24.03.2009 18:20 RLPC-UPDATE 1-Porsche scrambles to fund 10 bln euro loan refi
By Tessa Walsh
LONDON, March 24 (Reuters) - Carmaker Porsche (News/Aktienkurs) is scrambling to raise 1.45 billion euros to refinance a 10 billion euro loan at midnight, having already raised 8.55 billion euros, banking sources close to the deal said on Tuesday.
Porsche is seeking to raise the additional 1.45 billion euros from existing banks that were asked to increase commitments in tense final negotiations on Tuesday, two bankers close to the deal said.
'Porsche has 8.55 billion euros from banks and is working on its existing banks to get to 10 billion euros,' a banker close to the deal said.
A spokesman for Porsche said the carmaker had to reach a general agreement with banks today but did not have to transfer money by midnight.
Porsche was initially seeking to raise 12.5 billion euros -- 10 billion euros to refinance the existing loan and a further 2.5 billion euros for general corporate purposes, but had to focus on the lower amount after a muted response to the deal.
Porsche is trying to meet conditions that banks require to increase their commitments. Some banks' commitments were contingent on Porsche raising the full 10 billion euro refinancing, the two banking sources said.
If Porsche fails to raise the additional funds from banks, it will have to fund the difference from its own resources to repay the loan by midnight and avoid a technical default on its debt, they added.
The two bankers were surprised by the shortfall on the 10 billion euro loan after being assured by Porsche's management on Friday that it would sign for the full 10 billion euro amount on Tuesday.
Many bankers have also criticised Porsche for failing to leave sufficient time to refinance its debt in difficult market conditions.
'This has come within a short head of being a total disaster. This should stand as a lesson for corporates looking to refinance that you do not want to manage a process like this,' a second banker close to the deal said.
'A legal and sound enterprise has come within a few hours of being in technical default,' the second banker said.
By Tuesday afternoon, Porsche had raised 8.55 billion euros from LBBW, which committed 1.5 billion euros. Barclays, Commerzbank and UBS had committed 1 billion euros each, the two bankers said.
Deutsche Bank had pledged 750 million euros, Santander, BayernLB, BNP Paribas, Calyon and UniCredit had committed 500 million euros each, Helaba Bank had signed for 300 million euros and Intesa SanPaolo and WestLB had given 250 million euros each, they added.
Banks remain on standby waiting for the drawdown of Porsche's 10 billion euro loan that agent bank Commerzbank will use to repay existing lenders.
FRAUGHT RELATIONSHIP
The tense end to the deal is the latest twist in Porsche's fraught relationship with its closest banks, which are still smarting after losses incurred last year when Porsche drew down the 10 billion euro loan at low rates to make financial investments.
Porsche met with a shortfall on the 10 billion euro refinancing despite upping fees on the deal by 50 basis points to 250 bps for banks committing 1 billion euros and to 200 basis points for banks committing 500 million euros to boost interest.
The company may still opt to raise the full 12.5 billion euro total in a second later round of syndication, several banking sources said.
The loan has an 'accordion' facility that can increase the amount of the deal that would accommodate Japanese banks that could pledge a further 1.5 billion euros after their financial year end in April, they added.
However, banks that were looking to commit at a later stage could reconsider in light of the last-minute loan developments.
'We are still interested but events like this don't fill us with confidence,' the second banker close to the deal said.
Porsche's five-year credit default swaps tightened by 15 points on Monday to 580 basis points, down from 595 basis points on Friday.
'Porsche has created a credit crunch on its own liquidity facilities by not getting its act together in time. Banks are asking each other why it has got to this late stage,' the first banker close to the deal said.
(Reporting by Tessa Walsh) Keywords: PORSCHE LOAN/
(tessa.walsh@reuters.com; +44 20 7542 4048; Reuters Messaging: tessa.walsh.reuters.com@reuters.net)
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