Controlling families feud over plans to service huge debts
5 May 2009

Porsche's controlling families are set to clash today as they hammer out a strategy to secure the car maker's future.

Wolfgang Porsche, chairman of the company, and Ferdinand Piech, chairman at Volkswagen, are feuding over how best to restructure the company, which has massive debts.

According to the Financial Times newspaper Porsche, whose family branch owns a larger portion of the company than the Piechs, is backing a plan by Wendelin Wiedeking, the car maker’s chief executive.

Wiedeking wants to merge VW and Porsche into a new holding company and to inject capital from the families and outside investors.

Reports suggest several sovereign wealth investors from the Middle East, one believed to be from Qatar, had expressed interest in investing in a combined VW/Porsche group.

However, Piech has put forward an alternative proposal for VW to take over Porsche AG, the automotive business that is owned by the highly-indebted holding company Porsche SE.

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Porsche has rebuffed Piech's suggestion, saying: "We are currently on the right path. Porsche AG will not be sold to Volkswagen”.

Piech also wants to replace Wiedeking and Holger Härter, the company's chief financial officer, with VW executives, should the takeover of Porsche be successful.

Porsche has spent around 23 billion Euros (£20 billion) to gain control of a 51 per cent stake in Volkswagen, leaving it with a nine billion Euros (£8 billion) net debt load. With car sales slumping, concerns have risen that Porsche could run into difficulties servicing its interest payments.

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