Porsche board meets to discuss VW plans

[May 18, 2009]  WEISSACH, Germany (AP) -- Volkswagen's CEO said the company "will not be pushed" to hurry talks over a possible merger with majority shareholder Porsche AG.

In a letter to VW employees obtained Monday by The Associated Press, VW head Martin Winterkorn said more analysis was needed to avoid risking Volkswagen's finances in any combination with sports car maker Porsche, now facing deep debts.

Volkswagen on Sunday announced that it was postponing talks over the combination, agreed to last week by the two companies. Porsche insisted, however, that only one meeting had been canceled and the deal talks were ongoing.

"For any association between Volkswagen and Porsche, we have to systematically analyze the position of Porsche in order to get a clear picture of the real situation," Winterkorn said in the letter.

"We need full transparency of the current situation. It is in the interest of all involved, our workers, shareholders and customers, that we do not risk Volkswagen's financial stability and sovereignty."

"For that reason, we will not be pushed to rushed negotiations by anyone ...we need a constructive atmosphere for the necessary constructive talks. That has not been the case lately. We are not under pressure. All the options and circumstances have to be thoroughly investigated, in order to be able to decide on the basis of facts," the letter read.

Porsche built a 51 percent stake in Volkswagen, and appeared to be in the driver's seat, but ran up debt as it did so. As auto markets turned down and credit tightened, Porsche moved instead to merge operations with Volkswagen and forge an integrated company in which Porsche's sports-car operations would be one of the brands.

Porsche employee representatives walked off the job Monday in protest at the proposed combination at the company's development center in Weissach near Stuttgart. Porsche's employee council chief Uwe Hueck demanded that the independence of Porsche continue.

"Porsche stays Porsche. VW stays VW. That's the message," Hueck said.

Nearby, Porsche's supervisory board -- much like a U.S. board of directors -- convened but without leader Ferdinand Piech, also VW's board chairman, whose absence was not expected or explained. Other board members, including those from the Porsche family -- controlling shareholders of Porsche Automobil Holding SE -- were to discuss the integration plan, agreed to earlier this month, with particular focus on Porsche's debts.

At the heart of the dispute is some euro9 billion ($12.22 billion) in net debt that Porsche -- at the time Germany's most successful car maker -- racked up in its attempt last year to take over the much larger VW.

Piech, a grandson of company founder Ferdinand Porsche, angered Porsche by openly discussing the debt with reporters last week.

VW also has accused Porsche of withholding information regarding the true size of its debts and what it expects to see happen if the two companies merge, amid speculation that Porsche is seeking some euro4 to euro5 million ($5.4 to $6.7 million) in fresh capital.

[Associated Press; By OLIVER SCHMALE]

Melissa Eddy contributed to this report from Berlin and George Frey from Frankfurt.

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