VW Said to Sign 20 Billion-Euro Bridge Financing Deal on Fridayby , , and
Banks offered as much as 29 billion euros to German automaker
Citigroup and UniCredit acting as lead banks in consortium
Volkswagen AG plans to sign a 20 billion-euro ($21.2 billion) bridge financing deal with about 13 banks on Friday to demonstrate that the German automaker has adequate liquidity to weather the emissions cheating scandal, according to people familiar with the matter.
The banks, led by Citigroup Inc. and UniCredit SpA, will each provide financing of either 1.5 billion euros or 2.5 billion euros, said the people, who asked not to be identified because the negotiations are confidential. The offer was oversubscribed and VW could have raised as much as 29 billion euros, they said. The loans could be turned into bonds for repayment at a later stage, according to the people.
VW does not need the money currently and is seeking extra funds to create a financial cushion with talks due to be finalized by the end of the year, people familiar with the matter told Bloomberg on Nov. 13. Reuters reported earlier on Wednesday that the talks had concluded. VW declined to comment.
While the company has made progress toward a simpler-than-expected recall of 8.5 million rigged diesel cars in Europe, talks with U.S. regulators are still ongoing as plummeting sales in the country show the impact of the crisis on the showroom floor. The financial impact, which the company has said will total more than 8.7 billion euros, is also uncertain.
Credit-default swaps insuring VW’s debt were the third most active among 1,000 entities tracked by the Depository Trust & Clearing Corp. last week, with 247 trades covering a gross $944 million of the automaker’s debt. Outstanding contracts rose to cover a net $5.4 billion of its debt from about $2 billion at the start of the year.