Europe's biggest car maker Volkswagen has announced a long-awaited capital increase aimed at ensuring strong credit ratings. The move comes as VW takes over the luxury sports car maker Porsche.
VW said it would raise around €4.42 billion through the issue of up to 65 million preferred shares, a decision expected to be approved by its supervisory board on Friday.
Preferred shares do not have voting rights, and VW said it would also provide details on the final subscription price and the offer price on Friday. The car maker said the move should strengthen its finances and give it more flexibility.
The news caused VW shares to lose 6% on the Frankfurt exchange, ending at €68.50, as a capital increase dilutes the value of existing stock.
Last year, VW shareholders approved a capital increase of up to €8.5 billion. VW is in the process of taking over Porsche, and the capital increase is designed to help finance that deal without affecting the car giant's bottom line and while maintaining strong credit ratings. The latter are important so VW can continue to raise funds on capital markets at favourable conditions.
source: rte
