Volkswagen, Europe's largest carmaker, is considering a capital increase as one option among many to finance its takeover of debt-laden sports car maker Porsche, bankers familiar with the situation said.
Issuing new voting shares is seen as a problem, however, since it would dilute the 20 percent voting stake owned by the German state of Lower Saxony, wiping out its blocking minority.
VW ordinary shares were down 1.9 percent in Frankfurt at the market close, while the German blue-chip DAX .GDAXI closed up 0.42 percent. Separately, preferred shares in Porsche SE sank almost 11.4 percent as more reports emerged that its finances had deteriorated further.
On Monday, the Financial Times reported that Volkswagen was considering raising up to 4 billion euros ($5.7 billion) ahead of a takeover of Porsche to protect its credit ratings. The report did not provide further details.
"Volkswagen is planning to buy Porsche's sports car business as fast as possible and, to finance this, they are thinking about strengthening their capital base," the FT quoted a person familiar with the situation as saying.
A spokesman for Volkswagen declined to comment.
At present, VW is authorised by shareholders to raise its capital by a maximum nominal value of 90 million euros until May 2011 through the issuance of new ordinary shares, assuming management would gain the approval of its supervisory board.
This would allow for the issuance of 35 million new ordinary shares, which would raise its capital base by nearly 12 percent.
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