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Porsche looks for shareholder approval at AGM

Porsche, the family-controlled car company, is hoping to gain approval for a €5 billion rights issue at its annual general meeting held 30 November.

The rights issue is aimed at cutting the company's huge debt pile in order to smooth the way for the next stages of its merger with Volkswagen, the carmaker that is controlled by a rival branch of the founding Porsche family.

Porsche is looking for shareholder approval for the rights issue at tomorrow's AGM, which needs the approval of 75% of the company's shareholders to proceed.

The niche sports car maker must drastically reduce its €6 billion debt in order to proceed with the merger under German law.

Analysts say Porsche is confident of getting approval for the rights issue as the merger is in the interest of most shareholders, despite receiving some public opposition from a few smaller German institutional investors. Porsche's preference share price rose last week as investors saw the rights issue as a cheaper way to access VW shares through the merger next year.

Porsche and VW are headed by rival branches of the same family; Porsche is headed by Wolfgang Porsche and VW by Ferdinand Piech, both grandsons of Porsche's founder.

Both families own Porsche's ordinary shares, which hold voting rights, along with the Qatar Investment Authority.

The families patched up a series of feuds in 2009 when they announced the merger of the two companies, which saw VW pay €3.9 billion for a 49.9% share in Porsche in October 2009 in the first stages of the deal. 

Porsche originally envisioned his smaller company could takeover VW and so begun building shares in his cousin's business. However, this drove Porsche into €10 billion of debt and left the smaller company in need of financial help from VW to survive.

The families have recently agreed to sell a VW dealership chain for €3.3 billion in order to raise cash for the rights issue. 

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