VW extends $21 billion loan to weather diesel fall-out
By Arno Schuetze and Andreas Cremer
FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE: Quote) has agreed to extend a 20 billion-euro ($21.2 billion) bank credit line, it said on Monday, part of the German carmaker's efforts to maintain its financial strength while it counts the full cost of its emissions scandal.
Europe's largest automaker secured the one-year bridge loan last December after the biggest corporate scandal in its history wiped billions off its market value and made it much more expensive for Volkswagen (VW) to borrow in the debt market.
"We have now decided to extend the credit line until June 2017," VW told Reuters in an email.
The credit line will protect the financial framework for the group's operations and increase its financial flexibility, the carmaker said.
VW faces a record-breaking corporate settlement with regulators and vehicle owners in the United States where in September 2015 it was found to have cheated diesel engine emissions tests.
A U.S. judge last month approved VW's $14.7 billion settlement with authorities and owners of 475,000 polluting 2.0-litre diesel cars and is due to discuss proposals for buybacks and fixes for 80,000 3.0-litre vehicles on Wednesday.
VW said it will return to the unsecured bond market in due course and was still taking advantage of ABS (asset-backed securities) transactions and commercial paper.
Two sources in the financial industry told Reuters that VW had drawn up to half of the loan by the summer, but the carmaker said the bridging loan was currently undrawn. Continued...