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 Europe's largest carmaker is under pressure to strengthen its
finances as it is expected to have to pay out tens of billions of
euros to cover fines, lawsuits and vehicle refits after it admitted
to cheating U.S. diesel emissions tests and falsifying carbon
dioxide emissions.
The biggest corporate scandal in the German company's 78-year
history has forced out its long-time CEO, wiped billions of euros
off its market value and hammered its bonds, making it much more
expensive for the company to borrow through its
traditionally-preferred route of the debt market.
VW secured the 20 billion euro bridging loan from 13 banks this week
and is planning to refinance it by issuing bonds over the next
couple of months, the sources said.
Under the terms, VW assured the lenders it would sell or list assets
worth up to significantly more than 20 billion euros if it fails to
find other sources of money, the people said.
Volkswagen declined to comment.
"No specific assets have been discussed," one of the people said,
while another person said a potential emergency rights issue was
also an option.
Investment bankers are pitching ideas to Volkswagen on potential
ways to raise money, though decisions are unlikely before more
clarity on the scope of penalty payments and recall costs have
emerged, the people said.
Listings of divisions such as Audi, Porsche or its truck business -
which is being carved out now - seem unlikely, but the non-truck
parts of VW's MAN subsidiary are expected to be at the top of the
list of potential divestments, the people said.
The MAN power engineering operations, whose products include ship
engines, mini power plants, special gear units, propulsion
components and testing systems may be valued at 4-5 billion euros in
a potential deal, the people said.
The division accounted for all of MAN's 101 million euro nine-month
operating group profit and for more than a quarter of its 9.98
billion in sales.
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"Volkswagen may also consider divesting luxury car brands Bentley
and Lamborghini or motor bike brand Ducati, although these units
don't really move the needle," one of the sources said.
Separately, VW said the number of cars whose carbon dioxide (CO2)
emissions and fuel consumption have been understated may turn out to
be smaller than the 800,000 announced last month. VW has said it
expects costs of at least 2 billion euros from the issue.
Investigations into the circumstances of the manipulations and
number of affected vehicles have not been concluded yet, "but many
CO2 levels have in the meantime turned out to be quite accurately
measured," a spokesman said.
VW's Skoda subsidiary said on Thursday initial suspicions that the
Czech brand was also affected by the CO2 malfeasance have turned out
to be wrong.
Almost 500 lawsuits have been filed in the United States against VW,
Audi and Porsche since the emissions scandal became public on Sept.
18, Germany's Sueddeutsche Zeitung and broadcasters NDR and WDR said
on Thursday, without citing the source of the information.
For more stories on the VW emission scandal:
($1 = 0.9474 euros)
(Additional reporting by Andreas Cremer and Jan Schwartz)
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