VW ready to sell assets should loan repayment falter: sources
By Arno Schuetze
FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE: Quote) has told banks supplying a 20 billion euro ($21.1 billion) credit line that it would sell assets if it finds no other way of repaying the one-year loan, two people familiar with the matter said.
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. Continued...