The Porsche Wars: It's All About the Money

...or should we say about borrowing money from the enemy. The fight between Volkswagen and Porsche has taken another turn today, as the sports car manufacturer admitted it borrowed 700 million euro ($980 million) from the company it largely owns, Volkswagen. Still Porsche continues to claim it can manage to keep to its debt woes, Autonews reported.

"Porsche is not on the verge of insolvency even if that is alleged over and over," a spokesman for the company was quoted as saying by Autonews, while commenting on the current merger talks.

Der Spiegel reported that this loan was made earlier this year to help Porsche get back on its feet and was backed up by the company by putting up Porsche Holding as collateral for the loan. This branch of Porsche is the Austria-based automotive wholesale distribution firm owned by the same people which now hold the destiny of the two manufacturers (and their subsidiaries): Porsche and Piech.

This makes for a strange situation for Porsche. The sports car manufacturer is Volkswagen's biggest share holder, owning 51 percent of VW. Still, the 9 billion euro debt it has accumulated by the end of January has put a stop to its moves to take over VW entirely. Now, the situation seems to have reversed.

Volkswagen loans money to Porsche, while on the background, the merger negotiations are said to keep going. As you know by now, the two companies tend to disagree on how the merged company should look like. Volkswagen went as far as canceling one of the very first meetings, last Monday.