Porsche brass to meet on capital rise

Debt-laden German carmaker Porsche is set to approve this Sunday details of implementing a 5 billion euro ($7.1 billion) capital increase, clearing the way for a merger with Volkswagen AG.

"The executive board and the supervisory board of Porsche SE have not yet resolved on the subscription price and the details of the implementation of the capital increase. Such decision is planned for Sunday, 27 March 2011," it said in a written statement late on Friday.

"A syndicate of banks has today undertaken vis-a-vis Porsche SE, under certain conditions, to underwrite all new ordinary and preferred shares to be issued in connection with the implementation of the capital increase ...," it said.

It said the banks will offer the new shares at a subscription price of 38 euros per share.

Porsche's statement came after sources familiar with the preparations said the company would implement the capital increase in the next few days.

Porsche Automobil Holding SE only earns investment income from stakes in Porsche AG sports cars and Volkswagen and needs fresh equity before being folded into Europe's biggest carmaker.

The underwriters of the mammoth issue are Deutsche Bank AG and Morgan Stanley and other banks could still join the syndicate, the sources said.

The sources said the capital increase would raise a total of 2.5 billion euros from the Piech and Porsche families, as well as Qatar, all of whom hold ordinary shares.

Reuters