Porsche facing $3.5b cash shortfall, narrowly avoided bankruptcy

sidindica · 26th May 2009, 08:31

Porsche facing $3.5b cash shortfall, narrowly avoided bankruptcy

Porsche has been trying to obtain a majority stake in Volkswagen for some time now, but it looks as though that quest has pushed the German sports car maker to the brink. Porsche has now racked up more than $12 billion in debt and was reportedly close to filing for bankruptcy in March.

According to Germany’s Der Spiegel magazine, Porsche nearly filed for bankruptcy back in March and was only saved by a $978 million cash infusion from Volkswagen. Despite that loan, Porsche still requires another $3.5 billion just to meet its operation requirements.According to The Local Porsche has asked the German government for $140 million in emergency loans, but the German government is reluctant to move forward with the funding. Moreover, even if Porsche lands the loans from the German government, it will only be a fraction of what the German automaker needs to keep the doors open.
Porsche’s true financial health remains a bit of a mystery at this point, but it sounds as if Porsche’s management may have bitten off a little more than it could chew with the VW deal. Porsche says it’s still interested in taking control of VW but all talks will be on hold until the company can shore up its financial standing.

theMAG · 26th May 2009, 10:40

This is really surprising. Porsche was always known to be the manufacturer with the highest profit margins in the industry.

amtak · 27th May 2009, 11:22

Recession has thrown a lot of surprises on all of us! Porsche and going bankrupt when we are all discussing GM?

ajmat · 27th May 2009, 11:50

Quote:

Originally Posted by theMAG

This is really surprising. Porsche was always known to be the manufacturer with the highest profit margins in the industry.

It is not the car manufaturing that bled them - that is very healthy. It is the hedge fund business which has bit them hard

Nikhilb2008 · 27th May 2009, 12:30

It is quite funny actually. A company that most other manufacturers admired for years is now struggling financially. I love Porsche and hope they recover as soon as possible, but it is quite funny. They seem to have redefined the term "Bitten off more than they can chew" .

f450 · 27th May 2009, 14:08

They should be fine once the recession passes. Their loss making investments will turn into profit making ones. It's only a question of riding the tide out till then...

Gilead · 27th May 2009, 20:49

Just the other day, Porsche was mounting a hostile takeover of VW. Looks like the tables have been completely turned around now. Hope Porsche gets through this.

For those that are unfamiliar with Porsche's finances, their main source of profitability came from an investment banking type operation they have been running. That's what enabled them to make a move on VW.

xploSID · 23rd June 2015, 11:55

Here is an excellent article that combines three of my areas of interest: Automobiles, Hedge Funds & Hostile Takeovers.
This is a saga about how the firm made more money trading FX markets than automobiles. The hunter can become the hunted, other things never remain constant, and if your good there's always someone better out there waiting in the wings

http://priceonomics.com/porsche-the-...lso-made-cars/

SafeDrive · 23rd June 2015, 13:45

Brilliant article. This can be made into a Hollywood movie

26th May 2009, 08:31	#1
sidindica Senior - BHPian Join Date: Jun 2007 Location: Delhi Posts: 4,892 Thanked: 8,106 Times	Porsche facing $3.5b cash shortfall, narrowly avoided bankruptcy Porsche facing $3.5b cash shortfall, narrowly avoided bankruptcy Porsche has been trying to obtain a majority stake in Volkswagen for some time now, but it looks as though that quest has pushed the German sports car maker to the brink. Porsche has now racked up more than $12 billion in debt and was reportedly close to filing for bankruptcy in March. According to Germany’s Der Spiegel magazine, Porsche nearly filed for bankruptcy back in March and was only saved by a $978 million cash infusion from Volkswagen. Despite that loan, Porsche still requires another $3.5 billion just to meet its operation requirements.According to The Local Porsche has asked the German government for $140 million in emergency loans, but the German government is reluctant to move forward with the funding. Moreover, even if Porsche lands the loans from the German government, it will only be a fraction of what the German automaker needs to keep the doors open. Porsche’s true financial health remains a bit of a mystery at this point, but it sounds as if Porsche’s management may have bitten off a little more than it could chew with the VW deal. Porsche says it’s still interested in taking control of VW but all talks will be on hold until the company can shore up its financial standing.
	() Thanks

26th May 2009, 10:40	#2
theMAG Distinguished - BHPian Join Date: May 2006 Location: Avon, CT Posts: 7,217 Thanked: 1,807 Times View My Garage	This is really surprising. Porsche was always known to be the manufacturer with the highest profit margins in the industry.
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27th May 2009, 11:22	#3
amtak Senior - BHPian Join Date: Oct 2006 Location: Mumbai - The city of Sea Link!!! Posts: 2,914 Thanked: 899 Times View My Garage	Recession has thrown a lot of surprises on all of us! Porsche and going bankrupt when we are all discussing GM?
	() Thanks

27th May 2009, 12:30	#5
Nikhilb2008 Distinguished - BHPian Join Date: Jul 2006 Location: Bangalore Posts: 5,196 Thanked: 10,138 Times	It is quite funny actually. A company that most other manufacturers admired for years is now struggling financially. I love Porsche and hope they recover as soon as possible, but it is quite funny. They seem to have redefined the term "Bitten off more than they can chew" .
	() Thanks

27th May 2009, 14:08	#6
f450 BHPian Join Date: Dec 2008 Location: Hyderabad Posts: 794 Thanked: 7 Times	They should be fine once the recession passes. Their loss making investments will turn into profit making ones. It's only a question of riding the tide out till then...
	() Thanks

27th May 2009, 20:49	#7
Gilead Senior - BHPian Join Date: May 2009 Location: Chennai Posts: 2,142 Thanked: 60 Times	Just the other day, Porsche was mounting a hostile takeover of VW. Looks like the tables have been completely turned around now. Hope Porsche gets through this. For those that are unfamiliar with Porsche's finances, their main source of profitability came from an investment banking type operation they have been running. That's what enabled them to make a move on VW. Last edited by Gilead : 27th May 2009 at 20:58.
	() Thanks

23rd June 2015, 11:55	#8
xploSID Newbie Join Date: Sep 2012 Location: Delhi Posts: 15 Thanked: 6 Times	Porsche: A hedge fund that also makes cars Here is an excellent article that combines three of my areas of interest: Automobiles, Hedge Funds & Hostile Takeovers. This is a saga about how the firm made more money trading FX markets than automobiles. The hunter can become the hunted, other things never remain constant, and if your good there's always someone better out there waiting in the wings http://priceonomics.com/porsche-the-...lso-made-cars/
	(1) Thanks

23rd June 2015, 13:45	#9
SafeDrive BHPian Join Date: Jun 2010 Location: Trivandrum Posts: 425 Thanked: 86 Times	Re: Porsche: A hedge fund that also makes cars Brilliant article. This can be made into a Hollywood movie
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