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Porsche selling shares for VW merger

Porsche selling shares for VW merger
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Porsche shares fell on Monday after it released details of its sale of nearly five billion euros worth of new stock.

The debt-laden German sports car maker needs to sell shares to increase its capital and clear the way for a merger with Volkswagen, Europe’s biggest carmaker.

Its net debt is around 6.3 billion euros and Porsche plans to cut it to about 1.5 billion euros, a key demand of VW shareholders.

Current investors will be able to buy shares at 38 euros, which is a significant discount to their market price.

Porsche is having to turn to shareholders after it ran up crippling debts of more than 10 billion euros in a botched attempt to buy VW. It raised its holding to just over 50 percent of VW’s voting stock in early 2009, but nearly bankrupted itself in the process.

The company was eventually forced to seek a merger with its larger rival, but financial and legal problems still have to be cleared for that to go ahead.

Porsche’s share sale will be the biggest rights offer in Europe so far this year.

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