Porsche SE turned to new lenders to refinance ?10bn of loans to buy Volkswagen AG stock, a sign the economic slump is curbing banks?? ability to extend credit.
Former lenders Merrill Lynch & Co. and ABN Amro Bank NV dropped out of the new transaction, the Stuttgart, Germany-based company said in a statement today. Porsche may add ?2.5bn to the facility in coming weeks, after banks needed ??extra time? to consider the deal.
??Porsche??s struggle to refinance its credit line is tangible evidence that in the loan market banks are not as willing to take further exposure,? said Andrea Cicione, a London-based credit strategist at BNP Paribas SA. ??Particularly to companies in the most distressed sectors such as autos.?
The carmaker??s new borrowing replaces a facility arranged in 2007 by ABN Amro, Merrill Lynch, a unit of Bank of America Corp., Barclays Capital, Commerzbank AG and UBS AG.
Porsche paid an interest margin of 20 basis points, or 0.2 percentage point, more than the euro interbank offered rate on the credit line it??s replacing. The carmaker didn??t provide details of the terms on the new financing.
The new credit line will be guaranteed by 15 banks including Credit Suisse AG, Banco Santander SA, BayernLB, BNP Paribas SA, Calyon, UniCredit SpA, Helaba, Intesa Sanpaolo SpA, WestLB and DZ Bank AG.
Porsche??s debt has two portions maturing in March 2010, including a ?6.7bn piece that has an option to extend the maturity for one year, according to the statement. The carmaker has a ??a framework contract? to increase the loan to ?12.5bn in coming weeks.
Porsche has been accumulating shares of Wolfsburg, Germany-based Volkswagen since 2005 and owned 50.8 percent of Europe??s biggest auto manufacturer as of Jan. 5.
Porsche needs an extra ?2.5bn to increase its stake in Volkswagen stock to 75 percent.
