Porsche 2009 Annual Report Download - page 88

Risks originating from the capital and
credit markets
Day-to-day monitoring ensures that the execu-
tive board is informed at an early stage about
changes in the conditions on the credit and capital
markets allowing it to develop and decide on suitable
methods of handling and transferring the risk. The
main focus is placed on the liquidity of the markets
and the development of the cost of capital in com-
parison to competitors. The relationship to creditors
is another key aspect of the strategic considerations
and risk analyses.
Liquidity has been secured until 30 June
2011 thanks to Porsche SE’s refinancing completed
in 2009 by means of a new credit line with a total vol-
ume of up to 8.5 billion euro. The implementation of
the financing strategy also includes the fundamental
attempt to transfer interest risks to a large extent to
third parties at conditions that are economically rea-
sonable. In the process, potential risks inherent in the
interest components of the debt capital carried by
Porsche SE are analyzed in terms of the expected
development of interest rates and transferred to third
parties if appropriate.
Liquidity risk
As described in the section “Considerably
improved liquidity situation” under “Significant events”
in this management report, the Porsche SE group’s
liquidity situation has improved significantly since
31 July 2009. On the one hand, this is attributable to
the revocation of the restrictions on the power to dis-
pose of the existing sight and fixed-term deposits of
more than one billion euro which related to the op-
tions sold. On the other hand, Porsche SE received
cash of 3.9 billion euro passed on by Porsche
Zwischenholding GmbH in connection with Volkswagen
AG’s capital increase at Porsche Zwischenholding
GmbH. Finally, an agreement was reached with a
banking syndicate in December 2009 on replacing the
line of credit agreed in March 2009. The total credit
facility available to Porsche SE now amounts to 8.5
billion euro, of which only 7 billion euro has been
drawn at present.
All of Porsche SE’s shares in Volkswagen AG
are used as collateral for the loan. If a potential sale
of the pledged shares in Volkswagen AG does not sat-
isfy the banks, further collateral has been provided in
the form of a lien on the 50.1 percent share in Por-
sche Zwischenholding GmbH, as well as on the claims
accruing to Porsche SE in the event that the call or
put option relating to the 50.1 percent share in Por-
sche Zwischenholding GmbH is exercised. The 50.1
percent share in Porsche Zwischenholding GmbH has
been assigned to a trustee as collateral.
The cash and cash equivalents held by Por-
sche SE, excluding restricted cash, totaled 0.9 billion
euro as of 31 July 2010. In principle, Porsche SE ad-
ditionally has at its disposal the aforementioned, cur-
rently unused line of credit of 1.5 billion euro.
To secure liquidity beyond 30 June 2011 it will
be necessary for the capital increase of Porsche SE
scheduled for the first half of 2011 to be performed
by this date with an issue volume of at least 2.5 billion
euro. The company’s annual general meeting on
30 November 2010 will decide on the corresponding
capital measures. According to the provisions of the
new syndicated loan for 8.5 billion euro, the first
tranche of 2.5 billion euro is due for repayment on
30 June 2011. The syndicated loan agreement stipu-
lates that the funds used to repay the first tranche
may not stem from the sale of Volkswagen AG shares
or Porsche Zwischenholding GmbH shares.
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 (in this respect we refer to our explanations in
the section “Basic agreement on the creation of an inte-
grated automotive group” under “Significant events” in
this management report). If the steps involved in the
merger of Porsche SE and Volkswagen AG do not take
place as planned, Porsche SE might be left, following
the repayment of the aforementioned first tranche, with
residual debt that may have to be repaid by selling
Volkswagen AG shares.
88 Group management report