Porsche plaintiffs suffer setback to $5 billion claims

Wed Jun 27, 2012 10:45am EDT
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By Andreas Cremer

BERLIN (Reuters) - Investors suing Porsche SE (PSHG_p.DE: Quote) over its botched 2008 takeover of Volkswagen (VOWG_p.DE: Quote) suffered a setback to claims for more than 4 billion euros ($4.99 billion) of damages as German court hearings on Wednesday exposed initial cases as sketchy.

Swiss investment company My Capital-MC and a German private investor, seeking compensation for 4.7 million euros of losses from short-selling VW shares in a bet that the price would fall, have yet to convince German judges of Porsche's wrongdoings.

"There are high hurdles" to prove that the sports car manufacturer violated legal standards defined by Germany's top civil court, said judge Stefan Puhle after three hours of hearings at the regional court in Brunswick, northern Germany.

"This is a tough act to prove," Puhle added, pointing out that one of the two claimants even failed to adequately explain the level of damages claims.

Investors say that throughout 2008 Porsche concealed its plans to acquire VW and instead secretly piled up its holding. In March 2008, Porsche dismissed rumors that it was pursuing a takeover of the much-bigger VW. Seven months later, however, it disclosed that it held almost 75 percent of VW shares, of which 31.5 percent were previously undisclosed cash-settled options.

The Brunswick court has scheduled a ruling on both cases for September 19. Hearings on three other lawsuits, including a case brought by Elliott Associates and other U.S. investment funds for 2 billion euros in damages, have yet to be scheduled.

"At the moment, the court does not yet follow our reasoning," said Franz Braun, who represents plaintiffs in three of the five lawsuits.

Porsche's statement of October 26, 2008, caused VW shares to surge to 1,005 euros within days, briefly making the Wolfsburg-based carmaker the world's most valuable company as short-sellers raced to cover positions.   Continued...

An illuminated Porsche logo is pictured on a building of a Porsche retail centre in Niederwangen, outside Bern March 9, 2012. REUTERS/Michael Buholzer