1.75 Billion-Euro Porsche Loan Denied by Germany

Germany’s government is unlikely to support Porsche's renewed request for 1.75 billion euros ($2.4 billion) in loans and canceled a review of the application, two people familiar with the situation said.

The Federal Economy Ministry called off a meeting of an eight-person advisory committee scheduled for tomorrow in Berlin to discuss Porsche’s request to state-owned development bank KfW Group, according to the people, who asked not to be identified because the session is private. German officials no longer see the need for a review after KfW rejected the loan request last week, the people said.

The decision increases pressure on Porsche to reach an agreement with Qatar on selling a stake in the Stuttgart-based carmaker or some VW stock options it owns to the Persian Gulf state to reduce 9 billion euros in debt. Porsche, which tripled its debt after boosting its stake in VW earlier this year, doesn’t have the money to exercise the options for an additional 20 percent of VW shares.

“We continue to believe that the loan request provides a basis for a decision” by the German government, Frank Scholtys a spokesman for Porsche, said today by telephone. “We’re still in talks with KfW.”

Porsche said on June 22 that it would make a second approach for government loans.

Source:Bloomberg