VW board considering steps to prop up credit rating
BERLIN: Volkswagen's supervisory board is considering steps to prop up the carmaker's credit rating amid a scandal over its rigging of emissions tests that affects 11 million of its vehicles, two sources close to the board said.
The board is considering cost cuts and measures to generate cash flow, but has not discussed selling off VW assets or brands, they said. One source added that a capital increase would become likely if cash costs of the scandal were to exceed a "critical level".
Volkswagen declined to comment on the remarks made by the sources to Reuters.
Europe's biggest carmaker has admitted cheating in diesel emissions tests in the United States and Germany's transport minister says it also manipulated them in Europe, where Volkswagen sells about 40 percent of its vehicles.
The scandal sent the Wolfsburg-based company's stock sharply lower and forced out long-time CEO Martin Winterkorn, who has been replaced by Porsche boss Matthias Mueller.
VW shares were up 3.6 percent in early trading on Thursday.
Credit rating agency Moody's last week changed the outlook on VW's debt to negative, citing risks to the company's reputation and financial flexibility. Fitch said it expected the crisis to affect the entire automotive sector.
The sources said there were worries following the rating agencies' comments that a downgrade could inflict higher borrowing costs on the company, hampering its ability to win back the trust of investors.