetable for the merger provided for in
the basic agreement can be met. The legal and tax
assessment of the complex transaction to be made in
accordance with the basic agreement has not yet been
completed. This is due to external factors, among
them the fact that the tax framework for the merger is
not yet set. Further, with regard to the damages
claims filed in the US against Porsche SE and the
damages claims raised by certain funds in Germany
against Porsche SE (for both matters please refer to
section “Litigation risk” under “Opportunities and risks
of future development” in this management report), at
the current stage of those proceedings, no final as-
sessment of the consequences of those claims for the
merger is possible. The executive board of Porsche
SE currently assumes that a successful clarification of
the current uncertainties is possible and hence the
merger will take place, even though possibly not within
the ambitious timetable provided for in the basic
agreement.
Under the basic agreement Porsche SE and
Volkswagen AG granted each other put and call op-
tions for the remaining 50.1 percent share of Porsche
Zwischenholding GmbH, which is held in trust on behalf
of Porsche SE. These options can be exercised at de-
fined times within the period from 15 November 2012
to 31 January 2015 in the event that the merger reso-
lutions required from the general meetings of Porsche
SE and Volkswagen AG are not adopted by 31 Decem-
ber 2011 or, where they have been adopted, if ap-
proval proceedings have been unsuccessful and claims
filed continue to prevent registration of the merger.
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