Porsche Cut to ‘Sell’ by UBS on Debt, Likely Failure of VW Plan

Porsche SE, the maker of the 911 sports car, was cut to “sell” from “neutral” by UBS AG, which cited growing debt and a greater likelihood that the company will be forced to sell its Volkswagen AG stake.

“Porsche’s economic net debt, including its hybrid bonds and derivative positions, may be as high as 18.3 billion euros rather than the 9 billion euros reported at the first half,” analysts led by London-based Philippe Houchois wrote in a report to investors.

Porsche began using cash from the luxury vehicle business in 2005 to buy shares of Volkswagen, amassing debt as it built a 51 percent stake in Europe’s largest carmaker. Stuttgart, Germany-based Porsche is in talks with Qatar about selling a stake as well as options that can be converted into VW shares. The Porsche and Piech families, which own the sports-car maker’s voting shares, agreed in May with VW to pursue a merger.

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