Porsche Shares Fall on Concerns Over Borrowing Needs

May 25 (Bloomberg) -- Porsche SE, the German sports-car maker burdened by 9 billion euros ($12.6 billion) in net debt, dropped in Frankfurt trading on investors’ concerns that the company needs more financing.

Porsche fell 1.42 euros, or 3.1 percent, to 43.76 euros, bringing its decline to 23 percent since May 6, when the company announced it would pursue the creation of an integrated automaker with Volkswagen AG. Volkswagen lost 78 cents, or 0.4 percent, to 222.57 euros.

The Stuttgart-based manufacturer of the 911 sports car is continuing talks with banks about raising an additional 1.75 billion euros in loans after securing a 750 million-euro credit line with a bank, Albrecht Bamler, a Porsche spokesman, said in a phone interview. The talks on additional borrowings include government-controlled development bank KfW Group, he said.

Separately, Porsche said it had received a short-term loan from Volkswagen that will expire at the end of September. The family-controlled sports-car maker owns a majority of the Wolfsburg, Germany-based automaker’s stock. Handelsblatt newspaper reported today that the credit line was granted in March for more than 700 million euros.

The Financial Times Deutschland said in a separate article that Porsche faces higher financing costs as options it holds on Volkswagen stock mature in June. Porsche declined to comment on its options. Volkswagen declined to comment on the reports.

The VW loan report “suggests that Porsche’s balance-sheet performance was worse than anticipated,” said Aleksej Wunrau, an analyst at BHF Bank in Frankfurt.

Integration Talks

Porsche is negotiating with Volkswagen, Europe’s largest carmaker, on creating an integrated company. The talks, announced on May 6 after Porsche renewed a 10 billion-euro credit line, were suspended on May 18 when Ferdinand Piech, Volkswagen’s supervisory board chairman and a member of the family that controls Porsche, said that Volkswagen shouldn’t help solve the sports-car manufacturer’s financial problems.

Piech and Wolfgang Porsche, his counterpart at Porsche SE, said in a joint statement on May 19 that they still have a goal of combining the carmakers. Talks, which were originally set to conclude in early June, are continuing, Bamler said today, declining to provide details. Piech, who is a cousin of Wolfgang Porsche, also holds a seat on Porsche SE’s board.

Porsche’s debt tripled to 9 billion euros after the company increased its stake in Volkswagen to 50.8 percent at the beginning of this year from a 42.6 percent holding reached in October. Porsche holds options for about 20 percent of Volkswagen stock following transactions last year to build up the stake in an effort to reach a 75 percent ownership target.