Porsche 2010 Annual Report Download - page 43

the legal proceedings, please see the section “Litiga-
tion risk” in risk report of Porsche SE and the section
“Forecast report and outlook” of this management
report). Since the end of the investigations can be
expected at the earliest at the beginning of 2012, the
legal and tax assessments of the merger of Porsche
SE into Volkswagen AG to be made under the basic
agreement will likely be delayed. From the executive
board’s view, this also reduces the probability that the
merger can be achieved under the timeline of the
basic agreement (which requires that the necessary
shareholder resolutions on the merger are made in
2011) from previously 70 percent to 50 percent.
In the view of the Porsche SE executive
board, the overall probability of the merger de-
creases in case of substantial delays in the merger
process compared to the timeline of the basic
agreement.
However, the executive board of Porsche SE
is currently of the opinion that the assessments can
be finalized so timely, that the merger can be
achieved even after 2011.
Measures to secure liquidity and steps to
reduce liabilities
To secure liquidity beyond 30 June 2011, it
will be necessary for the planned capital increase of
Porsche SE to be performed by 30 May 2011, with
an issue volume of at least 2.5 billion euro. For more
details on the capital measures approved by the
annual general meeting on 30 November 2010, we
refer to our statements in the section “Capital meas-
ures planned by Porsche SE” of this management
report. The proceeds from the planned capital in-
crease must be used to repay the first tranche of the
syndicated loan of 2.5 billion euro. Any proceeds
exceeding this figure must be used to further reduce
liabilities to banks.
Since December 2009, the total loan facility
available to Porsche SE has amounted to a total of
8.5 billion euro, of which 7.0 billion euro had been
drawn as of 31 December 2010. The collateral for
the loan has been provided primarily by pledging all of
Porsche SE’s shares in Volkswagen AG.
The lending banks support the proposed
capital measures and have expressed their willingness
to extend the first tranche of the credit line of 2.5
billion euro, which is due on 30 June 2011, by up to
four months, in the event of certain legal obstacles to
the implementation of the capital increase.
Change in Porsche SE’s fiscal year
With regard to the creation of the integrated
automotive group with Volkswagen, the annual gen-
eral meeting of Porsche SE decided on 29 January
2010 that the fiscal year of the company, which ran
from 1 August to 31 July of the following year,
should be changed to run concurrently with the cal-
endar year effective 1 January 2011. A short fiscal
year was created for the period from 1 August 2010
to 31 December 2010 and this is the reporting pe-
riod covered by the accompanying financial state-
ments. Unless otherwise stated, the comparative
period is the fiscal year 2009/ 10 which covered a
period of twelve months. Corresponding resolutions
were passed by the annual general meeting of Por-
sche Zwischenholding GmbH as well as by the annual
general meeting of Porsche AG for the Porsche
Zwischenholding GmbH group.
Disposal of cash-settled stock options
In the prior years, the increases in the
shareholding in Volkswagen were hedged to a large
extent by means of cash-settled options for Volks-
wagen AG shares. The remaining cash-settled op-
tions held by Porsche SE as of the prior-year report-
ing date (31 July 2010) relating to about two per-
cent of Volkswagen AG’s ordinary shares were dis-
posed of in full.
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