

Porsche on the financial brink - hardik
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/5383921/Porsche-on-the-financial-brink.html

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alex_c
More meat here (from New Mogul):

[http://www.bloomberg.com/apps/news?pid=20601100&sid=aMBk...](http://www.bloomberg.com/apps/news?pid=20601100&sid=aMBkiI5gvZnA&refer=germany)

I'm still a bit confused as to what caused the takeover to fail. The Bloomberg
article makes it seem that it was mostly a regulatory problem. Or is it more
that Porsche doesn't have the cash to exercise its options in VW?

Edit: the Economist article posted by anigbrowl explains it better.

 _Three things thwarted Porsche. In January the firm increased its stake in VW
to its present 50.8%, almost tripling its net debt to €9 billion in the
process, just as sales at Porsche’s car business were tumbling—leaving less
cash to pay the interest on the debt. Second, conditions in the credit markets
made it harder to go on borrowing more. On March 24th Porsche was able to roll
over its existing loan only by pledging its VW shares to the banks and
promising to pay back €3.3 billion within six months.

Third, Porsche was counting on the repeal of the so-called Volkswagen Law that
restricts individual shareholders to 20% of the voting rights, regardless of
the number of shares they own, and gives the state of Lower Saxony a veto on
major decisions. The law’s abolition would have allowed Porsche to use its
anticipated 75% stake in VW to get its hands on the bigger company’s cash
reserves, which stood at €10.7 billion at the end of the last quarter.

But despite a recent amendment by the German federal government, the law still
guarantees Lower Saxony’s veto. The state’s premier, Christian Wulff, sees
Porsche as an opportunistic would-be plunderer. With his support and that of
Bernd Osterloh, the head of the powerful VW works council, Mr Piëch feels he
is in a position to dictate terms to Porsche._

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eru
Yes. A problem of regulation and family feuds.

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anigbrowl
A weak article, but the story is interesting. It has been better covered in
the Economist:
[http://www.economist.com/finance/displaystory.cfm?STORY_ID=1...](http://www.economist.com/finance/displaystory.cfm?STORY_ID=12523898)
[http://www.economist.com/business/displaystory.cfm?story_id=...](http://www.economist.com/business/displaystory.cfm?story_id=13649071)

And if you are really interested in capital machinations and strategy, I would
recommend reading all the Economist stories in chronological order (use Google
rather than their lamentable in-house search engine) for the blow-by-blow
treatment. It's a great story which will likely become the subject of a book
next year, and might even make a good movie. Sadly, one German investor was so
badly hit by Porsche's aggressive financial strategy that he committed suicide
after losing billions of Euro when Porsche made its famous 'short squeeze'
play.

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sho
_"Sadly, one German investor was so badly hit by Porsche's aggressive
financial strategy that he committed suicide after losing billions of Euro"_

I just can't understand this kind of thing. If someone has enough money to be
making bets in the _billions_ , you'd expect them to have at least a few
million put away somewhere for a rainy day. Why not just take that and run off
to the Carribean or somewhere, start a new life? It's not exactly hard to get
out of Europe.

Killing yourself!? Geeze, it's only money.

~~~
TriinT
Many people value their own worth based on how much loot they have amassed. If
you lose it all, then you're worth nothing.

BTW, the german guy was an old tosser just waiting to see what kind of cancer
would kill him. Not much of a loss to mankind, I'd dare to say...

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jcl
It's funny... To hear Ivan Krstic's story earlier this year, Porsche had made
a brilliant financial coup:

<http://radian.org/notebook/porsche>

~~~
calambrac
They had. Things change.

~~~
paddy_m
I was just thinking of porsche's brilliant financial coup. I'm confused as to
how they are now in this position.

~~~
calambrac
What's confusing? They've made some high-stakes financial plays. Their
previous one worked, but this one didn't, and now they're in trouble. Is it
really that mind blowing to see someone overplay their hand?

~~~
froo
I like to look at their "financial acrobatics" in a more metaphorical sense.
Like driving a 911.

The car is prone to oversteering, so if you push it too hard around a corner,
you can lose control and spin out.

Looks like this this is what is happening to Porsche. Quite ironic really,
their financial position taking on the characteristics of their signature
vehicle.

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eru
Please correct spelling: Porche -> Porsche. Thanks.

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jpcx01
Surprising to me. I remember reading the article a year back about how Porsche
made off with billions of hedge fund dollars and remembering being amused at
their brilliance in gaming those idiotic pack rat fund managers.

[http://www.time.com/time/business/article/0,8599,1854760,00....](http://www.time.com/time/business/article/0,8599,1854760,00.html)

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tybris
One thing's for sure, after this crisis we'll all be driving Japanese cars.

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donw
I've been looking at new cars recently, and have to say that there's no way I
would consider buying a BMW, or pretty much any car that isn't Japanese. The
two- and three-year old used 3-series and Mercedes that I looked at seemed
totally ragged, next to the condition of a used Lexus or even a Mazda.

I could spend $40k on a 3-series, or half of that on a used Lexus, or a
quarter of that on a used Mazda 3.

~~~
jarrodtaylor
Half that $40k would also buy an E46 M3, which would be a whole lot more fun
that the Lexus or Mazda.

For the whole $40k you may be able to find an early Porsche 997 (like an '05)
with little if any noticeable wear.

