Volkswagen eased shareholder fears it would flood the market with new stock, outlining plans to use a convertible bond alongside a share sale to help fund an acquisition spree.
The finance chief of Europe's biggest carmaker said VW plans to raise around 4 billion euros ($5.4 billion) and would ask shareholders on April 22 to approve a bond issue convertible into 40 million preferred shares at a much later date.
"Such an authorization would give us a further financing instrument, which we consider to be standard for increasing the financial flexibility of major joint stock companies such as Volkswagen but which is not available to us at the moment," Hans Dieter Poetsch said on Thursday .
Volkswagen needs to add to its 10.6 billion euro cash pile -- effectively accumulated entirely by its crown asset, luxury brand Audi -- for an acquisition splurge to dethrone industry leader Toyota within a decade.
This includes 16 billion euros in equity and debt to buy Porsche SE's lucrative sports car business and Europe's largest independent car dealership, Porsche Holding.
VW stock rose over 5 percent, making it the biggest gainer in Germany's DAX, after investors were relieved their holdings would be diluted gradually over a longer period of time, taking the sting out of a capital increase planned for the first half.
Together the two financing measures would not exceed the limit of 135 million new preferred shares approved in December, an amount that would double that class of capital stock and would be worth around 9 billion euros at current market prices.
VW said the debt issue would be bearer bonds with warrants or convertible bonds with a maximum term of 20 years "on one or several occasions in the period until April 21, 2015."
VW paid 3.9 billion in cash last year for half of Porsche AG and spent another 1.7 billion euros for a near 20 percent stake in Japanese small car specialist Suzuki in January.
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