Andreas Cremer
BERLIN, October 1 (Reuters) – Volkswagen plans to take measures to reduce its costs and improve its cash position to protect its credit rating threatened by the scandal software to handling of emissions tests.
manufacturer’s supervisory board met to discuss ways to strengthen the group’s finances but did not mention the possibility of selling assets or brands, told Reuters two sources close to the board.
According to sources, the Board is concerned about a possible downgrade of the group, which would result in higher borrowing costs and affect its ability to regain the confidence of investors.
Raising capital by selling shares would become a likely option if the costs of the scandal exceeded a “critical level,” said one source.
The Wolfsburg group declined to comment this information
The rating agency Standard & amp. Poor’s placed last week’s note VW negative outlook while Moody’s lowered its outlook highlighting the risk from the financial impact of the scandal.
The first European manufacturer has admitted to have used software to distort test emissions of its vehicles in the United States. The tests were also handled in Europe, said the German Ministry of Transport.
The case, revealed on September 18 by the US authorities of environmental protection, pushed last week CEO Winterkorn to resign, the former boss of Porsche, Matthias Müller, succeeding him as head of the group.
FOUND POSSIBLE CAPITAL INCREASE ONE
Martin Winterkorn been from the Braunschweig prosecutor of an instruction as part of a preliminary investigation into Volkswagen, which states Thursday have no evidence of criminal conduct on his part .
The title Volkswagen lost over a third of its value since the revelation of the scandal, which resulted in turmoil for the entire global automotive industry.
Volkswagen which has already imposed a hiring freeze within its financial division and deleted a team in one of its engine plants, provisioned 6.5 billion euros to cover the costs of the case.
Some analysts believe that this will not be enough.
“The group has rather strong statements but also has a very cautious approach to its financing and its credit rating,” wrote this week Max Warburton a note, Bernstein analyst.
“We believe that if the costs (of the scandal) in cash exceed 10 billion euros, a capital increase will be very likely,” he added .
Volkswagen announced Tuesday it was preparing steps to modify diesel engines with the offending software, which could open the way to recall 11 million cars worldwide.
Still very volatile, as the Volkswagen lost 1.04% to 96.73 euros in Frankfurt Stock Exchange at 12:20 GMT after gaining up to more than 5% in early trading.
( Myriam Rivet and Patrick Vignal for the French service, edited by Wilfrid Exbrayat)
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