Porsche battles bankruptcy

[my gt]

Porsche battles bankruptcy, seeks billions
26/05/2009 7:46:01 AM
German luxury sportscar maker Porsche sought to deflect talk of bankruptcy on Monday after acknowledging it had borrowed hundreds of millions of euros from Volkswagen and needed billions more.

A spokesman for Porsche -- producer of the iconic 911 sportscar -- confirmed a report in Der Spiegel magazine that it had secured a loan of 700 million euros (980 million dollars) from VW, in which it holds a 51 percent stake.

"The loan expires at the end of September," the spokesman said without giving further details.

Porsche asked for the loan in March, Spiegel said, as the company struggles to raise cash to finance the huge mountain of debt it undertook when bidding to take over the much larger VW.

At the time, Porsche needed to raise 12.5 billion euros. The spokesman said it has got 10 billion from the banks, leaving it needing around 1.75 billion after the 700 million from VW is taken into account.

"We are still lacking 1.75 billion (euros). We are negotiating with several banks, including the KfW (state development bank)," said the spokesman.

Porsche has found itself facing debts of nine billion euros during its ambitious takeover bid for VW -- Europe's biggest carmaker.

After the bid failed, the two auto giants agreed on May 6 to begin merger talks, giving themselves four weeks to agree a tie-up but negotiations have since foundered amid clashes between the bosses of the two firms.

Shares in Porsche plunged over six percent on the German stock market before recovering in late trade on Monday.