Volkswagen has already set aside billions in potential costs related to its emissions-rigging scandal.
Mounting speculation that the crisis-stricken company will sell stock to raise funds is sending its non-voting shares to the biggest discount versus voting ones in six years.
A capital increase would dilute the value of the more commonly traded, non-voting stock - and investors have taken note.
The price of those shares has fallen €25.60 below its less-traded stock, reversing a premium from before the scandal broke.
VW has seen as much as €29.8 billion wiped from its market value after revealing last month it installed software to cheat on pollution tests.
While refinancing bonds and obtaining a bank loan are also among VW’s fund-raising options, the next step would probably be a stock sale, and the outcome becomes even more likely should the scandal’s costs exceed €32 billion, says Juergen Pieper, an analyst at Bankhaus Metzler.
“The chances for a capital increase are higher than 50 per cent,” Pieper said by phone from Frankfurt.
“Volkswagen needs to have it in their war plan. Before starting to sell assets, they would definitely do a capital increase. It is an elegant way to get money and not change anything on the voting rights side.”
VW’s “preferred” stock - the more common class that is included in Germany’s benchmark DAX Index- traded at a premium to the voting stock, confusingly known as “ordinary” shares, almost every day since 2010.
The securities with voting rights aren’t easily traded - almost 90 per cent are owned by the Porsche-Piech family, the government of Lower Saxony in Germany and the sovereign-wealth fund of Qatar.
Further fanning flames: VW has a €3.7 billion convertible bond maturing next month, and holders of those securities will be paid in equity instead of cash.
Bloomberg